An FCC rule change could put internet TV on a level playing field with cable

29 Oct 2014 | Author: | No comments yet »

F.C.C. Proposal Would Allow á la Carte Internet Video Services.

WASHINGTON — Seeking to give online video a chance to compete against cable and satellite television providers, the chairman of the Federal Communications Commission proposed a measure on Tuesday that would give online companies equal access to cable and broadcast stations. As it prepared to face the Supreme Court, Aereo argued that its streaming television service was fundamentally different from cable TV, and therefore it shouldn’t have to pay broadcasters to transmit their content over the Internet.Online video services would be guaranteed access to the most popular television shows under new rules proposed by the head of the US communications watchdog which risk undermining the business models of cable companies and broadcasters. The court rejected that argument, and it looked like Aereo was going to be forced to shut down, so it made a 180-degree turn and started arguing that because it was a lot like a cable company, broadcasters couldn’t simply refuse to license their content to it.

Aereo, which halted its service after losing a Supreme Court decision in June, praised the action by FCC Chairman Tom Wheeler, calling it “an important step.” “Consumers have long complained about how their cable service forces them to buy channels they never watch,” Wheeler said in a blog post today. “The move of video onto the Internet can do something about that frustration.” The proposed change would help providers of online services with fixed channel lineups, like Aereo, which relayed TV station signals. Companies that offer on-demand video streaming – Netflix and Amazon, for example – would not be affected by the rules, which would apply only to companies that offer viewers a prescheduled lineup of programs. “I am asking the commission to start a rule-making proceeding in which we would modernize our interpretation of the term ‘multichannel video programming distributor’ so that it is technology-neutral,” Mr. The potential regulatory change concerns online subscription video services that offer scheduled programming similar to traditional pay-TV providers, and not online video services such as Netflix Inc that stream content on demand. The changes wouldn’t apply to companies like Netflix that carry on-demand content, only over the top providers who carry traditional, linear TV channels. Satellite provider DirecTV is another company that has indicated plans for an Internet video service and CBS Corp this month revealed a plan for an Internet streaming service that would include scheduled programming.

It could also threaten the “retransmission fees” that distributors pay broadcasters for the right to carry their signals, which SNL Kagan expects will grow from $4.9bn this year to $9.3bn by 2020. Wheeler is proposing to further expand the definition of what the FCC calls multichannel video programming distributors, or MVPDs, and thus extend the same protections to Internet TV players. The company, which launched two years ago, delivered over-the-air channels via online streaming to computers and tablets for about $8 a month and had brought the service to 11 cities.

A majority of the five F.C.C. commissioners will have to approve releasing a proposal for public comment; after a comment period, they would then have to vote again to adopt a formal rule. Last week, CBS said it would offer is local TV stations over the internet, just days after premium pay-TV network HBO announced it too would launch an online-only service next year.

Aereo CEO and founder Chet Kanojia issued a statement supporting Wheeler’s move. “The way people consume television is rapidly changing and our laws and regulations have not kept pace. By clarifying these rules, the FCC is taking a real and meaningful step forward for competition in the video market,” he said. “The FCC recognizes that when competition flourishes, consumers win.” Wheeler said he also hoped that the measure would spur greater competition among companies offering high-speed Internet service. “Those seeking to deploy new competitive broadband networks tell us that it’s hard to provide new high-speed Internet access without also being able to offer a competitive video package as well,” he said. The rule ensures that big content distributors like Comcast – which also owns a broadcaster in NBC – cannot keep their best TV shows for themselves. The vote by four FCC commissioners, two Democrats and two Republicans, would formally propose the idea and begin the process of seeking public comments.

Congress first mandated that cable companies give video competitors access to their programming in 1992 to encourage the then-nascent satellite industry. The rules would apply to anyone wanting to enter the OTT market, raising the prospect of Apple or Google launching their own internet TV services to rival the big cable groups. It would cost them a few dollars per channel just in licensing.” Robin Flynn, an analyst at SNL Kagan, says the main impact will be to keep pressure on the major players in the industry to offer customers what they want. If Mr Wheeler’s rules were adopted then “innovation will flourish and new video products and services will emerge, providing consumers with more choices in programming and pricing,” he said.

Even if Aereo’s specific formula doesn’t work, in other words, the industry is being dragged further toward something that resembles its broader vision.

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