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Ajit Pai Plans to Remain as FCC Chairman “For the Foreseeable Future”

Phillip Dampier October 30, 2018 Net Neutrality, Public Policy & Gov't No Comments

Pai

Despite the potential for a Democratic Party takeover of the U.S. House of Representatives that is likely to usher in a new era of more aggressive oversight of the Republican-dominated Federal Communications Commission, current chairman Ajit Pai “plans to lead the FCC for the foreseeable future.”

Multichannel News reports Pai is unlikely to leave his post just two years after being appointed to the position by President Donald Trump, despite an ethics controversy over alleged assistance given to Sinclair Broadcast Group to allow the company to acquire more stations despite a federal ownership cap on the number of stations that can be owned by a single entity. Pai also was responsible for a highly controversial decision to cancel net neutrality provisions enacted during the Obama Administration.

“Chairman Pai remains focused on his key priorities, including bridging the digital divide, fostering American leadership in 5G and empowering telehealth advancements,” said Brian Hart, director of the FCC’s office of media relations.

Should both the Senate and House flip to Democrats in next week’s midterm election, Pai’s agenda of deregulation, media consolidation, and elimination of many Obama-era consumer protections would be in peril and subject to determined Congressional oversight.

Pai has taken heat from consumer groups for ending a set-top box competition program that could have forced television providers to accept equipment obtained competitively in the retail market. He also faced criticism for reinstating a program giving UHF TV station owners the opportunity to acquire more stations, directly benefiting Sinclair and allowing it to pursue its since failed merger with Tribune Broadcasting.

Charter Settlement Talks With New York Officials Proving Fruitful; Spectrum Likely Staying

Charter Communications’ ongoing settlement talks with the New York Public Service Commission are “productive” and will likely result in a final settlement agreement allowing Spectrum to continue operating in New York.

Today, the Public Service Commission formally approved a third extension for Charter, allowing the cable company to hold off filing an orderly exit plan and an appeal of the order revoking approval of Charter’s acquisition of Time Warner Cable in New York State. Department of Public Service (DPS) staff recommended one last 45-day extension to allow settlement discussions to continue and conclude.

“These discussions have been productive and should continue. However, DPS Staff believes that the Commission should direct that any request granted in response to Charter’s most recent filing be final in form and that any additional time allowed must either result in a settlement agreement being presented to the Commission or the cessation of settlement talks and a resumption of the processes outlined in the Revocation and Compliance Orders, unless good cause is shown by both parties,” wrote John J. Sipos, acting general counsel for the Public Service Commission. “This will ensure that progress is made or that in the event a settlement is not reached, that there is certainty as to the expectations on the parties going forward.”

DPS staff identified nine principles guiding discussions towards a final settlement:

  1. All addresses that are counted toward Charter’s obligations must further the Commission’s statements that service be provided to those in less densely populated areas (i.e., Upstate N.Y.).
  2. Addresses counted toward Charter’s obligations must not have had network previously passing the address or high speed broadband service available from a competitor. As the Commission has previously noted, New York City is one of the most wired cities in America, with much of the City served by multiple providers. Thus, the focus of the buildout should be in Upstate N.Y.
  3. Overlap between Charter’s proposed buildout Upstate and those areas awarded by the Broadband Program Office should be minimized or eliminated to the maximum extent practicable.
  4. The goal of DPS Staff and New York State is to ensure that the maximum number of New York State residents have wireline cable and broadband networks available to them.
  5. Charter’s violations of the January 8, 2016 order and September 2017 Settlement Agreement must be addressed.
  6. Going forward, the scope of changes allowed to be made to the buildout plan should be limited in order to provide certainty to New Yorkers as to when Charter’s network will pass their homes and businesses.
  7. Safety is of paramount importance to New York State and that, regardless of any targets agreed to, all work must be done safely.
  8. Company representations regarding the buildout and compliance with PSC orders must be truthful.
  9. The buildout schedule must establish concrete and enforceable consequences should Charter fail to meet its obligations.

Because the ongoing discussions have been conducted in private, without input from interested third parties (including Stop the Cap!) and the public, the revelation of the “nine principles” are the first indication the public has that the Commission’s staff has limited the scope of its negotiations to the rural broadband buildout obligation contained in the original merger approval order. This also coincides with Gov. Andrew Cuomo’s high-profile commitment to expand broadband availability to every New York resident, one of the achievements the governor cites in his re-election campaign. Charter’s participation is essential to the program achieving its objectives, because rural broadband funding has been diverted to addresses not identified as targets for Charter’s rural broadband buildout.

Gov. Andrew Cuomo announcing rural broadband initiatives in New York.

Charter ran into trouble with the Commission because it failed to initially meet its buildout targets for 2017 and progress further faltered in 2018. The Commission argues Charter attempted to mask the problem by counting new passings in urban areas towards its broadband expansion commitment, including many addresses in the New York City area. When Charter balked at the Commission’s broad disqualification of Charter’s progress reports, many that included locations outside the intended goal of the rural expansion effort, the PSC hastily met in July and revoked approval of the original merger agreement, directly threatening Charter’s ability to provide Spectrum service in the state.

A vocal group of consumers among the 78,000 rural New Yorkers without access to cable, DSL, fiber, or wireless broadband are also calling out the governor and the Broadband Program Office (BPO) for bait and switch rural broadband. They accuse the governor of promising to get broadband service to every New York home or business that wants it, but quietly capitulating on that commitment by assigning tens of thousands of rural New Yorkers satellite internet service from HughesNet, widely criticized for not consistently meeting broadband speed standards and offering heavily usage capped service at very high prices.

Because the DPS has set a goal to minimize overlap of Charter’s planned expansion areas with addresses designated for BPO-funded HughesNet service, the Commission will indefinitely prevent satellite customers from getting other practical internet options, because many of these locations are high-cost service areas. Stop the Cap! urged the Commission to consider requiring Charter to further expand its rural broadband commitment as a penalty for earlier transgressions, specifically targeting as many satellite-designated addresses as practical, even if HughesNet has already received BPO funding to serve those locations.

Dampier

“The commitment should be to protect the interests of the public, not the assigned provider,” said Phillip Dampier, director and founder of Stop the Cap! “The Commission’s goal to maximize the number of New York addresses where wireline cable and broadband networks are available is laudable. But this goal is immediately abandoned in areas designated for satellite service. Satellite internet access has rarely, if ever, been considered by broadband regulators to be a suitable replacement for wired internet access. Satellite internet access has proven again and again to be a frustrating and inadequate broadband solution.”

“We are talking about a very small percentage of places where overlapped funding may occur, potentially giving these rural New Yorkers two options for internet access instead of one,” Dampier added. “There is no conflict with the public interest if it means these customers have the option of a much faster, unlimited internet access plan — something HughesNet does not and will not offer in the foreseeable future.”

Stop the Cap! argues without a better option for residents stuck with satellite, the governor has broken his promise and commitment to these left-behind New Yorkers.

“In many cases, these addresses are literally just down the road from the nearest Spectrum customer,” Dampier noted. “Niagara County, for example, is hardly in the middle of the Adirondacks and is heavily wired by Spectrum/Time Warner Cable already. Is it too much to ask to push them to do more?”

John B. Rhodes, chairman of the New York Public Service Commission, signed an order granting the extension, but acknowledged the lack of broadband service in counties where Spectrum offers service to some residents but not others is a point of contention.

“Many Upstate New Yorkers living in Charter’s franchise areas are understandably frustrated by the lack of modern communications infrastructure,” Rhodes wrote. “The Compliance and Revocation Orders [revoking the merger] were designed to deal with very serious issues presented by Charter’s conduct related to the company’s network expansion. As such, the processes envisioned therein must continue in the absence of an agreement.”

Hulu’s New Owner Is Likely to Be Disney As Comcast Contemplates Selling Its Stake

Phillip Dampier September 25, 2018 Competition, Consumer News, Hulu, Online Video No Comments

Hulu could soon be in the hands of Disney, as a high stakes game of asset trading overseas could have a dramatic impact on the streaming service.

After a winning $39 billion bid to acquire British satellite TV company Sky, CNBC reports Comcast is willing to shed some of its assets back home, including its 30% minority stake in Hulu.

Analysts report Comcast has lost interest in the streaming venture because the cable company will face a permanently-reduced say in the venture after Disney completes its acquisition of 21st Century Fox, which controls 30% of Hulu. After the dust settles, Hulu will be 60% owned by Disney, 30% by Comcast and the remaining 10% held by AT&T, as part of its merger with Time Warner (Entertainment).

Originally formed in 2007 as an almost equal partnership between Disney, Comcast, and Fox, Hulu provides a controlled streaming platform for ABC, NBC, and FOX shows. Originally offering free, ad-supported access to recently aired network programs, Hulu has since grown dramatically under a subscription model, deepening its catalog of TV shows and movies and launching original content. In the last year, it launched its own cable-TV replacement service, offering streaming live television. Hulu is estimated to have 20 million paid streaming subscribers and an additional 1 million are signed up for Hulu with Live TV.

If Disney takes control of Hulu, CEO Bob Iger claims it will operate independently of Disney’s own, forthcoming subscription streaming service, set to debut in 2019. Iger said Disney may offer bundled discounts if customers subscribe to both Hulu and Disney’s own streaming service.

N.Y. PSC’s Diane Burman Objects to Special Session Voting Charter/Spectrum Out of New York

Phillip Dampier September 12, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't, Video No Comments

Burman

New York State Public Service Commissioner Diane Burman today voted against motions to give Charter Communications more time to develop its six month exit plan to leave New York and a motion to get more time to file a rehearing request about Charter’s alleged violations of merger conditions governing its behavior in the state.

Burman’s opposition was rooted in her irritation over PSC Chairman John Rhodes’ decision to hold an unscheduled special session of the Commission on July 27 (which Burman did not attend because of a scheduled family vacation) where the three remaining commissioners all voted to cancel approval of the Merger Order allowing Charter Communications to acquire Time Warner Cable in New York State.

“I believe it was wrong to have that special session and I don’t believe that the rationale for it is the right one,” Burman told her fellow commissioners this morning at a regularly scheduled Commission Session. “I think it is a slippery slope that there was a special session without me present and that is concerning.”

Burman argued the Commission’s recent approval of time extensions in the Charter case could set a precedent that could take the regulatory agency down a road where companies like Charter and other utilities could delay proceedings by having informal private talks with Commission staff. As a result, Charter has effectively stopped the Commission’s clock on pre-determined deadlines like a 30-day limit to file a petition asking the Commission for a rehearing.

“The message that I fear we are sending is if there is an order that someone disagrees with and they are going to file a petition for rehearing […] if they are engaged in ‘productive’ dialogue, whatever that term may be, between the staff, we can wait for the petition for rehearing to be filed past the 30 days,” Burman argued. “For me, the impactful piece of it is that by saying ‘don’t file now’ we are blocking the [regulatory and public notice] process and the opportunity to start that clock so that people have the opportunity to comment on what we may be doing, which may be helpful.”

Because the Commission has approved delays allowing Charter company officials and the Commission to continue privately discussing matters, none of those conversations are on the public record and no groups, including Stop the Cap!, can scrutinize the discussions and file comments about those conversations, Commission decisions that may result from those talks, or suggest alternative corrective measures to consider.

The PSC’s counsel this morning admitted the Commission and Charter were engaged in active settlement discussions, but it isn’t known if those talks relate to overturning the Commission’s decision to banish Charter from the state or are about more procedural matters such as how Charter plans to hand over cable service to another entity.

“I think there are lessons to be learned from having the special session without me there and I do think that going forward, we need to be more cognizant of taking into consideration what the perception is by not having the full Commission body, minus one because there is a vacancy, [vote together on matters of great consequence like this] regardless of whether counsel believes there is an appropriate quorum or not,” Burman added.

The final vote on both measures extending deadlines in Charter’s favor was 3-1. Both measures passed.

N.Y. PSC Commissioner Diane Burman opposed the extension of the deadline for Charter Communications to file its plans to leave New York State and to request a rehearing of a July decision revoking their merger with Time Warner Cable in New York. (29:26)

Charter, New York Officials in “Productive Dialogue” to Resolve Disputes

An attorney for Charter Communications revealed that company officials and New York telecom regulators were engaged in a “productive dialogue” over how to resolve the state’s dispute with the cable operator.

In written requests to extend the deadlines for a rehearing of the decision to revoke Charter’s merger with Time Warner Cable and file an “exit plan” to leave New York State, Helmer revealed the two sides were engaged in substantial talks to resolve their differences.

“Good cause exists to further extend the deadlines [….],” wrote Maureen O. Helmer, counsel for Charter Communications. “Charter and the Department [of Public Service] have been involved over the past few weeks in productive dialogue regarding the July Orders as well as the related special proceeding initiated by the Commission in the Supreme Court.”

Helmer added that Charter has been “assembling additional information” about its criticized rural broadband expansion program for review by the Public Service Commission, which decided in late July to evict Charter/Spectrum from New York for consistently failing to meet its merger obligations with the state.

Charter’s lawyer suggests it is in the Commission’s best interest to accept additional delays in the deadlines to file a rehearing appeal of the July eviction order (requesting an extension until Oct. 10, 2018) and to file an orderly exit plan (requesting an extension until Nov. 8, 2018).

“A further extension would allow additional time for discussions between Charter and the Department before the initiation by Charter of additional Commission or court proceedings. Additional proceedings before the Commission and/or the courts would have the potential to divert the resources of both Charter and the Department from discussions regarding both orders, and could have the effect of making it more difficult to resolve the issues raised by the orders without litigation,” Helmer wrote.

There is an increasing likelihood the Public Service Commission’s July order effectively throwing Charter Communications out of New York State was actually a hardball, last-ditch negotiating tactic, potentially to extract additional conditions and more rigid compliance with the orders of the Public Service Commission.

Charter officials originally claimed the July eviction order was an example of election year politics by the governor and a striking union. New York Gov. Andrew Cuomo, who has repeatedly slammed Charter/Spectrum for its performance in New York, is running for re-election. The International Brotherhood of Electrical Workers (IBEW) also continues to strike Charter in the New York City area, attracting support from local politicians.

A Commission that is amenable to Charter’s request for a second delay in meeting its deadlines to file paperwork would send a clear signal the PSC is no longer intent on throwing the cable operator out of the state.

The PSC’s July order rescinding the approval of Charter’s acquisition of Time Warner Cable was based ironically, in part, on Charter’s frequent failure to meet the state’s deadlines.

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