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Cable, Broadcast Wage OTT Battle

FCC Weighs Implications of Redefining Online Video 4/13/2015 8:00 AM Eastern
TakeAway

How the FCC defines a multichannel video programming distributor will shape the growth of online video distribution.

WASHINGTON — The reply comments to the Federal Communications Commission’s proposal to redefine online video providers were over-the-top in more ways than one.

 

With broadcast-TV stations and cable operators on opposite sides of the issue of redefining some OTT video providers as multichannel video programming distributors (MVPDs) — and each suggesting their counterparts were simply trying to gain a competitive advantage — the fault lines cleary showed in sometimes heated rhetoric against a backdrop of the inexorable rise of video content on the Web.

 

The fight over how to classify online video distributors (OVDs) is also related to the cable-broadcast fight over retransmission consent. Cable operators have been trying to get their traditional video business out from under the regime and don’t want retrans applied to online distribution.

 

Cable operators clearly want the freedom to move to an online distribution model, where they could get some of the support the FCC has been extending to edge content providers as part of its effort to boost broadband penetration. The same goes for edge providers such as Amazon, which don’t want the FCC impinging on the binge viewing that’s become a new model of online video consumption.

 

FUTURE PRECEDENT

 

How the FCC ultimately defines OTT video will determine the future course of video distribution, something the commenters to the agency recognized.

 

Broadcasters don’t want cable operators to gain any distribution advantage through the proceeding. “MVPDs’ meritless proposals to tip the balance of retransmission-consent negotiations in their favor to further line their pockets have no greater merit as applied to OVDs,” the National Association of Broadcasters said in its fi ling, the “further” a reference to ongoing broadcaster criticism of cable providers on the price of traditional video service.

 

The National Cable & Telecommunications Association has said the FCC doesn’t have the authority to redefine over-the-top video. Even if it does, cable-supplied online video services — either authenticated “TV everywhere” (TVE) services or separate online offerings MSOs might want to deliver to nonsubscribers — should not be reclassified. The FCC has tentatively agreed that TVE services won’t be subject to reclassification.

 

When Congress came up with the original definition of an MVPD, the NCTA said, it meant facilities-based distributors such as cable operators, satellite-TV providers and telcos, as was the FCC’s initial tentative conclusion.

 

Cable operators are concerned that local franchising authorities will start to assert jurisdiction over these online distribution models — and with good reason.

 

There were some mad men (and women) at cable programmer AMC Networks : Its attorneys. “AMC has the right to present its speech in the environment and context it chooses, including whether, when, and how its programming is distributed over the Internet (including whether to purchase online rights from copyright holders),” the company told the FCC. On that last point, if AMC does not have the online rights to some of its programming, it can’t sell those rights to someone else, it said.

 

And while it did not employ drones to deliver the news, online retail and e-commerce giant Amazon made it clear it’s siding with cable operators on the matter.

 

Amazon told the FCC it agreed with MSO Cox Communications that the FCC is off the mark when it presumes that over-the-top providers need the agency to intervene in order to successfully compete with traditional MVPDs.

 

Amazon suggested online content providers, like Amazon Instant Video, Netflix, Hulu and others, have drawn eyeballs and generated award-winning content, so what’s the beef?

 

DON’T PURGE BINGE-WATCHING

 

And if the FCC does go ahead, it should definitely not “force every entity offering online video content” into the MVPD mold, Amazon said. The company wants the FCC to ensure that the “linear” programmers it wants to redefine does not include the binge-watchers of such content as Transparent, on platforms such as Amazon Prime Instant Video.

 

Amazon is also concerned that “linear” is the only thing preventing the FCC from regulating the majority of OTT providers, and that is a pretty thin line.

 

“So while the commission should clarify that ‘binge-watching’ is not included within the definition of a ‘linear stream,’ this step alone is not enough to address our concerns,” it said. “It would be a mistake if companies are forced to distort their offerings to avoid classification as an MVPD when they have no ambition to replicate the traditional MVPD model.”

 

The FCC is under no timetable to vote on a final order and will likely take some time mulling the comments, particularly given the pushback from the online video providers that the proposal was meant to benefit.

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