TR Daily O’Rielly Says New Broadband Funding Could Spur Overbuilds
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Wednesday, March 20, 2019

O’Rielly Says New Broadband Funding Could Spur Overbuilds

FCC Commissioner Mike O’Rielly told smaller cable TV system operators and broadband providers today that their “good deed” of deploying broadband has not gone “unpunished,” because “you’ve been under assault by pointy-headed liberal advocacy groups hell-bent on driving your profit to zero” while facing the risk that “new federal money allocated by Congress to fund broadband deployment” could be used to fund competitors to overbuild their networks.

This lack of coordination by different agencies of the government “amounts to the left hand cutting off the fingers of the right,” Commissioner O’Rielly said in remarks at the ACA Summit in Washington.

Noting that retransmission consent is a topic of perennial interest to members of ACA (formerly the American Cable Association), Commissioner O’Rielly said that “there’s only so much the Commission can and should do on the issue,” given the limits on its statutory authorization in this area. He added that the issue needs “a complete overhaul” by Congress.

“We are now at the point where the OTT market is already maturing,” he said. “These radical changes should propel a fundamental recalibration of your relationship with broadcasters.”

Commissioner O’Rielly also said that the FCC “should look for” areas in which it can preempt local franchising authorities, such as its ongoing proceeding on whether “in-kind” payments such as support for PEG (public, educational, and governmental) access channels should be counted toward the 5% ceiling on franchise fees.

“Why should local franchise authorities oversee mergers, transfers, or even renewals with an eye to imposing new regulations? Why should they require [cable TV systems to use] certain accounting procedures? … What rationale can be found for continuing PEG channel mandates?” he asked.

With regard to the FCC’s consideration of allocation of mid-band spectrum, the Commissioner said he would “make the same commitment to you” as he made to local broadcasters last month: “If you don’t get greedy or seek unfair enrichment, your concerns will have to be fully addressed.”

Asked by ACA President and Chief Executive Officer Matthew Polka whether he is worried about the possible reversal of the FCC’s 2017 restoring Internet freedom (RIF) order, Commissioner O’Rielly said, “Any election and change in power can have a dramatic effect on policy. … I’m not advocating anyone take any decisions in an election, but that’s reality.”

Asked about remarks made by Assistant Attorney General Makan Delrahim earlier in the day about merger reviews (see separate story), Commissioner O’Rielly said, “I agree we have different statutes. We have different standards, too – and that’s the problem. His standards stink!”

Commissioner O’Rielly argued that the Justice Department’s Antitrust Division takes an inappropriately narrow view of media markets, “believing that FM only competes with FM, [and] AM only competes with AM.”

“We have an obligation as a government to modernize our rules,” he added. “The current media marketplace is much broader than that little universe.” He said that with many cable operators saying they’re getting out of the video distribution market, or “are only offering it as a loss leader, we need to look at the market again.” —Lynn Stanton, [email protected]

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