NAB Opting Out Of Open Net Fray – For Now

Broadcasters could be forced to start paying to get high-quality online programming streams to broadband Internet subscribers under a controversial FCC proposal that the agency is slated to put out for public comment on May 15.

But despite the pleas of watchdog group representatives for support in their efforts to force the agency to reconsider the proposal, the National Association of Broadcasters has remained on the sidelines, both to avoid upsetting NAB member Comcast — one of the nation’s largest broadband Internet service providers — and the broadcast industry’s deregulatory-minded GOP allies on Capitol Hill, broadcast industry sources say.

“NAB has looked at this issue for a number of years and up to this point has decided to remain neutral,” says NAB spokesman Dennis Wharton.

The FCC’s so-called open Internet proposal is on the table because a federal appeals court struck down the agency’s previous rules on the subject in January.

The FCC’s open Internet, aka net neutrality, rules were intended to prevent Comcast, Verizon and other giant ISPs from using their control over the nation’s broadband pipelines to discriminate against the content of independent companies.

But the federal appeals court in the case agreed with ISPs that the agency’s former rules exceeded agency authority.

In response, FCC Chairman Tom Wheeler has proposed a new set of Internet regulations intended to address the court’s legal concerns.

The new proposed regulations, which are slated to be addressed publicly by the FCC’s commissioners on May 15, would, like the previous regs, bar ISPs from blocking subscriber access to legal Internet content.

But the newly proposed regulations, unlike the former ones, also make clear that ISPs can charge content providers for higher-quality connections, as long as those are “commercially reasonable,” FCC officials have confirmed.

That means that broadcasters, who currently pay nothing to ISPs to make their streaming services available to broadband subscribers, may wind up having to pay ISPs for higher-quality connections.

“Anybody who delivers content over the Internet ought to be concerned about the direction this is going,” says one broadcast industry source, who asked not to be identified.

“You could be in the fast lane or you could be in the slow lane, and you have pay to be in the fast lane,” said another broadcast industry executive. “It would be worthwhile [for the NAB board] to have a discussion about it.”

Representatives of liberal watchdog groups told TVNewsCheck that broadcasters have a major stake in how the newly proposed rules come out because younger people in particular are increasingly getting their information and other programming online.

“Broadcasters should want to reach those users — particularly young users who are the future of the industry — without having to cut online deals with every cable or phone company, or having to pay the kind of fees Netflix and Apple can afford to pay to ensure a good online video experience,” says Marvin Ammori, a fellow with the New America Foundation.

The FCC’s current proposal also threatens to turn the broadcast industry’s current relationship with cable on its head, allowing cable operators who now pay broadcasters retransmission consent fees for broadcast programming to charge broadcasters for decent access to cable’s broadband customers online, according to Matt Wood, policy director of the watchdog Free Press.

“That’s the kind of leverage that any large broadband provider has who controls millions of peoples’ access to the Internet,” Wood says.

Andrew Schwartzman, a long-time attorney for watchdog groups, adds: “As video delivery moves to the Internet, they [broadcasters] have an interest in making sure that ISPs, including the cable companies they have dealt with for so long, cannot use their bottleneck power to extract revenue from speakers such as broadcasters.”

One well-placed broadcast industry attorney tells TVNewsCheck that he believes the FCC’s new net neutrality proposal is particularly “dangerous” for broadcasters and others who post content online, because Comcast will have 40% of the nation’s advanced broadband subscribers, and 30% of cable TV homes, if the giant company’s $45.2-billion pending acquisition of Time Warner Cable is approved.

This essentially means that any video service provider with national ambitions is going to have to cut a deal with Comcast to reach a critical national audience mass.

“They [Comcast] are going to be a gatekeeper you are going to have to go through, and they’re going to hold all the cards,” the broadcast attorney says.

Still, one broadcast attorney tells TVNewsCheck that NAB’s concern that it could alienate critical GOP support it needs for other issues if it weighs in on net neutrality is not a trivial one.

“This might be an issue where other people can carry the water,” the attorney said. “It’s more of a longer-term threat than an immediate threat, and we have a lot of more immediate threats we need to deal with. If I were sitting at the NAB, I would probably do the same thing (remain neutral).”

NAB has been sitting on the fence on the net neutrality, even though Wheeler invited broadcasters to support his open Internet initiative during the NAB Show in Las Vegas earlier this month.

During his speech at the show, Wheeler also urged broadcasters to expand efforts to repurpose news and local information programming into “over the top” Internet services.

“The open Internet rules should be seen as an Open Sesame for the expansion beyond your local license,” Wheeler said.

But one broadcast station group executive tells TVNewsCheck that the chairman’s new net neutrality proposal, by clearing the way for ISPs to charge broadcasters for higher quality broadband connections, blew away any business rationale for broadcasters to expand OTT services.

“Why would we do that if we’re just going to get throttled?” the broadcaster asks. “These proposed rules give us no incentive.”