FCC Officially Launches OVD Definition NPRM Broadcastin...

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1 FCC Officially Launches OVD Definition NPRM Broadcasting & Cable broadcastingcable.com ( by John Eggerton December 19, 2014 The FCC has launched its rulemaking to define some online video providers ( (OVD's) as MVPDS, at least with respect to access to cable and TV station programming. The item was voted two days ago, but not announced until Friday. It was unanimous, but with concurrences from Republican commissioners with concerns. As B&C/Multichannel News has reported, the item proposes to give linear OVD's nondiscriminatory access to cable-affiliated programming and local TV station broadcasts, regardless of whether or not they have facilities based distribution. Beyond that it tees up lots of questions about how to apply that definition and the ramifications of doing so. The idea is to help promote online video as a competitor to traditional cable and satellite providers, which the FCC says should produce more choices for programming, by making the MVPD definition technology neutral. "Video is no longer tied to a certain transmission technology, so our interpretation of MVPD 1 of 6 7/31/15, 5:46 PM

2 should not be tied to transmission facilities," FCC chairman Tom Wheeler said in announcing the item had been voted. In the past, the FCC has tentatively concluded that an MVPD needed the distribution facility to meet that classification. "When digital technology made video simply zeroes and ones, it opened up the opportunity for new Internet-based competition to cable and satellite services," said Wheeler Friday. "Yet efforts by new entrants to develop new video services have faltered because they could not get access to programming content that was owned by cable networks or broadcasters...with this Notice of Proposed Rulemaking, the Commission moves to update the Commission s rules to give video providers who operate over the Internet or any other method of transmission the same access to programming that cable and satellite operators have. Big company control over access to programming should not keep programs from being available on the Internet. Today, we propose to break that bottleneck." Wheeler also says the item is about providing more choice, including the option not to take channels. "Consumers should have more opportunities to buy the channels they want instead of having to pay for channels they don t want." He also said it was about boosting broadband deployment, which is the FCC's prime directive these days, and to do so by packaging channels. Interestingly, he did not describe those online services as being in the video business. "An updated definition of MVPD would permit a new broadband competitor to offer customers the ability to reach a variety of over-the-top video packages, without having to enter the video business itself." 2 of 6 7/31/15, 5:46 PM

3 Hedging its bets, the NPRM asks about maintaining the facilities-based requirement, even as it proposes to do away with it. It also asks how to apply retransmission consent good faith negotiations to over-the-top providers and what impact a reclassification would have on IP-delivered services over cable and satellite. Republican commissioners did not oppose the NPRM, but their concurrence, rather than yes vote, signaled their concerns. For example, in his concurring statement, commissioner Ajit Pai said: "In my view, the Commission s fundamental proposal that certain Internet-based distributors of video programming should be regulated as multichannel video programming distributors (MVPDs), a mouthful of a term older than Internet video itself is premature. And the legal analysis contained in the Notice is heavily slanted to support that result." He also said he was worried that the item "will pave the way for more comprehensive regulation of Internet-based services." Then why not oppose it? First, he said, it was time for the commission to resolve the question of whether over-the-top providers can be MVPDs. And, he said, the item had been improved significantly with edits from him and commissioners Michael O'Rielly and Jessica Rosenworcel. Among those, he said, are that the notice "now tentatively concludes that programmers websites should be shielded from additional regulation"; tentatively concludes "there should be regulatory parity between cable operators offering video programming over the Internet and other entities doing the same," 3 of 6 7/31/15, 5:46 PM

4 and asks about the interplay "between the Commission s regulatory decisions and decisions that will need to be made independently by the U.S. Copyright Office." In particular, he said, "if the Commission were to decide that Internet-based distributors of video programming are MVPDs, subjecting broadcasters to the obligation to negotiate in good faith with them regarding retransmission consent, what would it mean in practice if the Copyright Office maintained its position that such Internet-based distributors do not qualify for the compulsory license?" The compulsory license covers the underlying programing, while retrans has to do with the TV station signal. The Copyright Office has held that an online video provider is not an MVPD, but has signaled it was holding in abeyance a request for Aereo for that license until the courts or FCC weighs in. But until then, even if the FCC says linear online video providers OVDs are MVPDS in terms of program access and retrans rules, the Copyright Office would need to change its definition, or the OVDs would still need to negotiate individually for the underlying programming on a TV station signal aside from local station programming before it could distribute/aggregate the programming. Wheeler has said one of the reasons that the FCC was proposing the definitional change was that services like Aereo had been blocked by broadasters in court thanks in part to "old" FCC rules. " Aereo wasn t the reason for the new rules," he said in a speech Nov. 4( ( the idea that entrepreneurs should be able to assemble programs to offer consumers choices is something that shouldn t be hindered by the FCC. 4 of 6 7/31/15, 5:46 PM

5 The Supreme Court did the major thwarting with a ruling that Aereo had impermissibly distributed TV station content without paying for it. In response, Aereo signaled that the NPRM would not help it re-start its service, but applauded it in principle. "The FCC has taken a bold and meaningful step forward to provide much-needed regulatory clarity in the video marketplace," said Aereo CEO and founder Chet Kanojia. " "Even though Aereo won t have an opportunity to compete in this new workd," he said, "having a clear set of the rules for online linear video disdtributors ensures that we'll have a robust video marketplace for decades to come." Alki David, whose FilmOn online video distribution site also ran afoul of the courts over TV station distribution, also celebrated the decision. Unlike Aereo, FilmOn is still in business and has been trying to negotiate for cable rights since 2010, he says. "Though compulsory licenses may not be on the menu yet, the right for OTT services like FilmOn to negotiate deals with Cable channels is now mandatory. No more games, time to let the vision of broadcast grow." While we do not believe that the Notice's tentative conclusion can be squared with the plain language of the definition for a multichannel video distribution provider, we appreciate the efforts of Commissioners to identify many of the difficult policy issues that such a conclusion would raise," said the National Cable & Telecommunications Association. "We look forward to participating in this proceeding to ensure that any rules deemed necessary in today s competitive 5 of 6 7/31/15, 5:46 PM

6 video distribution marketplace are fairly applied to all. NCTA has told the FCC that a facilities-based transmission path, ( is part and parcel of MVPD status, rights and obligations broadcastingcable.com ( /fcc-officially-launches-ovd-definition-nprm/136544) by John Eggerton December 19, of 6 7/31/15, 5:46 PM