D.C. Goes Over the Top in Regulation Rulings

The FCC could play a leading role in determining just how big a player online video becomes

Why This Matters

Friend or Foe?

The courts could also play a key role in determining whether over-the-top will be a boon or a bane to traditional broadcasting. Here’s where things stand now:

Aereo: The Barry Diller-backed subscription service Aereo TV won a big victory in July when a federal judge denied broadcasters’ request for a preliminary injunction and refused to shut the service down, indicating Aereo would likely prevail in broadcasters’ lawsuit against it. Broadcasters have argued that the company was “misappropriat[ing]” copyrighted material and retransmitting it over the Internet without compensation.

The judge disagreed. Aereo argues it is providing access to remote, individual antennas taking free TV signals off the air, just as a home antenna would. It also allows users to time-shift that programming. The judge agreed with Aereo that it was providing individual antennas and found no appreciable difference between Aereo’s model and Cablevision’s remote DVR model; the Second Circuit Court of Appeals concluded it did not violate copyright.

Ivi: In a decision three weeks ago that went in broadcasters’ favor, the Second Circuit Court of Appeals upheld a preliminary injunction against streaming service Ivi TV, preventing it from distributing TV station signals over the Internet. In that case, said the court, “continued live retransmissions of copyrighted television programming over the Internet without consent would…threaten to destabilize the entire industry.”

Net neutrality:
On a separate track, but one that could be on a collision course with over-the-top access, the FCC is battling Verizon/MetroPCS in court over its network neutrality rules. The FCC last week filed its brief in defense of the rules, facing a challenge from Verizon and MetroPCS.

One of the reasons the FCC cited for adopting those rules was so that Internet service providers would not be able to discriminate against the delivery of online content by competitors. Some Comcast critics have suggested it is favoring its own online video content accessed over Xboxes, which are not subject to its data-use caps. But Comcast has argued that the Xbox-delivered Xfinity content is not being delivered over the public Internet, so it is not a violation of discrimination prohibitions. The FCC carved out private networks from its open Internet access rules as part of a compromise that secured the acquiescence of major cable operators. —JE

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

But how, and whether, the FCC extends the rights and obligations of MVPDs to the increasingly wide world of online video providers will help shape the future of video distribution, and act as another shifting presence in the tug-of-war between Hollywood and technology developers (see Cover Story). As Disney told the FCC recently, the decision has potentially “far-reaching ramifications for online distributors of video programming, broadband Internet service providers, onDemand video program providers, cable-affiliated programmers and television broadcasters.”

The FCC tentatively concluded in the Sky Angel complaint against Discovery that to be an MVPD required both a transmission path—fiber, copper, satellite—and the programming channels, which would exclude online programming aggregators such as Sky Angel.

But before it set those words in regulatory stone, the commission asked for comment on whether or not it was the right call. The answer will greatly affect the future of over-the-top video.

Don’t look for the FCC to weigh in on Sky Angel anytime soon. According to sources inside and outside FCC headquarters, the commission will almost certainly issue a separate rulemaking on the definition of an MVPD, with a Sky Angel decision—which hinges on that definition— coming sometime after that. Representatives on both sides of the issues have counseled the FCC to open new proceedings.

The commission has already asked the industry to weigh in on the pros and cons of designating over-the-top providers as MVPDs, but that was in the context of the Sky Angel complaint, and many of those comments were that the decision was too important not to get its own proceeding. The FCC apparently agrees. And while they may want this separate proceeding, many stakeholders have already tipped their hands. Here are a few of them:

TV Writers:
Scribes would prefer to see a “technology-neutral” definition of MVPD, which means they want online providers to be subject to the same access requirements that require cable operators to carry program networks on nondiscriminatory terms and conditions. “Narrowly de! ning MVPDs to require both the transmission path and the video programming channels would deprive consumers of competitive offerings from Sky Angel and other potential market entrants such as Intel, Sony and Apple,” the Writers Guild of America, West wrote in comments titled, “A Broad Interpretation of the MVPD Definition Will Enhance Competition.” That would mean decreasing the number of outlets for TV programmers and, thus, writers. Without FCC action, say the scribes, content creators won’t reap the rewards of the new platform.

Disney: Looking out for the interests of its owned TV stations, the Walt Disney Co. told the FCC that no matter how you define an MVPD, if over-the-top providers retransmit TV station signals “and the copyrighted content they deliver,” they must get consent to do so. And the de! nition of retransmission is at the heart of the Aereo debate .

Cable Ops:
The National Cable & Telecommunications Association, whose members serve most cable subs nationwide, said they definitely don’t want the FCC to give over-the-top providers the same rights and obligations as MVPDs, arguing it would lead to expansive regulation of the Internet.

“As anyone who has searched for videos on YouTube or Google knows, virtually anyone can—and does—distribute video programming online,” the NCTA says in its filing. Eliminate the transmission path from the definition, says the association, and the FCC would be faced with the essentially impossible task of “applying MVPD status to a set of online entities that the Commission neither tracks nor licenses, which may or may not even possess any physical facilities in the United States, and which were never intended to be the subjects of such regulations.”

Broadcasters:
The National Association of Broadcasters, as well as consumer groups and TV affiliate associations, see some ulterior motive in the stance of cable operators. They argue that those operators could recon! gure their systems—they have already established a strong online beachhead with TV Everywhere—to qualify for some rules, but fall outside of others. That is why the NAB tells the FCC it must apply retrans and program exclusivity rules to over-the-top providers.

E-mail comments to jeggerton@nbmedia.com and follow him on Twitter: @eggerton