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Over the Top Takes Center Stage in D.C.

FCC signals a probe of indie programmer access to online video platforms 1/25/2016 8:00 AM Eastern
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OTT is in the D.C. crosshairs, thanks to concerns over the Charter-Time Warner Cable deal and minority access to platforms.

WASHINGTON — Call it OTT or OVD, online video is the talk of the town in the nation’s capital.

 

The Federal Communications Commission is expected to launch an inquiry into programmer access to online distribution, a probe spurred in part by cable-industry critics who coalesced around Charter Communications’s pending acquisition of Time Warner Cable, saying it was a threat to over-the-top video.

 

Democratic FCC commissioner Mignon Clyburn used the Multicultural Media, Telecom & Internet Council’s (MMTC) annual Broadband and Social Justice Summit here to hint at the possibility of agency action.

 

She said to look in the next few weeks for a notice of inquiry (NOI) on access to over-the-top distribution channels by independent programmers. Opening such an inquiry could be the start of regulation, the start of a conversation or a dead end — depending on the desires of the FCC chairman, in this case fellow Democrat Tom Wheeler.

 

An agency spokesperson had no comment, but pointed out that Clyburn had asked for such an NOI when the merger of telco AT&T and satellite-TV provider DirecTV was approved last July.

 

Despite the promise of OTT and the optimism that surrounds it, Clyburn said people have told her “the same old legacy issues” of getting projects green-lighted and gaining access to distribution channels remain. She didn’t know if it is an issue the FCC can solve, she said, but the regulator can serve as a platform for discussion and bring attention to the issue.

 

Elsewhere at the MMTC, former top Clinton administration telecom adviser Larry Irving said there is a definite dearth of black- or Hispanic-helmed productions coming out of the programming shops of major OTT video providers, which also means a deficit of funding to make such projects.

 

GOP PUSHBACK

 

Republican FCC members immediately pushed back on the idea of the NOI — and also said they had no idea it was coming.

 

Neither GOP commissioner Ajit Pai nor Michael O’Rielly professed to know that an NOI was contemplated, but both said they’d be interested in seeing it.

 

Pai said the FCC didn’t need to be in that space and that there were plenty of opportunities to get content on the Web and profit from it.

 

There’s a difference between uploading a video to the Web and making money, though, Clyburn said. Conceding there are a lot of Internet-video stars, she asked how much they were “truly making.”

 

“Are there bottlenecks or barriers to entry?” she asked. “These are some of the things that I hope we will talk about” in this inquiry, Clyburn said, as well as who should address bottlenecks, “if anyone.”

 

O’Rielly countered by suggesting that some YouTube stars were making a lot more than the commissioners on the panel. As to the legacy issues of access to distribution channels, YouTube “completely eviscerates a number of the current models that have been so problematic in the past,” O’Rielly said.

 

What’s at issue is no longer getting a pilot green-lighted by a broadcast or cable network, he said. With the Internet, a would-be producer can do a pilot from the garage or basement, and viewers can “see it and like it, and I can make money out of advertising,” O’Rielly said.

 

Pai said he was inspired by the people who were bypassing the legacy models to get their content online.

 

He said he had been told by people “across the country” that Clyburn’s proposed OTT proceeding “would be a terrible thing for minority programmers” because it would “lock us in with the big guys and establish legacy regulations over this really nascent space.”

 

The OTT knock on Charter-Time Warner Cable was an echo of the week before, when Time Warner Inc. had gone to the FCC to say it had OTT-based concerns (“Time Warner vs. Time Warner,” Jan. 18, 2016).

 

Last week, merger concerns took the form of the “Stop Mega Cable Coalition,” essentially a reprise of the “Stop Mega Comcast Coalition” with satellite TV provider Dish Network, advocacy group Public Knowledge and the Writers Guild of America on both coasts among the returning members. The coalition warned that a combined Charter and TWC, along with Comcast, would comprise a broadband duopoly with the “ability and incentive” to control the future of the Internet and “all of the innovative services that rely on a high-speed broadband connection.”

 

MEGA-OPPONENTS RALLY

 

“The Stop Mega Cable Coalition believes that kind of concentrated power risks serious harms,” the group said. “Among other things, a duopoly threatens the future of over-the-top streaming services and independent programmers.”

 

That came as news to Charter, which was still beaming over last week’s plaudit from Reed Hastings, CEO of over-the-top powerhouse Netflix. Hastings had said the deal would be a “tremendous positive,” and Charter’s settlement-free Internet peering policy had a lot to do with that.

 

But during Comcast’s effort to acquire Time Warner Cable early last year, the Stop Mega Comcast Coalition emerged either as a symptom or a driver of trouble for that deal, which ultimately tanked.

 

Could this be a reprise? Charter has suggested there is a big difference between its deal and the Comcast-TWC transaction. For one, Charter doesn’t own a major content company, as Comcast does with NBCUniversal. Charter also cited its OTT-friendly policies of no usage-based billing, data caps or modem fees.

 

Ultimately, though, the FCC and the Justice Department will have to decide whether the deal creates a stronger competitor to Comcast and AT&T (owner of DirecTV), or if it’s a broadband combo in need of mega-stopping.

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