Sources: FCC Majority Approves Over-the-Top NPRM

Could Be Officially Voted Out As Soon As Wednesday
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According to sources, a majority of the FCC--all Democrats--have voted to approve the Notice of Proposed Rulemaking that would define some over-the-top (OTT) video providers as multichannel video programming distributors (MVPDs), at a minimum to qualify for nondiscriminatory access to programming.

The three Dems—Chairman Tom Wheeler and Commissioners Jessica Rosenworcel and Mignon Clyburn -- give the item the needed votes to pass, though the Republicans are still being given time to provide edits. The item was circulated for a vote and once it achieved that three-vote quorum is now in a must-vote situation, meaning the Republicans are on the clock and must vote it soon or it will be adopted without them, since it already has the votes to pass.

One of the Republican offices asked for and received an extension until Dec. 10 to vote, but that is not a hard deadline and there could be another extension of the edits are still being vetted.

The item would define an OTT that delivers a linear stream of programming as an MVPD. That means those OVDs would have access to content through the FCC's program access rules, but also have to negotiate retransmission consent with broadcasters. It would not apply to TV Everywhere, which is in essence an authentication regime for an online mirror of traditional service, in which access rules already appear. But it does ask questions about how it should treat TV Everywhere.

The idea behind the NPRM is to give over-the top providers offering an online service that mimics a linear cable offering the same FCC-enforced access to vertically integrated programming.

An FCC source confirmed the item had been voted by the Dems, with the Republicans still making edits that were being considered by the other offices at press time.

It is possible that the item could be 5-0 if the edits are accepted.

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 SkyAngel 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 Newsfirst 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."