FCC’s MVPD proceeding: the next divisive issue

[Commentary] Federal Communications Commission Chairman Tom Wheeler’s proposal to reclassify some online video providers as multichannel video programming distributors is going to be another divisive, partisan issue -- an all-too familiar pattern at the agency. The gist of the proposal would result in over the top services that provide linear programming (programming streamed on a set schedule) falling under the same regulations as cable or other pay TV services. Chairman Wheeler recently said the agency would take up the issue in the fall, but GOP Commissioner Ajit Pai, is already building his case for why it’s a really bad idea. From Commissioner Pai’s perspective, there is no market failure. Over-the-top video is thriving. “Given the remarkable success of the over-the-top video industry, the burden should be on those who favor new regulations to prove what’s wrong and explain why we should change,” Pai said in an address to the Churchill Club, a business and tech forum in Palo Alto (CA). Commissioner Pai cited numerous examples of online video that have popped up all across the Internet, from YouTube to Netflix to CBS All Access. The argument for redefinition is that it would help the OTT industry, stimulating more competition for cable because TV stations would now be required to engage in retransmission consent negotiations.

In a speech before the cable industry, Chairman Wheeler signaled his position: “The commission has its work to do to clear obstacles to competition. We will proceed to consider whether to adopt a technologically-neutral definition of a multichannel video program distributor and, to be candid, I favor a technologically-neutral definition that includes Internet-based companies that choose business models that fit this status,” Chairman Wheeler said. But that presents its own legal dilemma, Commissioner Pai noted. While the FCC could compel retransmission negotiation agreements, it has no authority over the Copyright Office, which must also grant a compulsory license.