In Response to Video Competition NOI, Some Raise Questions about Online Video Regulations
The FCC should start a proceeding to lay out what rules apply to online video distributors (OVDs), Public Knowledge said in comments filed with the commission this week. Its comments and others came in response to the FCC’s latest inquiry into the state of video competition. “The statute at no point expressly requires that cable systems be facilities-based,” Public Knowledge said. Online video providers that meet certain requirements including signal protection, should be allowed to opt into cable operator status under Title VI of the Communications Act, it said. “Such an opt-in would grant regulatory privileges (such as the right to negotiate for retransmission consent) as well as obligations (perhaps must-carry),” it said.
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Most commenters, including Netflix, said OVDs do not compete directly with traditional multichannel video programming distributors (MVPDs). Even if true today, that will certainly change soon, and the FCC should address what rules apply to new online video distributors, DirecTV said. “At present [OVDs] have not been deemed subject to the Commission’s requirements for closed captioning, children’s television protection, political advertising, emergency broadcasting, public interest programming, most carry, and equal employment opportunities, among other things,” DirecTV said. That gives OVDs distinct regulatory advantages over legacy MVPDs, it said. “The commission should move quickly to provide clarity in this area, in order to ensure a level playing field for all participants,” it said.
The NAB said it’s too soon to make rules covering OVDs. “These are nascent offerings, using diverse technologies and business models that provide different types of consumer experiences and service different markets for online video,” it said. “At this early stage, the FCC risks being over- or under-inclusive, potentially grouping together services that are dissimilar or that transform in unexpected ways,” NAB said. Moreover, the FCC’s jurisdiction over online video is unclear, it said. The NCTA struck a similar tone, saying it’s clearly a marketplace in transition. “All the stakeholders -- content producers, content distributors, and software and hardware industries -- need to make their best guesses. But fortunately, regulators and policy makers do not, because with an abundance of choices available … consumers will decide."
Still, the FCC needs to keep a close eye on how traditional MVPDs, especially those who are also broadband providers, treat new online video services, Netflix said. “The incentive of network operators who are also MVPDs to discriminate against unaffiliated OVDs defines” the challenges OVDs face, it said. They risk losing access to programming, having to pay broadband providers to terminate traffic on their networks, and usage-based billing plans that could limit consumer demand for online video, Netflix said. Rovi raised similar concerns. “Aside from some rare cases, ISPs have not yet succumbed to this incentive,” Rovi said. “However, network neutrality rules with exceptions for ‘reasonable network management’ may not prevent OVD services from being hindered,” it said. Moreover, the rules aren’t mature yet and may not even stand up in court, it said.
Meanwhile, Comcast suggested the FCC look at whether it needs to keep its legacy cable rules, including many in the 1992 Cable Act. “It is well past time for the Commission to recognize that cable regulations are impeding competition and that justifications no longer exist for treating cable differently from its formidable competitors,” it said. Verizon urged the commission not to add any new obligations, including those outlined in the AllVid NOI, to traditional MVPDs. Such rules would be immediately outdated and moreover, “to the extent that any new requirements along these lines were only to apply to one subset of the video marketplace -- such as facilities-based video distributors of programming -- such requirements would not only inhibit technological innovation would also introduce new distortions into the marketplace,” Verizon said. “Netflix … and other online video providers would gain artificial competitive advantages by being free from such regulation."
CEA and Consumer Electronics Retailers Coalition used their comments to press the FCC for action on the AllVid rulemaking. That would promote competition among navigation devices, distributors and programming, they said. The AllVid Tech Company Alliance also urged the commission to issue a rulemaking notice on AllVid.
MVPD competition continues to be fierce and cable, especially Comcast, will likely dominate in the near future, said Dish Network in its filing. Online video products have also emerged, adding a new competitor to the mix, the DBS company said. The effect of online video is bigger for DBS providers because cable can offer its own online video products, said Dish. Retransmission consent rules reform is increasingly necessary as broadcasters increasingly abuse their market power “in an effort to preserve their existing government-sanctioned monopolies and undermine competition in the MVPD market, said Dish.