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.
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