FCC Proposes Treating Online Video Providers Akin to Cable

Tom Wheeler - P 2013
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On Tuesday, FCC chairman Tom Wheeler threw his support behind a rule change with the potential to transform the television industry — one that would give online video providers the same access to programming that cable and satellite operators currently enjoy.

Wheeler's blog post announcing a rulemaking proceeding to "modernize our interpretation of the term 'multichannel video programming distributor' (MVPD) so that it is technology-neutral," and cover over-the-top video providers (OTTs), has spurred excitement in some quarters that services like Aereo might soon be reborn, but some context and caution is in order.

The FCC has been kicking around something big for a few years now, ever since a "family-friendly" service called Sky Angel moved from satellite to the Internet, and got into a dispute with Discovery over access to programming. The FCC initially denied an emergency petition by Sky Angel in 2010 because it was "non-facilities-based," but later asked for public comment about the decision and how it interpreted the meaning of an "MVPD" and a "channel."

In 2012, just as Aereo was getting off the ground, most of the big entertainment companies (and Google, too) weighed in with a message of caution. Fox even suggested at the time that the FCC go to rulemaking.

"If the Commission wants to explore the definition of 'MVPD' and whether that term applies to new distribution platforms and technologies," Fox said in a filing, "it should initiate a rulemaking proceeding of general applicability so that interested parties will have advance guidance as to how the FCC intends to proceed and so that affected entities will have straightforward and unimpeded appeal rights in the event that an adverse decision threatens their businesses or the public interest."

Then, for nearly two years, nothing happened until Aereo lost at the U.S. Supreme Court and began looking at a fall-back position that it qualified for a compulsory license under Section 111 of the Copyright Act. The effort was boosted, in Aereo's mind, by the Supreme Court's likening of Aereo to a cable operator.

Wheeler gives Aereo a shout-out in his post about the future and signals how "new OTTs may offer smaller or specialized packages of video programming, so consumers will be able to mix-and-match to suit their tastes."

Importantly, though, Wheeler stops short of providing many details about the rule that he has in mind. It might help Aereo. It might not.

In 2012 filings by Fox, Disney and CBS, they all stress that even if the FCC takes an expansive view of what an MVPD is, that doesn't negate certain legal requirements.

As CBS puts it, "There is nothing in the definition of 'multichannel video programming distributor' in the Communications Act that compels an interpretation of that phrase that would defeat the clear intent of Congress that broadcasters be able to negotiate compensation for the retransmission of their signals."

As Disney posits, "Broadcasters must maintain the rights to control the retransmission of their signals over all distribution platforms, including the Internet, and to negotiate for compensation for distribution of such signals."

Aereo is carefully celebrating Wheeler's latest move. Chet Kanojia, chief executive at the company, calls it "an important step in the right direction for consumers."

Expect much push-back, however, in coming months from broadcasters who not only want to ensure proper compensation, but also geographical limitations on the transmission of programming. Such concepts as "syndication exclusivity" will be brought up, as will the Aereo judge's comment that technical safeguards ensuring localized retransmission "are easily overridden." And while the FCC can carry a big stick, especially as it weighs in on some mega media mergers, there will also be an implicit threat of lawsuit in the background. Or as Fox once stated, "Extending the definition of an MVPD to nontraditional distribution platforms, such as online distributors, therefore raises a host of regulatory and practical issues, including whether the FCC’s regulation of MVPDs can be extended to the Internet without an explicit Congressional directive to do so."

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner