It's Official: FCC Proposes OTT Reclassification

Democrats Vote Yes, Republicans Concur

It is now official, except for the commissioner's statements. The FCC has voted unanimously--three Democratic "yes" votes, two Republican "concurrences"--to propose reclassifying linear over-the-top (online) video providers as MVPDs, at least for the purposes of access to vertically integrated programming. That is according to a source who has seen the vote tally.

The vote actually came last night, a drop-dead, must-vote deadline for the Republicans. The Democrats had voted it already.

The item will likely not be released until Friday, along with the commissioner statements. A concurrence is approval, but with the suggestion that they would have done things somewhat differently, likely to be expounded on in those statements. Neither Republican commissioners offices were available for comment at press time.

The Notice of Proposed Rulemaking asks a host of questions about that reclassification, including, what other MVPD obligations should apply. But nothing is official until an order is voted, which won’t come until after a healthy comment and reply period.

In essence the vote launches the process of figuring out how to treat online video services that emulate traditional ones--linear day and date channel lineups.

According to source familiar with Republican Commissioner Ajit Pai's thinking on the itema and his reason for concurring rather than voting yes, he supports asking whether online video distributors should be classified as MVPDs, an issue that has been in front of the commission thanks to the Sky Angel petition, but believes that the tentative conclusion that some are MVPDs--linear OVD's mimicking traditional MVPDs--is premature. He is said to be worried about increasing regulatioon on Internet video.

The item was circulated for a vote last month, and once achieved, that three-vote quorum was in a must-vote situation, meaning the Republicans were on the clock and had to vote it or it could be adopted without them.

One of the Republican offices asked for and received an extension until Dec. 10, then there was a second extension with a hard Dec. 17 deadline.

In addition to starting the process of defining OTT's in terms of competition to traditional video, the item responds to a complaint by OTT provider Sky Angel about access to content.

Exactly which OTTs should be defined as MVPDS and what other obligations or rights would apply beyond that access--PEG channels, exclusivity--are all teed up in many questions for the commenters, and ultimately the FCC, to answer.

A source who has seen the item describes it as the beginning of a process of answering some tough questions that will help determine the future of online video.

FCC Chairman Tom Wheeler had signaled the FCC needed to look at the regulatory treatment of online video providers, as online becomes a stronger competitive video distribution platform, and circulated an item to the other commissioners in October. B&C/Multichannel News first reported on the item in September.

The NPRM would reverse a tentative, bureau-level conclusion in the Sky Angel program-access complaint that having a facilities-based transmission path was necessary to be an MVPD. The FCC tentatively concluded that an MVPD has to have control of both the content and the transmission path—copper, fiber, satellite signals to be delivering a channel—and that an OVD distributor lacks that path since it does not control a facilities-based channel to deliver it.

The FCC signaled in the Comcast/NBCU deal that it expected over-the-top video to become a competitor to traditional MVPDs going forward and, therefore, included conditions requiring the company to make its programming available to OTT providers on nondiscriminatory terms and conditions.

The National Cable & Telecommunications Association has argued that a transmission path is necessary to be an MVPD.

It told the FCC in comments on Sky Angel that the 1992 Cable Act was clearly intended to promote "facilities-based MVPD competitors," which would require facilities.

To define it otherwise, they say, would result in "expansive regulation of the Internet" and conferring rights and obligations on online entities the FCC does not track or license, may not have physical facilities in the U.S. and which "were never intended to be the subjects of such regulations."