Commissioner Pai Proposes Forbearing Video Regs

Calls FCC Decision on Comcast/Tennis Channel 'Unforced Error'
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The video marketplace is transforming into an IP-based system and the FCC should transform as well, including considering not applying video regulations to MVPDs on a case-by-case basis, as it currently forbears regulation in the telecom space.

That was one of the messages of Republican FCC commissioner Aji Pai to an audience of broadcast and cable execs and others at a Media Institute luncheon Thursday in Washington. Pai talked of the massive changes in viewership and distribution over the past four decades -- he just turned 40.

Pai suggested that while folks now wanted their TV whenever and wherever they wanted it, regulations should be rather less ubiquitous, and pointed to an example from the cable side, according to a copy of his prepared text.

"A cable company recently told me that the legal team had to flyspeck every single idea for improving the business to make sure that it was even allowed. Innovation shouldn't be frustrated by worries about regulatory burdens. And it shouldn't be hindered by regulatory uncertainty....In considering whether to develop a new service, the first question cable operators should ask is: Would this add value for our customers? Unfortunately, many in the industry now find themselves pondering a different question: How would this service be regulated?"

While he said he recognized that there would not be a major rewrite of the 1992 Cable Act, which established many of those cable-related regs, he did suggest a more surgical strike was possible.

"Even minor statutory changes could yield major benefits," he said, like extending forbearance to video regs. Over the years, forbearance has allowed the FCC to remove outdated regulatory burdens from telecommunications carriers. This, in turn, has encouraged infrastructure investment and broadband deployment."

Given the competition in the video space, he said it makes no sense not to be able to take the same steps not to apply laws aimed at video. "Technology is turning voice and video into applications transmitted over the Internet. Former monopoly providers are facing intense competition as we move to an all-IP world. So it seems to me that the FCC should have the same authority to relieve MVPDs from obsolete rules as we currently have for carriers. Permitting forbearance for voice regulation but not for video regulation is itself an anachronism."

Particularly, when IP has turned competition into a cottage industry. He cited actress Felicia Day (Dr. Horrible's Sing-Along Blog), whom he met at CES and has become something of a YouTube programming mogul thanks to the Internet.

"Felicia Day doesn't need the permission of gatekeepers at MVPDs or broadcast networks [those outlets prefer the terms "curators" or trusted sources" to "gatekeepers"] to share her creative vision with the world," he told his audience.

Pai gave the FCC credit for the cable-friendly deregulatory moves of ending the ban on basic tier encryption, modifying its viewability mandate, and sunsetting the absolute ban on exclusive programming contracts.

But he said the commission had committed an unforced error in finding Comcast had discriminated against Tennis Channel -- he opposed the decision. The D.C. circuit will hear Comcast's challenge to that decision later this month.

"At a time when consumers have more options than ever before for accessing video content, the FCC shouldn't go out of its way to micromanage MVPDs' programming decisions," he said of that program carriage complaint finding, the first time the FCC has upheld such a complaint.

He was not done laying into the decision. "At a time when we would like cable operators to devote more bandwidth to advanced services, we shouldn't force them to carry more channels in order to avoid carriage complaints. And at a time when video distributors and American consumers alike are complaining about programming costs, we shouldn't order MVPDs -- and ultimately, consumers -- to pay for programming that they don't want."

Asked whether the FCC didn't need to define the statue of MVPD as part of the move to IP delivery, Pai told Multichannel News he thought the FCC was "rapidly approaching the time when the FCC is going to have to make some basic and fundamental decisions" about how FCC video regs apply to people "in the same space...It becomes a challenge to apply certain regulations to what are classified as MVPDs when, as I said in the speech, business models are so dynamically changing right now that it doesn't make sense to lump cable operators and DBS providers on one side and then not even consider the insipient competition from new providers."