The Federal Communications Commission’s Thursday plan to let cable customers watch TV over free apps instead of set-top boxes “exist[s] within a fantasy world” according to one FCC commissioner, who said a provision to grant the FCC copyright oversight exceeds its authority.

“I will review this proposal carefully over the coming days and weeks, but at the outset it appears to exist within a fantasy world of
unlimited commission authority,” FCC Commissioner Michael O’Rielly, one of the commission’s two Republicans, said after the plan dropped. “The commission is and must remain in the business of licensing spectrum and infrastructure, not content.”

The plan detailed to reporters by senior FCC officials Thursday abandons Chairman Tom Wheeler’s initial pitch to make pay-TV providers like Comcast open up their video streams to third-party devices, and orders providers instead to build free apps subscribers can download on devices like a Roku, Apple TV, smartphone or tablet.

Wheeler’s concession came after cable providers, content programmers, lawmakers, fellow commissioners and the U.S. Copyright Office expressed concern the original plan would make content vulnerable to piracy with DVR functions and manipulation by potential third-party device makers like Google, who could alter channel placement and advertising by building their search functions.

The apps outlined by the FCC will let pay-TV providers control the flow of content from end-to-end and leave channel placement, advertising and licensing deals with programmers intact.

While the app-based approach was the solution offered by the industry in response to Wheeler’s original plan, the FCC tacked on a provision to establish a body within the FCC to review licensing deals between pay-TV providers and third party devices to “serve as a backstop to ensure that nothing in the standard license will harm the marketplace for competitive devices,” according to agency documents published Thursday.

Though FCC officials said the licensing authority the plan seeks to establish is very limited in scope, industry and policy groups opposed to the provision aren’t convinced.

“According to several public sources, the commission will play a much more significant role in the licensing process than simply the ‘backstop’ as it was described today,” the National Cable & Telecommunications Association (NCTA), which counts Comcast among its members, said in a statement. “The work of this licensing body would be subject to intrusive FCC oversight, creating a bureaucratic morass and improperly involving the FCC in private licensing arrangements in a way that will slow the deployment of video apps, ignore copyright protections and infringe on consumer privacy.”

NCTA drafted the app proposal the FCC drew from for its final plan. The trade group threatened to sue the FCC earlier this year if the agency made the technical aspects of Wheeler’s initial proposal law.

“It’s sad, but not surprising, that even Wheeler’s idea of compromise involves declaring himself ‘King of Copyright,’” said Evan Swarztrauber, communications director at the center-right D.C.-based think tank TechFreedom.

South Dakota Republican and Senate Commerce Committee Chairman John Thune, who chairs the committee that oversees the FCC, said the agency legally cannot “police copyright as Chairman Wheeler has proposed.” The plan was praised by Democrats including Sens. Ed Markey of Massachusetts and Richard Blumenthal of Connecticut, who together conducted the survey cited by the FCC that found the average U.S. household pays $231 annually in set-top box rental fees, bringing in almost $20 billion for the industry every year.

John Bergmayer, senior counsel at digital consumer advocacy group Public Knowledge, said in a statement the updated plan “addresses the legitimate concerns raised by these parties while preserving the benefits to the public, and fulfilling the congressional directive that requires the FCC to ensure that viewers do not need to rent set-top boxes from their providers.”

Public Knowledge, which previously criticized the Copyright Office’s critique of the rules, published a study the same day alleging the office’s objectivity has been compromised by “regulatory capture,” a result of hiring former entertainment industry employees who champion policies that benefit copyright holders over consumers.

“The report, however, doesn’t necessarily offer a full profile of these employees,” Politico noted in a Friday newsletter, “highlighting examples of their connections to particular industries, but making little mention of their work in other fields like finance or public service.”

Swarztrauber pointed out on Twitter Friday that Public Knowledge has gone through its share of revolving doors at the FCC, where Gigi Sohn — the organization’s former president and CEO of more than a decade — joined Wheeler’s staff as a counselor in 2013 ahead of its landmark net neutrality rulemaking two years later..

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