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FCC Chairman Defends Regulatory Moves at NAB Confab

Television IndustryMedia IndustryFederal Communications CommissionNet NeutralityAuction ServiceTime Warner Cable Inc.U.S. Congress

LAS VEGAS -- FCC chairman Tom Wheeler told broadcasters on Tuesday that they can move from "being the disrupted, to the disruptor," a call for them to pursue innovation even after many have grumbled that the agency is targeting them for regulations while favoring a broadband future.

Wheeler's speech came a day after Gordon Smith, the president of the National Assn. of Broadcasters, blasted the FCC for a "singular focus" on broadband, and said that the agency was imposing rules "as if the world is stuck in the 1970s."

But the tone during Wheeler's speech, and in a Q&A with Smith afterward, was much more about assuring broadcasters that they can be at the forefront of innovation. In fact, face-to-face with Wheeler, Smith was more conciliatory than he was on Monday, and made a "peace offering" by presenting him with a "Buckeye necklace," as Wheeler is an alum of Ohio State.

"You know what the definition of a Buckeye is?" Wheeler asked. "A hairless nut of no practical value."

Smith then quipped, "If the NAB had said that, it'd be a headline."

One of the rifts between the FCC and the broadcast lobby is over a recently passed rule that restricts stations from entertaining into joint sharing agreements to sell advertising time, so-called "sidecar deals" that Wheeler said were "end runs" around media ownership caps. Broadcasters complained that the rule will stifle station investment, and ignored the realities of competition from cable and satellite.

But Wheeler said that stations could seek a waiver if they could show that such arrangements "facilitate statutory values such as a diversity of voices and ownership they will have no problem clearing the FCC."

"When entanglements between separately owned stations serve as end runs around our local television rules, however, it is appropriate to push the stop button," he said.

He said that it was not as if the rule was "just dropped on everybody," as Wall Street analysts had been talking of such a possibility.

He defended the FCC's action, saying that "some broadcast lawyers took a really good concept and manipulated it to their ends."

Smith said that Wheeler called him for a meeting to have a "heart to heart talk" on tensions between the agency and broadcasters.

Among the topics discussed was Smith's proposal that the FCC conduct a National Broadcast Plan, which would lay out the future of broadcasting. Wheeler said that he takes the idea "very seriously," and if "Congress will give us the funds, we will carry it out."

Another issue discussed, and one that has had considerable talk at the convention this week, is the idea of moving to ATSC 3.0, a next generation broadcast standard using OFDM technology that will offer ultra high definition picture, interactivity and other innovations.

Stations transitioned to digital television over much of the last decade, and this would mean another upheaval.

Wheeler said that such a transition is "going to be a long and heavy lift," but "we should neither shrink from it, nor underestimate its magnitude."

A big part of Wheeler's message to stations was that they could take advantage of the changing media landscape and pursue over-the-top services delivered via broadband, drawing on their unique local content.

"Your content represents far more than the potential for retransmission fees," he said. "It can be the basis for a fixed and mobile-delivered cable-like service. You possess the two most important components of a successful digital strategy: compelling content, specifically, the most important content, local content, and the means to promote it. Even more, you can leverage those advantages at only incremental cost."

But he warned that the "window of opportunity won't stay open forever," noting Yahoo's plans to expand into local TV news, and reports that Verizon and AT&T are pursuing new lines of business based on broadcast LTE.

"They are all embracing something that looks startingly like your model," Wheeler said.

He said that because of the opportunity to move local content to broadband platforms, stations had an interest in seeing net neutrality rules to prevent an ISP from blocking of discriminating against certain types of content. The FCC is launching a process to create new rules after the D.C. Circuit struck down aspects of previous net neutrality regulations.

As he has before, he also said that stations have a "terrific financial opportunity" with the FCC's plans for an incentive auction, to be held next year, in which broadcasters can choose to give up their spectrum in exchange for sharing in the proceeds when it is sold to wireless firms.

He said that a recent test of channel-sharing in Los Angeles showed that could "maintain their existing business while taking home an auction check," presenting a "once-in-a-lifetime, virtually risk free opportunity to expand your business model."

At the start of his speech, Wheeler mentioned that as the former head of associations representing the cable wireless industry, "I get the skepticism" from broadcasters. On Monday, media mogul Haim Saban even dubbed the FCC the "friendly cable commission."

But Wheeler noted that he advocated for broadcast station, when, as a member of the transition team, he encouraged President-elect Obama in 2008 to delay the conversion to digital television, and when he invested in mobile DTV as a venture capitalist.

And he made mention to what he did two weeks ago when his daughter called him up to complain about her rising cable bill. She went "over-the-top," and he installed an antenna for her.

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