Wheeler Gets Down With OTT

It's all in the name of competition.

Nearly a quarter century after Congress mandated access to cable programming for satellite TV companies in 1992, Federal Communications Commission (FCC) Chairman Tom Wheeler is ready to do the same for online video providers. In an official blog post Tuesday, Wheeler proposed a rulemaking proceeding that would broaden the definition of a multichannel video programming distributor (MVPD). In an effort to ensure the FCC's rules don't create a barrier to competition, Wheeler said he would like to create an MVPD definition that is technology-neutral, making room for IP-based video delivery. By doing so, Wheeler argued that the Commission would open up new opportunities for over-the-top service providers and create new video choices for consumers.

A news report by Broadcasting & Cable first leaked the idea that the FCC was considering a notice of proposed rulemaking (NPRM) on the definition of an MVPD last month. The move follows a lengthy legal saga in which Internet streaming startup Aereo Inc. opened up the debate over content rights online by transmitting free broadcast TV to subscribers over the web. The US Supreme Court ruled that Aereo couldn't bypass licensing fees for broadcast content because the company was "for all practical purposes a traditional cable system." (See Aereo's Cable Status Denied by Copyright Office.)

However, Aereo then found itself between a rock and a hard place when a US District Court judge ruled that -- despite the Supreme Court's decision -- the company still couldn't legally be defined as a cable operator, or granted the right to negotiate TV retransmission-consent deals. Stuck in limbo, Aereo has been searching for a viable business strategy ever since.

Chairman Wheeler specifically referred to Aereo in his blog post on the new NPRM, noting that the streaming company recently visited the FCC and asked the Commission to reconsider its MVPD definition. Wheeler agreed that an update could help companies like Aereo, and also pointed out that a new MVPD classification could benefit Internet-only service providers as well. "An updated definition of MVPD," he wrote, "would 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."

Want to know more about Aereo's fate and other OTT developments? Check out our dedicated OTT content channel here on Light Reading.

Reactions to the proposed NPRM are still rolling in. Aereo CEO Chet Kanojia reportedly said, "This is an important step in the right direction for consumers. Clarifying the definition of MVPD to encompass linear online video distributors will create a stronger, more competitive television landscape for consumers."

In a statement, the National Association of Broadcasters (NAB) said, "NAB welcomes video distribution platforms that legally deliver local TV content to consumers when and where they want it. We look forward to engaging with the FCC to ensure that this new competition enhances rather than undermines localism."

Taking great exception to Wheeler's move, the National Cable & Telecommunications Association (NCTA) argued that consumers are already "reaping the benefits of robust competition and an ever expanding menu of video options." The group warned that changing the MVPD definition "raises profound questions about how government will extend regulation to Internet video services and how any would-be virtual MVPDs will meet their 'social compact' obligations." With "so many unknowns," the NCTA cautioned the FCC against "creating new problems that would result in unintended consequences and would fail to honor principles of competitive neutrality among rival providers."

For its part, the American Cable Association (ACA) didn't really state a position on Wheeler's decision. Instead, it pounced on the chairman's blog post to make its case again for reform of the FCC's program access rules for all pay-TV providers, not just the larger providers and OTT providers. The group, which represents independent and smaller cable operators, contended that extending the program access protections that large MVPDs now enjoy to smaller MVPs would benefit many broadband providers and increase competition in the market as well.

— Mari Silbey, special to Light Reading

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TomNolle 10/30/2014 | 7:28:29 PM
Re: Downside They have, and the original model of Internet pricing and settlement came about more by accident than by policy.  In the days of dial-up modems and everyone with a modem bank being an ISP, people didn't worry about settlement because the financial world was valuing ISPs at $50k per customer so it was a land rush.  Unlimited usage and no settlement was the result.

About 1996 it started to become clear that there would be issues in areas like QoS if there wasn't some formal settlement.  I co-authored an RFC on "Brokered Private Peering" that proposed settlement, and Boardwatch at the time actually called for FCC intervention to establish some sensible model.

What killed sense was the advent of the OTT players and the VC and private-equity windfall that was created.  FCC Chairman Genachowski (who championed the neutrality order I referenced) was from that group and he simply articulated his own sensibilities.  But there was no statutory framework for the FCC to order anything relative to settlement UNLESS you ruled the ISPs were common carriers, which is what got us to where we are.
brooks7 10/30/2014 | 7:00:08 PM
Re: Downside The challenges are definitely larger than they are in the voice world, where routes were predetermined.  I was thinking of settlements around the assymetric peering that have been in vogue lately.  It seems to me that the original rules did not anticipate the rather assymetric nature of a service like Netflix.  

So, I get where you are getting the notion that payments are not part of Net Neutrality.  I just think that things have changed as well.


TomNolle 10/30/2014 | 5:53:46 PM
Re: Downside In the original FCC Neutrality order (which the DC Court of Appeals voided, starting our current flap) the FCC said that they believed that any payment/exchange/settlement other than "bill and keep" by the ISP that owns the user, is non-neutral.  I agree this conflicts with reality, but that was never much of a barrier to politics and regulations!
brooks7 10/30/2014 | 5:46:18 PM
Re: Downside Why would Net Neutrality prohibit settlement...it exists in the voice world.


kjsing 10/30/2014 | 5:43:15 PM
Re: OTT is no longer OTT Seven and DWX,

Good discussions. All good points and very appreciated. I would love to continue the discussion again 5 years into the future. It will be interesting to see how the broadcast industry has evolved by then.

K Jsing
TomNolle 10/30/2014 | 5:16:15 PM
Re: Downside I think that "extreme neutrality", meaning measures to prohibit settlement among ISPs, premium handling paid by the content provider, or specific statutory guarantees of QoS or availability will simply kill investment.  If the purpose of Title II classification is to do these things, I think it will kill the industry if it goes forward.  If Title II would also mandate wholesaling of infrastructure/services as we have with voice, it would be even worse.  But the FCC almost certainly wouldn't do that, they would follow Waxman's proposal and apply Section 706 to "forebear" from applying some sections.  The big problem would be that any move like this would take years in writing the order and appealing.  My view is that we'd be better off doing absolutely nothing.  The FCC can prevent real abuse of neutrality, and anything more than that is just an invitation to attend court sessions.
sam masud 10/30/2014 | 4:53:35 PM
Re: Downside Tom:


Don't you think it's past time the FCC designated ISPs as common carriers? Wouldn't that solve a lot a problems...although it would probably raise some new problems, probably more so for the ISPs and the OTT folks?
brooks7 10/30/2014 | 3:31:49 PM
Re: OTT is no longer OTT kjsing,

Actually, there have no entrants into residential service for a very long time.  There won't be now.  It takes Billions to build new residential networks and to do so for little or no profit will not draw in investors.  See - CLECs.

To add capacity at a peering point does not build out the network between the peering point and the customer.  That costs money that nobody, to date, has been willing to pay for.  Thus the challenge with the business.


dwx 10/30/2014 | 3:16:29 PM
Re: OTT is no longer OTT I think you are proving his point with your examples.  There is little incentive for incumbent providers to continue upgrading their networks just so people can consume services they already offer from other people.  Last-mile Internet access is really expensive and the people operating it aren't making much money selling just Internet access.  There is also little incentive for other people to build last-mile Internet access networks unless they can do so cheaply, like municipalties or utilities who have the infrastructure, right of ways, etc. in place already.      

Caps are there because adding bandwidth is expensive, it has little to do with architecture.  You can't architect more bandwidth out of thin air.  CDN works to an extent but it still takes space/power/interfaces/management no one seem to want to pay for.  We haven't seen real enforced bandwidth caps on fixed networks but it doesn't mean we won't.   Sure you can subscribe to video provider X streaming at 4K, but the quality may end up being poor or it will cost you in BW overages.  Right now it's okay for the MSOs/telcos and wireless providers to not count their own services against BW caps, Comcast already does that with their X1 IP video product.  

The MSOs and telcos already have the infrastructure in place to deliver video to customers via IP and are all doing it.  They all stream their content, even local channels, to alternative screens and the delivery is all IP.  They've built transcoding headends, CDNs, etc. which can easily be built to scale to support their customer base.
kjsing 10/30/2014 | 12:20:22 PM
Re: OTT is no longer OTT I did not miss the point. You are postulating under a false assumption that there can be no other players than incumbents. Market realities are different. Time in time history has shown that open markets prevail and lawmakers and businesses have no other choice than to follow suit.

Caps are only there because of a network architecture that was designed without scalability in mind. Incumbents are not caught flat-footed on increasing Inetrnet traffic. Reports have been out and continue to come out periodically.

Comcast rather preferred to charge Netflix access to its broadband subscribers than allowing Netflix to add CDN capacity. Verizon choose the same path rather than adding a couple of extra 10G ports that Level 3 was even willing to pay for (http://www.telecompetitor.com/peering-dispute-level3-says-fix-cost-verizon-grand-per-10g/).
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