Web Players Push Back on OTT Redefinition

Internet firms offer resistance to FCC’s efforts to regulate online video
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WASHINGTON — The Federal Communications Commission’s proposal to reclassify some over-the-top providers as multichannel video programming distributors appears to be moving through the agency at the speed of dial-up Internet.

Chairman Tom Wheeler has proposed a vote in the fall, but nothing has been circulated among the commissioners, according to FCC sources.

Even if an item is circulated this month or next — as one hopeful cable executive in in the capital suggested — there does not seem to be a lot of urgency to address the item among the commissioners, particularly given the pushback from some major Web players.

REGULATING ACCESS

There was reluctance to tackle the issue of how — or whether — to regulate access to over-the-top programming under the previous FCC administration, but Wheeler is on a broadband mission and has signaled that ensuring that over-the-top firms could access programming was on his to-do list.

Cable operators have been pushing back, arguing that the facilities-based definition of multichannel video programming distributor (MVPD) was the correct one. But, then again, those companies argued that classifying broadband Internet access as a Title II commoncarrier service would be disastrous, and Wheeler was not dissuaded.

But Wheeler could be having a hard time rustling up votes, given the pushback from just the sort of over-the-top players he is trying to help out.

Cable operators have argued that the online video marketplace is already vibrantly competitive with access to tons of content without the FCC stepping in and reversing its conclusion that an MVPD must have a physical transmission system, such as cable plant.

The Motion Picture Association of America supported that point of view last week with figures submitted to the U.S. Intellectual Property Enforcement Coordinator in a separate proceeding on cracking down on pirate websites.

According to the MPAA, by the end of last year Americans could access 112 legitimate online services for watching content, accessing a beast of a figure at 66.6 billion television episodes and 7.1 billion movies in 2014 alone.

One point in the case that the FCC shouldn’t rush to regulate OTT service is that the rules apply only to services that mirror traditional cable and satellite services, such as Sling TV, and not to the flourishing services like Netflix or Hulu that deliver the “when-you-want-it” model that’s becoming the new normal.

But the FCC would be regulating some over-the-top video services, potentially making them subject to must-carry rules and possibly public, educational and government (PEG) channel carriage requirements. That is a precedent that does not sit well with some of those online content providers, like the members of the Digital Media Association, which include Amazon, Apple, Microsoft and YouTube.

Rather than seeing any need to put OTT under legacy program-access regulations, Amazon executives told the FCC in meetings last month that “competition and innovation in all sectors of the video content and distribution industry, including ‘over the top’ (‘OTT’) services, today is vibrant and growing,” a point cable operators have also been making.

Amazon said that OTT competition is happening without government intervention, and that is the way it should stay.

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