The FCC’s OTT NPRM: Is Aereo cable by nature? OT
Post# of 17650
Posted On: 10/23/2014 6:59:30 PM
The FCC’s OTT NPRM: Is Aereo cable by nature? OTT, yeah MVPD - See more at: http://www.techpolicydaily.com/communications...HgCTv.dpuf
News broke late last month that the FCC is working on a notice of proposed rulemaking (NPRM) that would classify some types of Internet-based video distributors as multichannel video programming distributors (MVPDs). This is a big deal. MVPD classification would place these Internet-based video distributors on similar regulatory footing as traditional MVPDs like cable and satellite, with both the benefits and obligations that such footing entails. At the same time, there are substantial limitations, both on the MVPD classification and on the types of Internet-based video distributors to which the classification would apply.
This is the first in a series of posts that will discuss the regulatory treatment of online video. Today, I’ll provide some background and look at what the NPRM likely would (or could) do, as well as the links between the NPRM and Aereo. In future posts I’ll get into more of the challenges about how specific rules may apply to OTT, the (statutory, if not logical) importance of “linear” vs. other video, and whether this is likely to be a step into the future or further tie the industry to the past.
What may be at stake in the NPRM: What’s an online MVPD, and what rules apply?
Most readers likely have some sense of what an NPRM is, thanks to the ongoing Open Internet rulemaking. The FCC’s OTT NPRM, however, is really a “proto-NPRM.” At this point, it is likely still a draft. And, while there may be some formal or informal guidance from the “8th floor” (where the Commissioners’ offices are), at this point, the process is probably being directed by FCC staff. Staff members are likely working through the intricacies of Title VI, trying to figure out what can and cannot be done under the statute and matching this with various visions of what should or should not be done.
That said, Commission staff have been thinking about these issues since at least 2010, when Sky Angel – a company that provides an Internet-based TV service – filed a complaint with the FCC that would require treating it as an MVPD. Indeed, Commission staff likely had these questions in mind even before then. Both Verizon’s FiOS service and AT&T’s U-Verse service have presented (unresolved) questions about the MVPD classification. And the Copyright Office has been considering similar issues – the treatment of Internet-delivered video – since at least 2000 in proceedings with which the FCC is certainly familiar.
These issues are complex. For instance, there are different, but overlapping, definitions of cable, satellite, and MVPD, with different rules for each definition. As a starting point, given concern over whether Aereo is a “cable system”: the Communications Act’s definition of “cable systems” requires that such systems make use of public rights-of-way. For the purposes of the Communications Act, therefore, Internet-delivered video probably cannot be treated as a “cable system.” If Internet-delivered video is not “cable,” this only leaves two options for how it can be classified under the Communications Act: it is either an MVPD, or it is nothing (meaning that it is subject to little, if any, regulatory treatment by the FCC).
What, then, is an MVPD? As the name suggests, the key feature of an MVPD is that it distributes “multiple channels of video programming.” The quirk here is that both “channels” and “video programming” are statutorily-defined terms, and they probably limit the MVPD classification to the distribution of pre-programmed linear channels; that is, content you “tune in” to – if you turn on your favorite show at 6:03, you miss the first three minutes.
This means that the “online MVPD” classification that the FCC is considering likely can only apply to companies that operate much like traditional cable companies, distributing pre-programmed channels of content. While there are some firms out there that distribute video in this way (e.g., Aereo, FilmOn, Ivi, Sky Angel, and some broadcasters), it would not apply to the YouTubes and Netflixes of the world – or, it could only apply to them to the extent that they are distributing broadcast-style channels. It may also apply to systems like Verizon FiOS, AT&T U-Verse, and any other colloquial “cable system” that uses IP or switched digital video. Some of these systems have informally consented to being regulated as MVPDs, despite implicitly or expressly resisting such classification. Formal classification by the Commission could resolve some lingering questions about the status of these systems.
Figuring out what regulations apply to which technologies isn’t always easy or logical. To give one example, both MVPDs and cable systems are subject to retransmission consent obligations. This means that they need to get permission from broadcasters before retransmitting their signals. However, only cable is subject to must-carry obligations, which allow local broadcasters to insist that local cable companies carry their programming free of charge. The fact that retransmission consent applies to MVPDs has important implications for firms like Aereo, while the fact that the must-carry obligation applies differently to different distribution technologies could have important consequences as firms transition to IP-based delivery technologies.
Why is this coming up now? Is it about Aereo?
It is worth considering why the Commission has turned to the NPRM now. Perhaps the time to address the issue has simply arrived. More likely, two specific incidents have drawn the Commission’s focus: the demise of Sky Angel and the Aereo case. The Commission never came to a decision following Sky Angel’s 2010 filing. It issued a public notice in 2012 and invited comments on the matter, but other than the modest number of comments the Commission received, the Sky Angel docket lay fallow. Over the summer, however, Sky Angel submitted a new filing in the docket, informing the FCC that it had decided to abandon its Internet-based video service. It attributed this decision to the FCC’s failure to act on its petition, saying that it still believed in the business model and had the resources to pursue it.
Shortly after Sky Angel informed the FCC that it was shuttering its operations, the Supreme Court decided the Aereo case, in which the Supreme Court rejected Aereo’s arguments that this business model did not violate copyright law. After its loss before the Supreme Court, Aereo now argues that it is a “cable system” for purposes of the Copyright Act. If this argument ultimately prevails, Aereo will legally be able to retransmit local television content over the Internet, subject to a modest statutory license. This is where the new NPRM comes in. Whether Aereo can make use of the Copyright Act’s statutory license is likely up to the Copyright Office (though the courts may have the final word). The Copyright Office has previously argued that Internet-delivered video does not qualify for the compulsory license – but it has implicitly suggested that it may classify Internet-delivered video as a “cable system” if the FCC also subjects it to regulation under the Communications Act.
This suggests two things. First, the FCC may be considering this issue now in response to questions raised by Aereo and the Copyright Office. And, second, this could (once again) spell “the end” for Aereo. At first blush, this may seem like a big win for Aereo: although it is not certain, if the FCC classifies Internet-delivered video services like Aereo as MVPDs, there is some likelihood that the Copyright Office will follow suit and classify Aereo as a “cable system.” This action will give Aereo access to the Copyright Act’s compulsory license, which is exactly what Aereo wants. But if the FCC classifies Aereo as an MVPD, it will also be subject to the Communications Act’s retransmission consent requirements. This would require Aereo to get consent from local broadcasters to retransmit their signals – and it is likely that such consent would come at a hefty price, if at all.
- See more at: http://www.techpolicydaily.com/communications...HgCTv.dpuf
News broke late last month that the FCC is working on a notice of proposed rulemaking (NPRM) that would classify some types of Internet-based video distributors as multichannel video programming distributors (MVPDs). This is a big deal. MVPD classification would place these Internet-based video distributors on similar regulatory footing as traditional MVPDs like cable and satellite, with both the benefits and obligations that such footing entails. At the same time, there are substantial limitations, both on the MVPD classification and on the types of Internet-based video distributors to which the classification would apply.
This is the first in a series of posts that will discuss the regulatory treatment of online video. Today, I’ll provide some background and look at what the NPRM likely would (or could) do, as well as the links between the NPRM and Aereo. In future posts I’ll get into more of the challenges about how specific rules may apply to OTT, the (statutory, if not logical) importance of “linear” vs. other video, and whether this is likely to be a step into the future or further tie the industry to the past.
What may be at stake in the NPRM: What’s an online MVPD, and what rules apply?
Most readers likely have some sense of what an NPRM is, thanks to the ongoing Open Internet rulemaking. The FCC’s OTT NPRM, however, is really a “proto-NPRM.” At this point, it is likely still a draft. And, while there may be some formal or informal guidance from the “8th floor” (where the Commissioners’ offices are), at this point, the process is probably being directed by FCC staff. Staff members are likely working through the intricacies of Title VI, trying to figure out what can and cannot be done under the statute and matching this with various visions of what should or should not be done.
That said, Commission staff have been thinking about these issues since at least 2010, when Sky Angel – a company that provides an Internet-based TV service – filed a complaint with the FCC that would require treating it as an MVPD. Indeed, Commission staff likely had these questions in mind even before then. Both Verizon’s FiOS service and AT&T’s U-Verse service have presented (unresolved) questions about the MVPD classification. And the Copyright Office has been considering similar issues – the treatment of Internet-delivered video – since at least 2000 in proceedings with which the FCC is certainly familiar.
These issues are complex. For instance, there are different, but overlapping, definitions of cable, satellite, and MVPD, with different rules for each definition. As a starting point, given concern over whether Aereo is a “cable system”: the Communications Act’s definition of “cable systems” requires that such systems make use of public rights-of-way. For the purposes of the Communications Act, therefore, Internet-delivered video probably cannot be treated as a “cable system.” If Internet-delivered video is not “cable,” this only leaves two options for how it can be classified under the Communications Act: it is either an MVPD, or it is nothing (meaning that it is subject to little, if any, regulatory treatment by the FCC).
What, then, is an MVPD? As the name suggests, the key feature of an MVPD is that it distributes “multiple channels of video programming.” The quirk here is that both “channels” and “video programming” are statutorily-defined terms, and they probably limit the MVPD classification to the distribution of pre-programmed linear channels; that is, content you “tune in” to – if you turn on your favorite show at 6:03, you miss the first three minutes.
This means that the “online MVPD” classification that the FCC is considering likely can only apply to companies that operate much like traditional cable companies, distributing pre-programmed channels of content. While there are some firms out there that distribute video in this way (e.g., Aereo, FilmOn, Ivi, Sky Angel, and some broadcasters), it would not apply to the YouTubes and Netflixes of the world – or, it could only apply to them to the extent that they are distributing broadcast-style channels. It may also apply to systems like Verizon FiOS, AT&T U-Verse, and any other colloquial “cable system” that uses IP or switched digital video. Some of these systems have informally consented to being regulated as MVPDs, despite implicitly or expressly resisting such classification. Formal classification by the Commission could resolve some lingering questions about the status of these systems.
Figuring out what regulations apply to which technologies isn’t always easy or logical. To give one example, both MVPDs and cable systems are subject to retransmission consent obligations. This means that they need to get permission from broadcasters before retransmitting their signals. However, only cable is subject to must-carry obligations, which allow local broadcasters to insist that local cable companies carry their programming free of charge. The fact that retransmission consent applies to MVPDs has important implications for firms like Aereo, while the fact that the must-carry obligation applies differently to different distribution technologies could have important consequences as firms transition to IP-based delivery technologies.
Why is this coming up now? Is it about Aereo?
It is worth considering why the Commission has turned to the NPRM now. Perhaps the time to address the issue has simply arrived. More likely, two specific incidents have drawn the Commission’s focus: the demise of Sky Angel and the Aereo case. The Commission never came to a decision following Sky Angel’s 2010 filing. It issued a public notice in 2012 and invited comments on the matter, but other than the modest number of comments the Commission received, the Sky Angel docket lay fallow. Over the summer, however, Sky Angel submitted a new filing in the docket, informing the FCC that it had decided to abandon its Internet-based video service. It attributed this decision to the FCC’s failure to act on its petition, saying that it still believed in the business model and had the resources to pursue it.
Shortly after Sky Angel informed the FCC that it was shuttering its operations, the Supreme Court decided the Aereo case, in which the Supreme Court rejected Aereo’s arguments that this business model did not violate copyright law. After its loss before the Supreme Court, Aereo now argues that it is a “cable system” for purposes of the Copyright Act. If this argument ultimately prevails, Aereo will legally be able to retransmit local television content over the Internet, subject to a modest statutory license. This is where the new NPRM comes in. Whether Aereo can make use of the Copyright Act’s statutory license is likely up to the Copyright Office (though the courts may have the final word). The Copyright Office has previously argued that Internet-delivered video does not qualify for the compulsory license – but it has implicitly suggested that it may classify Internet-delivered video as a “cable system” if the FCC also subjects it to regulation under the Communications Act.
This suggests two things. First, the FCC may be considering this issue now in response to questions raised by Aereo and the Copyright Office. And, second, this could (once again) spell “the end” for Aereo. At first blush, this may seem like a big win for Aereo: although it is not certain, if the FCC classifies Internet-delivered video services like Aereo as MVPDs, there is some likelihood that the Copyright Office will follow suit and classify Aereo as a “cable system.” This action will give Aereo access to the Copyright Act’s compulsory license, which is exactly what Aereo wants. But if the FCC classifies Aereo as an MVPD, it will also be subject to the Communications Act’s retransmission consent requirements. This would require Aereo to get consent from local broadcasters to retransmit their signals – and it is likely that such consent would come at a hefty price, if at all.
- See more at: http://www.techpolicydaily.com/communications...HgCTv.dpuf
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