Editorial: Thinking 'Over the Top'

The commission needs to think about how online programming services fit in its world -- and perhaps more importantly, how broadcasting and cable fit in its online world view

We must admit, we were a little surprised two weeks ago by the
court ruling approving the settlement that cleared the way for the
Comcast/NBCU merger. Most everybody has been treating it as a done deal since January, but there was still a
shoe to drop, which was the D.C. District Court’s
approval of that settlement agreement between
Justice and Comcast/NBCU.

But rather that simply sign off, the court made
a point of giving the government some homework.
Judge Richard Leon required it to report
on any program access complaints filed by over-the-top video providers, saying he was concerned
the government would not be able to enforce the
arbitration mechanism it had set up.

The court, like the FCC,
is anticipating that online
video is going to be a competitive
alternative to traditional
cable. And the FCC
is doing more than just
anticipating. It is currently
deciding whether and how
to turn set-top boxes into
universal home gateways to
content, turning the TV set
into a broadband player.

The FCC will need to
weigh in on the subject and
decide what rights and responsibilities online
video providers are going to have. Giving them
access rights to Comcast content as conditions in
a merger deal that will eventually sunset is one
thing. But the thicket gets thornier if the FCC
wants to grow online video distribution as a
driver of broadband deployment. And clearly it
is looking eagerly in that direction.

In the Comcast order, which was full of protections
for competitive online video providers, the
FCC looked beyond checks on potential Comcast
behavior to a wider market where competing online
video providers “increase consumers’ choice
of video providers, enhance the mix and availability
of content, drive innovation, and lower
prices for OVD and MVPD services.”

The Copyright Office isn’t looking to start
grafting broadcast or cable models onto Internet
delivery. In a report to Congress two weeks ago,
it declined to go along with ivi TV’s argument
that it was covered by the statutory license that
allows cable operators to retransmit TV station
signals without negotiating individual programming
licenses, saying there were signal piracy
and security issues that still needed resolving.

And they must be resolved. As the Copyright
Office pointed out in its report, “[T]he Internet
has become an integral part of the video distribution
chain as more and more content, including
broadcast content, is migrating online.”

It would be hard for the FCC to apply mustcarry
to online content providers and stick to its
guns about not regulating Internet content, which
was at the root of its defense of net neutrality rules
as applying to transmissions, not content. But it
would also be tough to apply must-carry rules to
cable and satellite operators, while not applying
them to a competitive service the FCC is promoting
as a price and service competitor to cable.

During the Comcast/NBCU merger-vetting
process, one FCC staffer suggested it was an issue
that was on the horizon rather than in their faces,
but it seems to us that this “horizon” is approaching
at the speed of 4 megabytes downstream.

As the story in this week’s Washington Watch section makes clear, the FCC has a lot on its
plate in the coming months, from its long-overdue
media ownership review, to its not-quite-as-overdue
decision on universal service reform, to what cable
operators hope is serious retrans reform and broadcasters
hope is no more than tweaks to the system.
But the commission also needs to start thinking seriously
about how online programming services fit
in its world—and perhaps more importantly, how
broadcasting and cable fit in its online world view.