FCC Ready to Reclassify Some OTTs – Report

It may be too late for Aereo, but the FCC appears to have taken another step toward broadening the definition of a multichannel video programming distributor (MVPD). (See Last Chapter (11) for Aereo.)

According to a source cited by Multichannel News, there is now majority support from Federal Communications Commission (FCC) commissioners for a rule that would extend MVPD classification to some over-the-top (OTT) video providers.

The three Democratic commissioners are reportedly ready to approve the rule, which would define an OTT provider as an MVPD if the company delivers a linear programming stream. The rule was scheduled to go up for a vote by December 10, but the two Republican commissioners are said to be still reviewing the item and making edits. A vote is now expected to take place next week.

Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.

FCC Chairman Tom Wheeler said last month that he wanted to create a technology-neutral definition of an MVPD in order to make room for new IP video competition. The issue has been in the spotlight this fall because OTT provider Aereo attempted to remake itself into an MVPD after the Supreme Court shut down its controversial practice of freely retransmitting over-the-air broadcast signals online. The Supreme Court ruled that Aereo was "for all practical purposes a traditional cable system," and should pay licensing fees like one. However, a US District Court judge later determined that Aereo didn't meet the legal requirements for an MVPD and therefore didn't have the right to negotiate retransmission-consent deals as cable TV providers currently do. (See Wheeler Gets Down With OTT.)

Sadly for Aereo, the company has now entered into Chapter 11 bankruptcy. But if the new MVPD definition is ultimately approved by the FCC, other companies such as Aereo would soon have the legal right to operate as full pay-TV providers on the web. As Wheeler pointed out last month, an updated definition of an MVPD would also "permit a new broadband competitor to offer customers the ability to reach a variety of OTT video packages without necessarily having to enter the video business itself."

— Mari Silbey, special to Light Reading

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mendyk 12/12/2014 | 11:22:57 AM
Not too late The reclassification would not have benefited Aereo, because even if it were reclassified, it would still have to pay for retransmission rights. Aereo's model was based on a form of content piracy.
Duh! 12/12/2014 | 10:57:32 AM
Re: Pronoun trouble Depends on your perspective.  If you're a vertically integrated MSO or satellite provider, it does "make a hash of things".  Content providers and local broadcasters wouldn't much like it either.   Almost everybody else would think of it  as disrupting a not-very-consumer-friendly business model.   

I see this as removing an obstacle to broadband deployments in underserved areas.  The consumer value proposition for high-speed broadband is incomplete without linear TV.   Linear TV is a low (or negative) margin, high CAPEX, high OPEX business, especially for entities without the scale or negotiating power of, say, a Dish or a Cablevision.  To say nothing of the hassle that comes along with being an MPVD.  Availability of OTT MPVDs takes all that off the broadband access provider's plate. 

Vertical integration is not the business model of the future.
craigleddy 12/12/2014 | 10:14:00 AM
Pronoun trouble This reclassification of an MVPD threatens to make a hash of things. From a regulatory standpoint, how will there be a legal distinction between facilities-based MVPDs, which have invested billions in their broadband delivery infrastructure, and an OTT content player who is riding on that infrastructure for free? I understand the FCC is trying to clear up a copyright hurdle for OTT streamers, but in the process it's mixing apples and oranges.           
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