FCC Chair Proposes Access for Internet Video Providers

29 Oct 2014 | Author: | No comments yet »

Aereo Applauds FCC OTT Definitional Move.

WASHINGTON—Federal Communications Commission Chairman Tom Wheeler is proposing to update the agency’s rules to guarantee online video providers access to the most popular TV shows and channels.Internet TV providers are just starting to emerge, but they might soon get the jumpstart that they need in order to turn into real competitors for traditional cable TV.FCC chairman Tom Wheeler’s circulation of a proposal to define some over-the-top video providers as MVPDs with program access rights drew immediate responses from some interested stakeholders.

The Internet service streaming over-the-air TV broadcast programming to consumers over the Internet that the Supreme Court, last June, determined was infringing the networks’ copyrights? The US Federal Communications Commission is beginning to consider a rule change that would put internet TV providers on the same playing field as cable companies when it comes to regulation. Aereo, which sees the move as a possible path to a workable business plan for its own over-the-top programming service, was, not surprisingly, pleased by the development. “This is an important step in the right direction for consumers,” said Aereo CEO and founder Chet Kanojia. “Clarifying the definition of MVPD to encompass linear online video distributors will create a stronger, more competitive television landscape for consumers.” “By moving this Notice of Proposed Rulemaking (NPRM) forward, the FCC will provide much-needed regulatory clarity and a clear set of rules for linear video programming systems, which ultimately, will increase investment in the video programming market.” “The way people consume television is rapidly changing and our laws and regulations have not kept pace.

Wheeler’s proposal, which he is circulating to other FCC commissioners, calls for adopting a “technology neutral” definition of multichannel video programming distributor. Wheeler circulated on Tuesday a proposal in which FCC’s rules would treat so-called “over the top,” or Internet-based, video providers the same as cable and satellite companies, making it easier for them to carry shows produced by the cable and broadcast companies. 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.

The change wouldn’t help on-demand services like those from Netflix Inc., Amazon.com Inc. or Apple Inc., Jonathan Sallet, the FCC’s general counsel, said in a speech Oct. 17. “I’m asking my fellow commissioners to update video competition rules so our rules won’t act as a barrier to this kind of innovation,” he said. The FCC recognizes that when competition flourishes, consumers win.” The American Cable Association is still looking for action out of the FCC on program access rule reforms. The adoption of these rules — which still must go through a vote of adoption, a comment period, then another vote — would open a flood of competition in what has traditionally been a closed market.

So Aereo took the next logical step: the Copyright Act not only says that cable system re-transmissions are infringing, but it also, importantly, provides them with a compulsory statutory license, at a fixed rate, to do so, in sec. 111 of the Act. That would allow them to create online video services that could be a replacement for larger, more traditional pay-TV services like cable or satellite.

If approved, the changes to “multichannel video program distributors” rules could also be a major help for struggling video provider Aereo, which had to shut down its broadcast-TV service after several courts found it violated copyright laws. In a blog post, Wheeler referred to the change as a “technical adjustment” that would remove the technological considerations when determining whether a company is or is not an MVPD. So Aereo said, in effect: OK, if we’re a cable system, we can (like other cable systems) continue to re-transmit these signals to our customers (just like the cable companies do), so long as we pay the royalty.

Wheeler also noted that such a move is necessary as satellite companies like Dish prepare to launch online services, and Sony, Verizon and DirecTV mull over whether to offer their own. He compared it to the previous decision that granted satellite companies the ability to become MVPDs: “In 1992 Congress realized that the then-nascent satellite industry would have a hard time competing because much cable programming was owned by cable companies who frequently kept it from competitors.

Not so fast, the federal court in the Southern District of NY held the other day; Aereo, it held, may be a “cable system” for purposes of determining whether it is infringing, but it’s not a “cable system” for purposes of determining eligibility for the statutory license. Broadly, it would allow Internet TV startups to have the same rights as cable operators like Comcast* or Cablevision to negotiate with local TV station owners to carry network channels. The definition would apply only to services that offer pre-scheduled programming lineups, an FCC official said, meaning that it would not include on-demand video providers like Netflix. Today I am proposing to extend the same concept to the providers of linear, Internet-based services; to encourage new video alternatives by opening up access to content previously locked on cable channels. Perfectly timed to coincide with a presentation I’m about to give tomorrow at Cardozo Law School (New Yorkers take note) on “Our (Somewhat) Incomprehensible Copyright Act.”

Internet TV services might be able to “offer smaller or specialized packages of video programming, so consumers will be able to mix-and-match to suit their tastes,” Wheeler wrote. “And perhaps consumers will not be forced to pay for channels they never watch.” Wheeler’s proposal seeks to eliminate this difference between virtual and facilities-based MVPDs, making the term “technology neutral.” If the change makes it through the FCC, companies including Google, Amazon and Apple could become MVPDs.

Becoming and MVPD means gaining access to television content, including broadcast networks and cable channels owned by companies that also operate MVPDS (NBC-owned Comcast, for instance). This could render the cable television model of content creators and distributors obsolete. “Once you move in that direction, you begin to enable all new levels of competition that should be extremely beneficial to consumers.

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