The Emergence of Online Video: Is It The Future?

The Senate Commerce Committee held a hearing to consider the future of online video, explore the migration of viewing from traditional television to Internet and broadband-enabled video content, and examine the role that disruptive technologies play in facilitating this transition, and the business and legal models that foster the growth of this sector.

Committee Chairman Jay Rockefeller (D-WV) started with a couple of questions: 1) How will the disruptive technology that online viewing provides lead to better content and more consumer choice? And 2) How do we harness this change for the power of consumers so we can get higher quality programming at lower rates? He voiced concerns that despite the growth of new video services such as Netflix and Hulu, consumers are forced to pay too much for television programming and were saddled with channels they didn’t want.

Internet executives at the hearing touted the growth of online platforms which they said would give consumers more choices outside of traditional cable providers.

Paul Misener, Amazon.com vice president for Global Public Policy, warned that policymakers should ensure that the Internet remained a "nondiscriminatory, open platform" to protect consumer choice. "The open Internet encourages innovation and allows consumers to decide whether a particular product or service succeeds or fails," he said. Misener said online video providers were heartened that the Federal Communications Commission (FCC) has pledged to monitor the Internet for anticompetitive or otherwise harmful effects. But he said lawmakers also needed to "remain vigilant on … Internet openness." Misener singled out data caps imposed by many consumer Internet providers as requiring such vigilance.

IAC Chairman Barry Diller that the US telecommunications law must be rewritten because of the advance of the Internet. Diller said changes in media brought about by online content have made the 1996 Telecommunications Act largely useless, and to a great extent an impediment to progress. “The laws we have … do not address the reality of this new force,” Diller said, referring to the Internet. “We do not have a 'first rate broadband infrastructure in this country,'” he said in response to a question from Sen. John Thune (R-S.D.) on the readiness of nation's communications infrastructure to handle new online video offerings. “We are slower and less deployed than 15-18 countries,” he said. “[W]e need as good a system as any in the world … and right now, we don't [have one].”

Diller also said he thinks the same rules and obligations that apply to traditional video distributors should be applied to online video services, though he also said he believed that should be light-touch regulation. Diller's point was that a level playing field was crucial.

Diller got a grilling from Sen Jim DeMint (R-SC) about Aereo TV. After Diller pitched the service to the committee as a technological innovation that gives viewers access to "perfect" HD pictures using their own personal remote antenna to view online programming they do not have to pay for, Sen DeMint probed his explanation. The senator suggested Aereo TV was intercepting signals and retransmitting them, charging viewers for distributing a network while not paying content providers. Diller countered that the service was not retransmitting or distributing content and was not a network. He said that if RadioShack was considered a distributor for selling an antenna to a consumer, then so was Aereo TV because it was analogous. As to the broadcasters' fighting Aereo, Diller suggested it went with the territory.