FCC Issues Public Notice Concerning Closed Captioning Reporting Procedures

In a Public Notice released this week, the FCC’s Consumer and Governmental Affairs Bureau provided details regarding the procedures by which video programming distributors (including broadcasters and MVPDs) must report video programmers who refuse to provide widely available closed captioning quality certifications.

The procedures described in the Public Notice are an outgrowth of the closed captioning quality rules, which require distributors to exercise best efforts to obtain certifications from each programmer stating that the programmer either (a) complies with the FCC’s new caption quality standards, (b) has adopted and follows the Video Programmer Best Practices set forth in the FCC’s rules, or (c) is exempt from the closed captioning rules (with reference to the specific exemption relied upon).  The rules permit distributors to meet their best efforts obligations by locating such certifications on programmers’ websites or other widely available locations.

If a distributor is unable to locate a programmer’s certification on the programmer’s website or other widely available location, the distributor must inform the programmer in writing that it must make its certification widely available within 30 days after receiving the written request.  If the programmer does not comply, the distributor is obligated to report the programmer to the FCC, which will be building a list of non-certifying programmers.

The Public Notice describes the procedures that distributors must follow to report non-certifying video programmers pursuant to these rules.  Importantly, the Public Notice specifies that such reports must be submitted either (a) within 40 days after the distributor provides written notice to the programmer or (b) by June 4, 2015, whichever is later.  The Public Notice also clarifies that it is the video programmer—and not, for example, the programmer’s captioning vendor—that must provide the required certification.

Less Than One Month Until May 29, 2015 Pre-Auction Licensing Deadline

The FCC Media Bureau’s designated May 29, 2015 “Pre-Auction Licensing Deadline” is rapidly approaching.  Full power and Class A facilities must be licensed by this deadline in order to be eligible for protection in the repacking process that will be part of the television incentive auction. For these purposes, facilities subject to a pending application for a license to cover the pertinent construction permit will be deemed to be “licensed.”

While Class A licensees may wait until the September 1, 2015 low power digital transition deadline to complete construction and license their digital facilities, those that do not have their digital facilities licensed by May 29, 2015 will be afforded protection in the repacking process based only on the coverage area and population served by their analog facilities.  (Class A stations that may be unable to complete construction of their digital facilities by September 1 must seek an extension of the digital construction deadline by tomorrow, Friday, May 1.)

Ad Blocking Declared Legal: German Court Dismisses Discrimination Claims Brought by Publishers, but AdBlock Plus Maker Eyeo is Not Home Free Yet

The Regional Court in Hamburg rejected complaints by newspapers Zeit Online and Handelsblatt seeking to have Eyeo GmbH prohibited from selling its AdBlock Plus software. The ruling establishes the important principle that ad-blocking is legal, however there are other cases pending against AdBlock Plus in Germany that suggest that there may be more to come on this issue.

The publishers sought injunctive relief, arguing that AdBlock Plus illegally interfered with their ad-based online business models. AdBlock Plus allows users to block ads by tracking software and malware using a browser plugin which permits some “acceptable ads” to pass through the software’s filter mechanism (the so-called “white-list”). This practice was criticized as being discriminatory by media firms, as Eyeo GmbH gets paid by certain companies to put their ads on the whitelist (i.e. Google, Microsoft and Amazon.com). Users can modify the filter to block all ads.

The Court dismissed the action. The Court concluded that AdBlock Plus does not amount to an anti-competitive restriction of online offers financed through advertising. However, the full reasoning of the Court has not been published yet.

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Dutch Competition Authority Updates Guidance on Distribution Agreements

On 20 April 2015 the Dutch Authority for Consumers and Markets (“ACM”) published new guidance regarding its enforcement priorities in relation to distribution agreements, noting that its enforcement efforts will be focused on agreements having the most significant impact on consumer welfare.  The 28-page document explains that before opening an investigation, the ACM will first conduct an “initial substantive investigation”, seeking to pre-assess the impact on consumers and the economic effects of any agreement.  The ACM will look at the market power of the companies involved, the scope of the agreements and whether retailers are abusing their buying power.

Although it is focused on vertical restraints, the guidance also provides valuable insight into the ACM’s enforcement priorities in the online sector more broadly.  One of the case studies discussed in the guidance describes a scenario in which a bicycle distributor puts pressure on his supplier to cut off an online distributor (who was undercutting other distributors’ prices).  Illustrating the steps of the “initial substantive investigation”, the ACM indicated that it could consider such a case to be a priority if the bicycle manufacturer holds a significant position on the bicycle market and the exclusion of one online distributor leads to a non-minor restriction on online retail.

The ACM also outlines its position regarding Most Favoured Nation Clauses (MFNs) in the context of sales through online platforms, explaining that MFNs are more likely to hinder new entry by platforms, lead to increased prices for sales on platforms, and reduce efficiencies.  The ACM recommends a deeper investigation of MFNs.

The Dutch guidance comes hot on the heels of the Slovak guidance on vertical agreements issued last week and statements by the Head of the Belgium Competition Authority and the Director-General for Competition of the European Commission confirming that vertical restraints (including MFNs) are “high on the agenda” of EU competition enforcers.

FCC Releases NPRM Regarding STELAR’s Market Modification Provisions

The Federal Communications Commission (FCC) has issued a Notice of Proposed Rulemaking (NPRM) in which it proposes satellite television “market modification” rules to implement Section 102 of the Satellite Television Extension and Localism Act Reauthorization Act of 2014 (STELAR).  STELAR amends the Communications Act and the Copyright Act to give the FCC authority to modify a commercial television broadcast station’s local television market for purposes of satellite carriage rights.  The FCC previously had such authority to modify markets only in the cable carriage context.  The FCC also proposes to change the factors relevant to the market modification process.  Below, we list some of the tentative conclusions and interpretations on which the FCC seeks comment.

The main effect of a market modification is to expand or contract the areas in which a station may elect mandatory carriage under the must-carry rules.  To the extent that a station’s network affiliation or other agreements authorize a station to grant retransmission consent only in the station’s Nielsen DMA, a market modification petition granted by the FCC would not alter the boundaries of that DMA.   However, for stations that have elected retransmission consent, a market modification may have implications with respect to the areas in which such stations’ signals may be carried as “local” signals under the copyright laws.

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FCO sends statement of objections to Booking.com

On 2 April 2015, the German Competition Authority (FCO) sent a statement of objections (SO) to Booking.com Deutschland GmbH in relation to its use of “best price” clauses in contracts with hotels in Germany.  The FCO takes the view that, following the decision of the Düsseldorf Higher Regional Court confirming the FCO’s decision in proceedings against HRS, Booking.com should cease to use “best price clauses” (i.e., clauses that require hotels to offer hotel booking platforms their best online conditions regarding prices, room capacity and booking and cancellation).  The FCO takes the view that such clauses restrict competition between hotel booking platforms, making entry by new platforms more difficult.

The FCO has said that it intends to prohibit Booking.com’s “best price” clauses to establish homogeneous competitive conditions between Booking.com and HSR.  Booking.com is currently engaged in settlement discussions with competition authorities in France, Italy and Sweden (in parallel with the German proceedings).

The various hotel booking cases and the upcoming EU e-commerce sector inquiry reflect a growing focus on cross-channel competition online that warrants companies carefully considering restrictions that they impose.

EU Announces E-Commerce Sector Inquiry

Competition Commissioner Margrethe Vestager announced today during a speech at the Bundeskartellamt (German Competition Authority) International Conference on Competition her intention to launch a sector inquiry in the e-commerce sector. The sector inquiry will be formally proposed to the Commission in May. Preliminary findings on the sector inquiry could be ready in mid-2016. Commissioner Vestager stressed:

It is high time to remove remaining barriers to e-commerce, which is a vital part of a true Digital Single Market in Europe. The envisaged sector inquiry will help the Commission to understand and tackle barriers to e-commerce to the benefit of European citizens and business.

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FCC Plans Maximum Fine for Television Broadcast of Indecent Material

The Federal Communications Commission today announced its intent to fine a television station $325,000 — the maximum penalty available — for airing less than three seconds of a pornographic video on a small portion of the screen during an evening newscast.  The Notice of Apparent Liability is a reminder of the FCC’s continued vigorous enforcement of its obscenity and indecency rules.

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AT&T Challenges FTC Jurisdiction Over Non-Common Carrier Activities of Common Carriers

As we previously reported, in October 2014 the Federal Trade Commission (FTC) filed a complaint against AT&T in federal court alleging that AT&T’s “throttling” practices for mobile broadband subscribers who were “grandfathered” into the company’s unlimited mobile data plan were unfair and deceptive in violation of Section 5 of the FTC Act.  On Monday, AT&T filed a Motion to Dismiss this lawsuit on the basis that it is a common carrier subject to the Communications Act and thus exempt from Section 5 of the FTC Act.

The Motion to Dismiss requests that the court dismiss the complaint because the FTC lacks authority to bring suit against AT&T.  Section 5 of the FTC Act exempts from the Act’s coverage “common carriers subject to” the Communications Act.  The motion asserts that AT&T falls within this exception because “it offers its mobile voice plans to customers on an indiscriminate basis without modifying the content of the information that traverses its network” and thus is a common carrier under the Communications Act.  According to AT&T, that its mobile data services are not regulated as common-carrier services under the Communications Act is irrelevant.  AT&T’s motion argues that the FTC is wrong to assume that Section 5 does not prohibit the agency from regulating the non-common carrier activities of common carriers, because Section 5 defines the FTC’s jurisdiction in terms of specific entities (namely, “persons, partnerships, or corporations”) and thus the exemption turns on “the status of the regulated entity, not the particular activity in which it is engaged.”

In addition, AT&T asserts that the mobile data activities that the FTC is seeking to regulate are already regulated by the Federal Communications Commission (FCC).  According to the motion, the same practices at issue in the FTC’s complaint (i.e., reducing mobile data speeds after users reach certain monthly thresholds) were the subject of an October 2014 FCC Letter of Inquiry and the FCC is considering whether to issue a Notice of Apparent Liability alleging that AT&T’s public disclosures about these practices failed to satisfy transparency rules imposed by the FCC’s 2010 Open Internet Order.  Thus, according to AT&T, whether its throttling practices were “unfair” and whether its disclosures were “inadequate” are issues for the FCC to decide and the FTC’s complaint must be dismissed so as to avoid overlapping regulatory jurisdiction.

FCC Extends Deadline for Compliance with Television Closed Captioning Quality Rules

The FCC announced in a recent Public Notice that it will extend the deadline for compliance with its new television closed captioning quality rules until March 16, 2015.

Previously scheduled to go into effect on January 15, 2015, the quality rules establish standards for television closed captioning concerning (1) accuracy, (2) synchronicity, (3) completeness, and (4) placement.  The rules also require video programming distributors (e.g., broadcast stations and cable systems) to seek certain certifications from video programmers concerning closed captioning quality.

In addition to the quality rules, the extension applies to certain related rules that also will now take effect on March 16, 2015, including:

  • Recordkeeping requirements concerning distributors’ monitoring and maintenance of closed captioning equipment and signals; and
  • Procedures concerning informal complaints in connection with the use of Electronic Newsroom Technique (ENT).  The extension does not affect eligible stations’ obligations to comply with the FCC’s ENT Best Practices, which took effect on June 30, 2014.

The FCC is still considering whether to impose direct obligations for compliance with the quality rules on programmers as well as distributors.