Streaming Video Seen Eclipsing Cable Program Access Rules
Cable operators compete on technological advances like faster broadband speeds and VoD, not exclusive programming, industry analysts said. That could inform how the industry approaches an FCC review this year of program access rules, said industry lawyers. Cable operators are focusing on offering more services such as broadband and VoIP, Sanford Bernstein analyst Craig Moffett said: “Broadband is emerging as the cornerstone of the consumer bundle.”
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Growing use of video on PCs and mobile phones, PVRs and VoD shows new technology eclipsing programming restrictions, Willkie Farr’s Michael Hammer told a Fri. FCBA cable lunch. Bell entry into video intensifies competition, making exclusivity bans a regulatory relic, he said. Verizon has gotten hundreds of municipal franchises for its FiOS fiber TV service, and AT&T is selling U-verse IPTV in 13 markets on a limited basis. “When you've got mobile phones [with video], you've got a fundamentally different market,” Hammer, who has represented Comcast, said: “I think VoD is another factor that rarely gets enough attention.”
Cable operators will have to respond to questions about defining the term “multichannel video programming distributor” (MVPD), lawyers said. “Inevitably there will be discussion of scope in this proceeding,” even though the Commission didn’t address it in its notice opening the proceeding, one lawyer said. Virtual Digital Cable, an online start-up that sells monthly subscription service, is hoping to use the program access rules to help it get programming contracts (WID Feb 22 p7). VDC needs the rules to persist if it hopes to benefit from them, the lawyer said: “You can expect VDC or others to jump in on this.”
Redefining MVPD to include Web-based services would up the stakes for cable, an industry lawyer said: “If you start redefining what is an MVPD too broadly, it becomes an even greater concern.” It’s unclear how the Commission and Chmn. Martin would come down on such a question, the lawyer said. Cable also will fight attempts to expand the rules in other ways, the lawyer said: “Nobody wants the rules extended into new areas like non-vertically integrated or terrestrially delivered programming.”
Wider use of the Web to distribute video is a reason to keep the ban on exclusive cable programming deals, Media Access Project Pres. Andrew Schwartzman told FCBA: “It certainly argues for maintaining the rules for the foreseeable future.” He and other panelists said they are uncertain how to apply the rules to Internet video distributors. An online video provider should be considered a pay-TV company under FCC rules only if it sells broadcast- quality programming, Hammer said: “This is probably the most interesting question out there: Is it video programming?” The FCC should consider rules, but with caution, he added: “The implications are truly profound if all you have to have is a website” to get program access, so “we have to slow down and pause.” He said it’s unclear how myriad rules would apply to online video companies considered pay-TV providers, including those on programming quality, closed captioning and customer service.