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Republican FCC commissioner urges DOJ to update merger review standards

Top federal regulators descended on a policy summit in Washington, D.C., on March 20 to talk to small and midsize communications about the government's approaches to merger reviews, mid-band spectrum and prospective legislation.

Merger reviews

Michael O'Rielly, a commissioner at the U.S. Federal Communications Commission who has long criticized both his own agency and the U.S. Department of Justice for defining the media and communications marketplace too narrowly, said he continues to have concerns about the Justice Department's merger review process.

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FCC Commissioner Michael O'Rielly
Source: FCC

"I don't agree with their standards," O'Rielly told reporters at the summit. "How they're approaching the media marketplace is problematic and therefore they should update their standards."

Not one to mince words, the Republican FCC commissioner said he thinks the DOJ's rules "stink."

O'Rielly has previously complained that the DOJ continues to review media and communications mergers the same way it did 60 years ago. In a June 2018 speech, for instance, he said the FCC and DOJ were both "stuck in administrative molasses, seeking to apply sectoral market analysis, preserve questionable bright-line tests, and continue the imposition of rigid restrictions as part of transactional reviews the same way now as in 2008, 1988, or 1958."

When asked about O'Rielly's previous comments, Makan Delrahim, assistant attorney general for the antitrust division at the DOJ, defended the agency's approach.

"We have two separate statutory mandates," Delrahim said at the summit. "They have more specific responsibilities and guidelines from the statute and their regulations."

The pending Sprint Corp.-T-Mobile US Inc. merger is among the deals awaiting approval from the two agencies.

Mid-band spectrum reallocation

Turning to the 3.7 GHz to 4.2 GHz band, which is known as the C-band, Bob Gessner, who serves as president of MCTV, a midsize cable operator, told reporters that he's concerned about the potential impact spectrum reallocation could have on some broadcasters.

The FCC is actively seeking ways to free up spectrum and expand flexible use in the band for 5G services, which is currently allocated in the U.S. for either fixed-satellite service, or space-to-Earth transmissions.

"We're very concerned what will happen to the distribution of television programming throughout the United States if satellite companies are really able to reallocate that spectrum to 5G and other providers and enforce a compression of the bandwidth that's being used," he said. "If it's squeezed too much, we have significant issues in terms of picture qualities to our consumers, if we're forced off to ... terrestrial fiber delivery, then there's a cost issue that we have to bear."

Gessner compared the potential impact of spectrum reallocation in the C-band to the current 39-month process of repacking broadcast spectrum following the 600 MHz incentive auction.

"They [the FCC] spent a lot of time and a lot of money and put in place protections and systems to make sure that broadcast stations were well protected and well reimbursed for the extra expenses that they incurred," he said. "I don't think we've seen the same amount of attention to this."

Aware of some of these concerns, O'Rielly sought to calm cable operators at the March 20 summit. "If you don't get greedy or seek unfair enrichment in the reallocation process, your concerns will have to be fully addressed," he said.

STELA Reauthorization

A law allowing satellite TV providers to import distant broadcast networks also garnered some attention at the summit. The law, known as the Satellite Television Extension and Localism Act, or STELA, expires at the end of 2019, pending reauthorization.

Rep. Steve Scalise, R-La., who introduced a bill in the previous Congress that he says would have eliminated outdated federal regulations to increase competition in the video marketplace, said in a video interview at the conference that while it is important to pass legislation reauthorizing STELA, he thinks Congress should look at modernizing all video laws.

"You can't just look at satellite in a silo, because some get content through fiber, cable, over the internet — laws shouldn't be completely different for each one," he said.

Scalise's bill did not pass the House.

Mike Chappell, director of the American Television Alliance, an advocacy group that focuses on retransmission content and TV blackouts, predicted Congress will pass a STELA reauthorization bill this year.

The summit was hosted by ACA - America's Communications Association, which represents over 700 small and midsize independent companies that provide broadband, phone and video services. The group announced earlier in the day that it was changing its name from the American Cable Association in an effort to better reflect changing technology and consumer habits.

The organization's new day-to-day name will be ACA Connects.