FCC’s proposed set-top box rules would violate US free trade agreements

This week, the International Center for Law & Economics (ICLE) submitted Reply Comments to the FCC in which we highlight a crucial but overlooked defect of Chairman Wheeler’s proposed set-top box rules: They would violate at least nine separate United States free trade agreements.

Multiple U.S. free trade agreements contain provisions that prohibit the government from permitting the unauthorized retransmission of copyrighted television shows over the Internet (e.g., Article 18.4(10)(b) of the Korea-U.S. Free Trade Agreement and Article 17.4(10)(b) of the U.S.-Australia Free Trade Agreement).

The proposed set-top box rules would permit precisely such unauthorized retransmissions. What’s more, as discussed in our initial Comments, compliance with the rules would require MVPDs to facilitate the resulting copyright infringements, making them secondarily liable under U.S. copyright law.

As Geoffrey Manne, ICLE Executive Director said, “The FCC is not free to violate treaties that bind the U.S. government. Chairman Wheeler’s proposed rules would require U.S. companies to facilitate the Internet retransmission of copyrighted content in violation of U.S. obligations under at least nine free trade agreements — to say nothing of U.S. copyright law.

“The proposed rules are aimed at enabling devices and apps to provide copyrighted TV shows in precisely the manner prohibited by a number of U.S. free trade agreements.” said Kristian Stout, ICLE Associate Director for Innovation Policy. “This could subject the United States to protracted international trade disputes, and, potentially, to the reimposition of tariffs or other trade barriers under the treaties.”

ICLE’s initial Comments explored the disconnect between the stated goal of set-top box competition and the proposed mechanism to implement it. We analysed the unintended results, the vast underestimation of the existing vibrant video marketplace, and the fatal inconsistencies in the logic used to justify the Chairman’s set-top box NPRM.