Could a change in the FCC treatment of Internet delivered video services be in the works – and how would that affect services like Aereo? There were a number of published articles last week that suggested that the FCC was considering extending the definition of a Multichannel video programming distributor (MVPD) to over-the-top video providers or, as they are apparently being referred to, as Online Video Distributors (OVD) who provide linear programming like a cable or satellite company (as opposed to an on-demand provider like NetFlix). While Chairman Wheeler at a press conference following last week’s open FCC meeting reportedly stated that the issue was “kicking around” implying that no decisions had been made, the FCC did announce that it was making a long-outstanding proceeding to look at this issue into a “permit but disclose” proceeding, meaning that parties can lobby the FCC on the issue as long as they file statements for the record disclosing the substance of their conversations with decision-makers. What does all this mean?
If the Commission were to consider OVDs to be MVPDs, they would presumably be covered by all of the rules that apply to cable and satellite – including provisions that allow equal access to cable network programming in which the cable companies have a financial interest, and would also be subject to the must carry-retransmission consent regime that is applicable to other MVPDs, requiring MVPDs to negotiate with (and in many cases pay) TV stations to carry their programming. The open proceeding to consider OVDs as MVPDs was started by a company called Sky Angel that focused on family-friendly programming. The service initially delivered its programming by satellite, but migrated it to the Internet, at which time they wanted access to cable programming including Animal Planet. When access to that programming was denied, they complained to the FCC. The FCC staff initially denied the complaint, determining that MVPDs had to be “facility based,” meaning that they had to own the actual facilities that delivered the programming to the consumer. The full Commission over two years ago asked for public comment on whether this decision was correct – we wrote about that request for comment here and here – and the proceeding has essentially sat at the FCC ever since, until it began to get some renewed interest in connection with the Aereo case.
There was speculation that the FCC might somehow get involved in the Aereo case by reviving this docket, though where that speculation originated was not clear, but the issue did come up from time to time (see our post here that mentions that speculation). But once Aereo lost its bid in the Supreme Court to carry TV signals without payment, the issue of whether an Internet delivered video service could be considered a cable system which could rely on the statutory license to rebroadcast television stations was Aereo’s fall-back position, about which we wrote here. As the extension of the STELA, which allows satellite television systems to retransmit television stations, moved through Congress, these issues were again revived in discussions of the Senate Commerce Committee, one of the 4 committees with jurisdiction over the extension.
Somewhere in all of these discussions it appears that the FCC finally decided to take another look at the issue, prompting the recent speculation and the permit-but-disclose status to engender more discussion at the FCC. Of course, getting MVPD status would not necessarily help Aereo, as the must carry/ retransmission consent rules would require that it pay television stations for the carriage of their programming, exactly what it was initially trying to avoid. But it could give birth to a new type of video programmer – though there are many issues that would have to be decided, not the least of which is how securely these systems can insure that the programming that they carry is available only in specified geographic zones, one of the controversial issues that faced the satellite carriers when they first began to retransmit over-the-air television programming. This has also been raised in the past every time some Internet company tried to argue that it was a cable system that could retransmit TV programming.
But technology has progressed, supporters of the change are sure to argue, and perhaps geo-location services offer some solutions to these issues. We will have to see as record develops before the FCC. But, with all this talk, it appears that there may be some action. What that action will be, and when it will come, is unknown at this point –but keep watching as such a change could further change the television industry.