Public notices suggest apparent redirection of auction funds to provide universal cable service.

To the bafflement of many, the FCC has consolidated its Incentive Auction and Open Internet proceedings. The public notice announcing that move sheds no light on exactly what the Commission might have in mind – the only reason given is that the FCC wants to “streamline consideration of issues common to both dockets”. Interestingly, it also mentions (in a footnote, maybe because it figures that nobody reads the footnotes anyway) that the soon-to-be-incoming Comcast-Time Warner Cable merger will also get channeled into the Grand Unified Docket.

Interests common to both dockets? What could those be? And what’s the Comcast merger got to do with anything?

Thanks to our old friend, the hilariously-named Paperwork Reduction Act (PRA), we have an idea.

The PRA, of course, requires the FCC to run new “information collections” past the Office of Management and Budget. And PRA requests have to be published in the Federal Register, where they seem to be largely ignored by everybody but us. (Our motto: We read them because we know you won’t.)

And what should appear in this morning’s Federal Register? A PRA notice indicating that the Commission is contemplating reallocation of at least some of the $1.75 billion TV Broadcaster Relocation Fund to a program that would provide universal cable TV service to everybody in the U.S. (The PRA notice describes, very generally, two questionnaires the FCC plans to send out – one to all U.S. households to determine who’s got cable and who doesn’t, and one to all U.S. cable providers, to get an idea of subscription prices.)

Is this a great country or what?

While the PRA notice is skimpy on details, it at least confirms what we already guessed: coming up with an incentive auction process and corresponding spectrum “repacking” is, in the words of the notice, “more complex than anticipated”. So, rather than continue to focus on assuring the continued availability of free over-the-air TV, the Commission is thinking about moving to Plan B. After all, if you can’t raise the bridge, you’ve got to think about lowering the river.

While continuing to promote the availability of TV programming to the public, Plan B would reduce the previous emphasis on the precise method of distribution. Instead of dedicating massive agency resources in an effort to get broadcasters on board, the FCC would take some part of the approximately five gajillion dollars on the table in the Incentive Auction game and cut a deal with cable providers to guarantee service to every household that isn’t already hooked up. That way, all Americans will still get to enjoy TV service (albeit by wire rather than by over-the-air). Almost certainly TV broadcasters, discouraged at yet another perceived demotion, would opt to take whatever incentive funds they could get in return for turning their licenses back in, giving the FCC lots more spectrum to auction. And the wireless carriers would get lots more spectrum over which to send silly cat videos to people’s tablets and phones.

Of course, multiple operational details would need to be resolved. For example, what level of cable service will the feds subsidize? Will fed-supported subscribers be permitted to chip in their own cash for premium services (e.g., HBO, Extra Innings, the Tennis Channel)? Also, will all-religious channels be barred from the deal out of Establishment Clause considerations? What about sexual content – will the FCC pay for any and all XXX services, none of them, or just the objectively “classy” ones? As with everything, the devil will be in the details.

All this is well and good, but what does any of it have to do with the net neutrality proceeding, or the anticipated Comcast-Time Warner merger?

It’s obvious.

The merger will, if approved, create a humongous, nationwide cable operator – one-stop shopping if you’re, say, a federal agency looking to treat unserved millions to free cable service and, thus, in the market for a volume deal. Sure, there may be some areas that won’t be within the Comcast-Time Warner Zone of Influence, but anybody in that position would be nuts not to play ball with the FCC. For its part, Comcast has already demonstrated (in its acquisition of NBC a couple of years ago) a willingness to deal. So the Commission is not totally out in left field to figure that a deal could be cut.

But to get the juice necessary for such an ambitious deal, the FCC will need plenty of cash and maybe a little something extra to sweeten things up. The Incentive Auction proceeding provides an excellent cash stash – which explains how that proceeding fits here.

And the net neutrality proceeding? Let’s not forget that Comcast is one of the Very Big ISPs across the country. It has an intense interest in avoiding undue governmental interference. And who can make that happen? The FCC, of course.

So, if everything breaks the right way, here’s what to be looking for: In order to get its merger approved, Comcast agrees to give the FCC an attractive price to get cable service to all U.S. households; in return, Comcast gets a boatload of new subscribers and it doesn’t need to worry about their creditworthiness (because Uncle Sam is footing the bill).

And if Comcast is willing to play ball – and why shouldn’t it? – we’re betting it won’t have to worry much longer about net neutrality.


Happy April Fool’s Day!