CO Has Concerns with Set-Top NPRM, Say Blackburn, Rosenworcel

Blackburn met with the CO Monday “and they’ve got some concerns about this proposal,” she said during her questioning, inquiring of all commissioners whether the original proposal “effectively renders content worthless.” Wheeler and Commissioner Mignon Clyburn said that’s not the case, but Rosenworcel said she met with the Copyright Office, too, and heard much of what Blackburn did. More work is necessary, Rosenworcel acknowledged. Commissioners Ajit Pai and Mike O’Rielly are critics of the NPRM and pressed for another approach. The CO declines comment on any concerns, General Counsel Jacqueline Charlesworth told us.

Commerce Committee ranking member Frank Pallone, D-N.J., asked Wheeler for a commitment “that you will work with the Copyright Office” and copyright experts inside and out of the government. Wheeler said he would go beyond that and “we’ll work with the copyright holders as well,” citing the limited jurisdiction of the CO. Wheeler doesn’t anticipate another notice will go out in the proceeding since the first was broad. “You can’t say there wasn’t a record,” Wheeler said.

Blackburn pressed all commissioners on whether the initial NPRM is flawed. “I’ll make it easy -- yes,” Rosenworcel said. Wheeler and Clyburn were the only other commissioners not to assent. “Yes or no,” Clyburn told Blackburn. “You’re saying both?” Blackburn questioned, prompting a shrug from Clyburn. “We are keeping in mind all of the privacy, security and all of the other protocols as a baseline,” Clyburn later told Rep. Jerry McNerney, D-Calif. “But what we want is more options. … I think that’s the direction we’re headed.”

Several lawmakers from both parties said they welcomed the industry alternative known as "Ditch the Box." The idea “merits consideration,” said Rep. Mike Doyle, D-Pa. The alternative proposal “would protect content,” Blackburn said. “It appears that some progress is being made on the set-top box issue,” said Rep. Yvette Clarke, D-N.Y., citing the agency soliciting additional proposals from industry and urging Wheeler to commit to ensure that minority programming concerns from the GAO report she requested on the NPRM be integrated into the final rulemaking. Wheeler told her he would work with her. GOP Whip Steve Scalise, R-La., held up a set-top box at one point. Rep. Bobby Rush, D-Ill., referred to talking to “many in the cable industry” about aspects that make the set-top NPRM “impossible to comply with.”

“There are those who are suggesting the way in which they’re structuring their apps proposal actually requires a new gateway for every television,” Wheeler said of the Ditch the Box proposal. "That’s a second box. ... I’m encouraged that we’ll be able to get through it.” In another exchange, he said it “shows promise” but initially slammed it for a lack of detail: “One page is not a proposal, it’s a press release.”

The other dominant topic during the hearing involved possible levels of waste, fraud and abuse in the Lifeline program. Pallone released a staff report that questioned the allegations of $500 million of waste, fraud and abuse that House Republicans had mentioned and begun investigating. “Despite the seriousness of these allegations, Committee Democrats have not been included in -- nor were they informed of -- the Republican investigation,” Pallone’s report said. It judged the underlying premise of the allegations as baseless: “The evidence does not show $500 million of abuse of ‘IEH [independent economic household] Overrides,’” it said. “The evidence does confirm that a key assumption underlying this allegation -- that every IEH Worksheet resulted in a duplicate phone being fraudulently subsidized -- is wrong.” The report offered recommendations such as periodic FCC review of data for new trends and coordinated efforts “to ensure that the National Verifier implementation adequately addresses misuse of eligibility documentation as seen in the Total Call Mobile case.” Wheeler told Pallone the recommendations sound “very logical.”

Pai offered details of what he called his ongoing investigation into Lifeline. The Universal Service Administrative Co. “explained that the NLAD [National Lifeline Accountability Database] does not prevent wireless resellers from requesting and receiving federal subsidies for subscribers who are not enrolled in the NLAD,” he said in his written testimony. “A wireless reseller may seek federal funds for phantom subscribers -- subscribers who aren’t subject to federal safeguards at all -- and can get away with it unless they’re caught after the fact. And in a 16-state sample, these wireless resellers exploited that loophole 460,032 times, costing taxpayers almost $4.3 million.”

Communications Subcommittee Chairman Greg Walden, R-Ore., requested more details about that and said “something went off the rails” in an earlier bipartisan compromise undone at the commissioners' March 31 Lifeline modernization open meeting. Communications Subcommittee ranking member Anna Eshoo, D-Calif., told Pai to “be really careful” and pressed him on whether he was talking about actual waste, fraud and abuse or the potential for it. Pai never affirmatively told her he had any evidence of fraud. “I believe I’ve uncovered potential fraud,” Pai said.

Also under discussion were possible steps Congress could take on Next-Generation 911, a key point in the testimony of both Wheeler and Rosenworcel. Walden said there would be follow up on that and asked Wheeler about states using 911 fees for other purposes, whether they should be cut off. “It goes back to 20 years, it’s been happening,” Wheeler said, lamenting the practice on behalf of states and saying it could be called a “deceptive advertising.” Eshoo said she shares Walden’s concerns. Wheeler also mentioned the broadcast TV incentive auction and said the FCC will as expected (see 1607110052) “shortly be issuing a PN, a public notice, indicating who those bidders are.”