FCC Moves To Give Internet Video Startups The Same Protections As Cable Companies

Legal Issues

from the actually-leveling-the-playing-field dept

While the FCC’s decision to raise the base broadband definition to 25 Mbps, its ruling on municipal broadband and the agency’s new net neutrality rules have seen the lion’s share of media attention, there’s another potentially important FCC plan underway that has largely managed to fly under the radar. The FCC has recently been fielding comments on whether the agency should reclassify linear over-the-top (OTT) Internet video providers as multi-channel video programming distributors (MVPDs), giving these companies FCC-enforced access to vertically integrated programming. The full order can be found here (pdf).

The idea is that by giving Internet video providers formal protections and the right to negotiate content deals like cable companies, we’ll see a surge in Internet video service competition and a reduction in the logjam surrounding content licensing. Note that this would only really impact subscription-based, prescheduled content (live TV), and as a result wouldn’t really apply to on-demand catalogs like Netflix or YouTube. Not too surprisingly, the cable industry, still sore from the FCC’s Title II ruling and wary of new competitors, doesn’t think modernizing cable regulations to include Internet video is a great idea:

“[H]aving recently adopted what was once understood to be the ‘nuclear option’ of Title II regulation of broadband Internet access service to address a hypothetical threat to the openness of the Internet,” NCTA told the commission, “the Commission in this proceeding is proposing to apply an arsenal of regulations from the Cable Consumer Protection and Competition Act of 1992, purportedly to promote competition in the already competitive and well-functioning online video marketplace.”

Some of the new wave of Internet video giants similarly aren’t happy with the idea. Even though the rule change likely wouldn’t impact the company’s on-demand services specifically, an Amazon filing with the FCC argues it doesn’t really want the FCC’s help, either:

“In light of the excellent results achieved over the last several years, Amazon does not see why the commission would risk interfering with the OTT marketplace, which is still growing and changing, at this stage in its development,” the company said. Amazon argued that services offered by Amazon, Netflix and Apple represent a whole new ballgame, not another team in the MVPD league. It said that planned services from Dish and HBO are an effort to be players in this new space, a space it and others have been building for years.”

Amazon’s likely wary for two reasons: the company’s already seeing success and is justly nervous about regulatory good intentions, and the FCC’s proposal could actually go both ways — as in it might help cable operators looking to deploy an out-of-footprint streaming service (giving them mandated access to regional sports networks, for example), generating additional competition for Amazon. Meanwhile, broadcasters like ABC, CBS, Fox, and NBC support the measure, pleased that it would force OTT upstarts into gaining consent out of the gate for retransmitting their broadcasts (read: they think it will help thwart piracy or force the next Aereo to the negotiations table).

Consumer advocates like Public Knowledge quite like the rule change, suggesting it could ramp up competition and bring down prices “without subjecting most kinds of online video services to additional regulation.” The updating of the definition of an MPVD could provide Internet video companies with protections they didn’t have previously:

“That interpretation meant that none of the protections that MVPDs have against other MVPDs, and that programmers have against MVPDs, applied to online video. That means that programmers could be prevented through contracts or incentives from selling video to online services, and that programmers affiliated with cable companies could discriminate against online services. Actions like this can add up to starve online video services of content–which is why most of the most popular services offer video that is complementary to traditional MVPD service (back catalog programming, and original and user-generated content) instead of the same lineup of things like first-run shows and live sports.”

For an agency that spent decades paying empty lip service to competition, the FCC’s focus in this case really does appear to actually be on modernizing regulations to help foster competition and protect the smaller Internet video providers of tomorrow. Reclassifying ISPs as common carriers under Title II protects upstart companies from discrimination by broadband and cable companies, and reclassifying Internet video providers as cable companies would provide them additional protections and programming negotiations rights they don’t currently have.

In short, for the first time in fifteen years or so the FCC actually appears to be focusing on competition as a real policy goal. That’s in stark contrast to the expectations most people had (myself included) when we learned that a former wireless and cable industry lobbyist would be the latest to run the FCC.

Filed Under: fcc, multi-channel video programming, mvpd, online video, ott, over the top video