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November 13, 2008 | Posted By David Oxenford FCC Approves White Spaces Devices in TV Band - While Some Hail a Boon to Wireless Internet, Others Say Not So Fast
At the FCC meeting held on Election Day, the Commission approved the operation of "white spaces" devices in the TV spectrum. These would be mobile, unlicensed devices that would operate on TV channels that are not used in a particular location. Many Internet users have hailed the expansion of wireless Internet opportunities that they believe that this decision will bring. While the FCC promised that these devices would protect television operations and other current uses of the TV Band, many other groups have reacted to the decision far more skeptically. All in all, we have probably not heard the end of this debate.

The full text of the FCC Order has not yet been released but, from the Public Notice summarizing the action (which came late in the day, after a several hour delay in the start of the FCC meeting), the FCC appears to have made some concessions to the broadcasters who were objecting that the tests of the white spaces devices were not able to adequately sense the presence of television signals in a way that would protect those stations. So, to protect television signals, the FCC ordered that, in addition to sensing the existence of television signals, the white spaces devices would also have to have geo-location abilities, which would check the location of the device and compare it to a database of television stations and prevent the device from operating on channels that the database shows to be occupied. Even with this capacity, organizations representing television stations do not believe that this compromise is sufficient to protect those stations.

Broadcasters are particularly concerned with the degree of protection that is to be provided by these devices. Press reports<a href="http://www.rbr.com/tv-cable/11106.html"> quote MSTV (an association of television broadcasters) President David Donovan as being particularly concerned with interference that would be caused to television stations operating on channels adjacent to the channel on which the white spaces device would operate, and also expressed concerns about interference to cable boxes and to wireless microphones used by television newsgathering. The NAB criticized the failure of the Commission to heed Congressional and industry requests to allow comment on the FCC's most recent engineering study on the interference potential of these devices, which was released only a month before the FCC meeting. Of even more concern to broadcasters was their allegation that the proponents of the white spaces devices ultimate goal was to capture the entire television spectrum for unlicensed wireless devices, relegating TV to being provided by cable or similar subscription delivery systems. These fears were based on statements made at a conference sponsored by Google and the New America Foundation, organizations backing the white spaces proposals.

The New America Foundation, on the other hand, claims
that broadcasters claims of interference are overstated and incorrect - and are just part of a pattern of the industry trying to block every new technology that could be competitive. The FCC Commissioners' statements released at the same time as the Public Notice (Martin, Copps, Adelstein, McDowell, and Tate) also hail the promise of the new technology as a new broadband competitor while claiming that the protections that have been built into the rules will protect broadcasters.

Even some commentators associated with the broadcast industry have suggested that broadcasters prepare for the coming of this new wireless technology. Mark Ramsey, in his Hear 2.0 blog, urges radio broadcasters to prepare for the coming competition from "wi-fi on steroids" that would be available on these channels. Jennifer Lane, in her audio4cast blog, while not specifically reacting to this decision but instead to the general availability of wireless Internet options, suggests that radio broadcasters embrace the Internet, introduce their staffs to Internet radio, or otherwise they will be left behind by new digital competition.

With all the controversy from broadcasters and others concerned about interference and the processes that the Commission followed, the controversy over this decision probably has not ended. With all of the promises made for the uses of these devices, the supporters of white spaces are also likely to push to implement this ruling as soon as possible. This may well be one of those issues that the new FCC will have to deal with yet again in the New Year.

Thus, to preserve the promise of Internet radio, that it will allow the flowering of diverse music sources that will play the great diversity of music that exists in this country, a royalty arrangement that permits such independent services to operate and make a profit (as this transaction demonstrates that even the largest Internet companies will not operate Internet radio stations without a profit) must be adopted. Let's hope that, before the February 15 deadline of the Webcasters Settlement Act, such a deal will be adopted and the promise of the statutory royalty preserved.

Webcaster Settlement Act - What Does It Mean?

Both the House and the Senate have now approved the Webcaster Settlement Act of 2008, which will become law when it is signed by the President. Just what does this bill do? It does not announce a settlement of the contentious Internet Radio royalty dispute, about which we have extensively written here. It does not change the standard for judging Internet radio royalties, as had been proposed in the Internet Radio Equality Act, introduced last year and now seemingly dead in the waning days of this Congress, and in the Perform Act, about which we wrote here (the IREA and the Perform Act proposed different standards – the first more favorable to webcasters and the second more favorable to SoundExchange). These issues will seemingly be left to be disputed in a future Congress. Instead, the Webcaster Settlement Act seems to only adopt a simplified process for the approval of settlements that may be reached by the parties on or before February 15, 2009 – a settlement process that had been previously used in the Small Webcaster Settlement Act (the language of which this bill amends).

What is the significance of these new settlement processes? Under current law, any settlement between any group of webcasters and SoundExchange could only be binding on the entire universe of sound recording copyright holders if that settlement was approved by the Copyright Royalty Board. If an agreement is not binding on all copyright holders, then the reason for the statutory royalty - being able to pay one entity and get access to all the music in the world - would not be met. The current procedures for approving settlements seem to contemplate such settlements only before a decision on royalties is reached by the CRB. While some have speculated that the Court of Appeals that is currently considering the CRB appeal could remand the case to the CRB to effectuate a settlement and force the CRB to address it, that is by no means certain. For instance, the large webcasters, through their organization DiMA, reached a settlement with SoundExchange to cap minimum fees at $50,000 per webcaster. In their briefs filed with the Court of Appeals, both DiMA and SoundExchange have asked the Court to remand that aspect of the case to the CRB for adoption – yet that request has been opposed by the Department of Justice acting on behalf of the CRB. Thus, voluntary settlements may not be easy to obtain.
In 2002, faced with a similar issue when the RIAA and a group of small webcasters with which I worked tried to reach a deal, Congress stepped in and passed the Small Webcaster Settlement Act. SWSA allowed a settlement to bypass what was then the Copyright Arbitration Royalty Panel (the "CARP") and go into effect simply upon submission of the settlement to the Library of Congress by a set deadline, and the Copyright Office publishing it in the Federal Register. The Webcasting Settlement Act adopts that same system. If any group reaches a settlement with SoundExchange by February 15, 2009, they need only submit it to the CRB, which will then publish it in the Federal Register, and it will become effective and binding on all copyright holders as part of the statutory royalty. Unlike pre-hearing settlements, no notice and public comment is necessary on this settlement.

The bill allows for settlements to be entered into for an 11 year period, starting with the end of 2005 when the last set of rates expired. This would allow the settlement to displace the CRB decision from last year, and eliminate the need for a CRB proceeding for the next 5 years (the current CRB decision is to run through the end of 2010).

But such a settlement must be reached by February 15 ( the date was December 15 in the original draft of the bill, but it seems to have been changed in later versions). Why wouldn't the period be unlimited? Already, there was some unease with the adoption of this bill by broadcasters - as they have argued that they have not been involved in any settlement discussions with SoundExchange in a long period of time. While that seems to have dissipated, perhaps others would object to an unlimited ability of copyright holders and webcasters to reach a deal without any opportunity to comment on a deal. Yet why not? If a group of webcasters and SoundExchange want to enter into a deal that would be available to any similarly situated webcaster, why do you need notice and comment? If other webcasters don't like the deal, they can call for a CRB proceeding at the next opportunity to determine a rate for that objecting group.

In any event, the Webcaster Settlement Act makes it easy for settlements to go into effect - now we need to see if the hard part - actually entering into those settlements - will occur.