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Verizon to FCC: Don't Treat OTT Like Cable

The threat of heavy regulation in the pay-TV market may have dropped through the floor since a change in leadership at the FCC this year, but industry stalwarts still want assurances that they won't be subjected to legacy rules and regs in today's era of Internet video.

Several industry representatives filed comments with the Federal Communications Commission (FCC) this week asking for changes to the regulatory framework governing video services. Petitioners ranged from the NCTA – The Internet & Television Association and the American Cable Association (ACA) to individual broadcasters and the National Association of Broadcasters (NAB) , the NTCA - The Rural Broadband Association and Verizon Communications Inc. (NYSE: VZ).

What are they looking for? The requests range, but for the most part everyone is hoping for fewer reporting requirements, and the ability to post information online rather than make it available in physical form.

Verizon is a bit of an anomaly, however. The telco-cum-cable operator filed a laundry list of recommendations with the FCC, and at the top of that list was a request for the Commission to "confirm that online video distributors (OVDs) are immune from legacy cable regulations." Verizon appears to be the only company interested in confronting this issue today, although numerous other companies weighed in when the idea was first raised nearly three years ago.

This concept of regulating new online video providers in a similar fashion to cable companies harks back to a Notice of Proposed Rulemaking established by the FCC in late 2014. At the time, the agency proposed that the definition of a multichannel video programming distributor (MVPD) be expanded to include providers of multiple linear streams of television online. The goal was to make it easier for new OVDs to gain access to broadcast programming rights, putting them on a more equal playing field with traditional cable companies. However, the NPRM had the added effect of making it possible for the FCC to impose other cable regulations on OVDs, including rules related to local franchising agreements. (See A Video Rose by Any Other Name?.)

Unsurprisingly, Verizon, with its pending online video offering, came out in favor of granting OVDs greater access to content. But the company also stated very clearly in 2015 that it was against the idea of applying local franchising rules and other legacy cable regulations to online providers.

Fast forward to today, and online distributors have found new ways to negotiate for broadcast programming rights. Sony Corp. (NYSE: SNE)'s Playstation Vue, for example, delivers a significant amount of broadcast content without the standard retransmission agreements that cable companies rely on.

However, the issue of whether online video services should face additional regulations that currently only pertain to cable companies remains. And Verizon would like to put that concern to rest.


Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.


The timing of Verizon's request is relevant. In addition to the fact that the company is now dealing with an industry-friendly FCC, Verizon is also preparing to launch its own OTT video service in the not-too-distant future. This service promises to be different from Verizon's existing Go90 offering in that it sounds like it will include more standard television fare, something that could create parallels with traditional cable packages. (See Verizon: OTT on Tap as Yahoo Deal Nears Close.)

At the same time, Verizon is also readying a new version of its Fios TV service, which is considered a cable offering. The company wants to ensure that even though it has a cable-like service on one side of its business, it won't be treated as a cable company by the FCC when its new OTT product launches.

From the Verizon filing: "The Commission should also confirm that an over-the-top video service offered by a cable operator independent of its 'cable service' is not subject to regulation by a local franchising authority (LFA) regardless of whether the online subscribers access the service within or outside of the provider's franchise footprint."

If the current debates at the FCC make anything clear (a debatable question in itself), it's that regulations are still falling behind the technologies they're supposed to govern -- an unsurprising conclusion given the speed of government compared to the speed of technology innovation.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

msilbey 7/7/2017 | 2:34:45 PM
Re: Declaration seeking Yes, agreed that it's a way to put a line in the sand now so Verizon and others can point back to it in the future. It was just interesting to me to see Verizon resurrect discussion of this NPRM when it's all but been abandoned. 
Joe Stanganelli 7/7/2017 | 1:55:38 PM
Declaration seeking > From the Verizon filing: "The Commission should also confirm that an over-the-top video service offered by a cable operator independent of its 'cable service' is not subject to regulation by a local franchising authority (LFA) regardless of whether the online subscribers access the service within or outside of the provider's franchise footprint."



All of this is the regulatory-agency version of asking for what is known in the judicial arena as a "declaratory judgment". No actual conflict or accusations of putative wrongdoing exist yet. VZ wants a statement/order/what-have-you that it can point to down the line -- because this is a far more efficient, far more affordable, and far easier way of going about things. In FCC land, it's sometimes better to ask permission.

Here's my industry-watcher's opinion here. VZ is already pretty sure it knows the answer -- and not just because of an "industry-friendly" FCC composition. It would not be the easiest of legal arguments to defend for a hypothetically communitarian FCC to hold that a company's OTT service are subject to the same laws/regs as those of a cable service simply because the company also happens to run a cable service -- but if it did so hold, then VZ would have to fight it in hearings (or even court, if it came to that) and/or reorganize its corporate structure to distance its OTT division from itself (perhaps as a subsidiary, perhaps as a spinoff, perhaps as a JV, whatever) to get around such a ruling.


And now, my standard disclaimer for when I venture into this kind of territory on Light Reading pages: Neither this comment nor anything else posted on this site is or should be construed as legal advice. Neither this comment nor anything else posted on this site is or should be construed as the creation, implication, or affirmation of an attorney-client relationship. For actual legal advice, consult an attorney licensed to practice in your jurisdiction.
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