The aftershocks of Comcast could reach well beyond broadband and net neutrality
While most attention on the aftermath of the Comcast decision has tended to focus on the decision’s impact on net neutrality and the implementation of the National Broadband Plan (NBP), the seismic wave from Comcast and its aftershocks could reach well beyond those obvious targets. Local TV broadcasters, in particular, might want to pay attention to how Comcast might play out in their corner of the regulatory universe.
For example, the NBP contemplates that spectrum currently in use by TV stations might be re-purposed for broadband. To wrest that spectrum away from the television operators who now hold it, the Commission has suggested that it might work some kind of deal in which: (a) the spectrum would be “voluntarily” relinquished by the broadcasters; (b) the re-captured spectrum would then be auctioned off; and (c) the broadcaster would be entitled to a portion of the auction proceeds.
But the FCC’s authority to cut this kind of deal in any event is far from clear. While the Commission is unquestionably authorized to conduct spectrum auctions, that authority does not obviously extend to cutting deals to kick-back auction proceeds to private parties. And any hope that such deals might be seen as “ancillary” to other authority is dimmed by Comcast. That in turn means that the FCC’s ability to secure spectrum commitments from broadcasters is likely diminished. Why, after all, would a broadcaster commit to turning in its spectrum if the FCC is not in a position to guarantee any repayment that might be part of the deal? As a result, the Commission should not expect much enthusiasm from broadcasters unless and until the Commission can demonstrate that it will be able to make good on any payment deals it may try to cut.
Another possible ripple effect of Comcast on the broadcasting terrain: let’s not forget that Comcast, the folks who landed the knock-out punch on the FCC in the eponymous Comcast case, are also the folks who are currently trying to get the FCC to approve a massive merger with NBC Universal. Now that Comcast’s ability to restrict, legally, Internet traffic contrary to the FCC’s preference has been established (thanks to the D.C. Circuit), the FCC (and other governmental authorities) may not be especially gung-ho about giving Comcast even greater control of more media than it already holds. If Comcast’s practice of jiggering with its subscribers’ Internet access is deemed potentially anti-competitive, the Feds might be expected to be reluctant to increase any perceived competitive advantages for Comcast.
Of course, in light of such concerns, the Powers That Be (whether that might be the FCC, DOJ or Congress) might attempt to extract “voluntary” commitments from Comcast and NBC, much as they did in connection with the Sirius/XM merger. Could the Commission then impose conditions that look remarkably like net neutrality requirements – even though the FCC might not have the authority to impose such requirements industry-wide? Conceivably, since the FCC’s clear authority to act on the merger request would arguably provide it the related authority to impose conditions on any grant of that request. Such conditions could have an impact on competition in both the online media and the cable industries, not to mention the broadcast business – in all of which Comcast plays a major role.
On the other hand, even if the Commission were to offer grant of the merger in return for concessions or commitments from Comcast, who’s to say that Comcast would accept the deal? Presumably, Comcast would not do so unless the deal made good business sense.
Another possible impact zone from Comcast: retransmission consent. As has been widely reported, the cable industry has filed a petition for rulemaking seeking overhaul of the current retransmission consent process. Thus far the FCC has appeared to be receptive to the idea. But a large number of fixed broadband service providers are cable companies, and those companies can now restrict internet traffic (thanks to Comcast), giving them a potential competitive advantage. How eager will (or should) the Commission be to give the cable industry a further leg up over competitors in the retrans consent process?
At this point we can only guess about how any or all of this will shake out. But it is important to recognize that the impact of Comcast is not likely to be limited to issues of net neutrality. In any event, television broadcasters should keep a wary eye on their own situation. They may still be looking at a decidedly unattractive future: packed tighter than ever in the broadcast band, stiffed by the FCC on any kick-back payments from spectrum auctions, and losing a steady source of revenue to the network, which just merged with the largest cable company.