Aereo Asks FCC for a Chance to Compete

WASHINGTON — Aereo is hoping to have found a life preserver in the news that the Federal Communications Commission’s Media Bureau was teeing up a notice of proposed rulemaking to define linear over-the-top video providers, such as Aereo, as multichannel video programming distributors, or MPVDs (first reported online Sept. 29 by Multichannel News). Aereo has signaled it would be willing to negotiate retransmission-consent payments were that the case.

Some MSOs had conversations with Aereo back when it was still operating — it suspended operations after the U.S. Supreme Court ruled it needed to pay for content — about using the service to bypass escalating retransmission fees.

But an Aereo that pays broadcasters would be competing with cable moreso than complementing it.


Aereo is the online service that declared it was a remote technology provider, not a content distributor, and that it could deliver TV signals online without paying a copyright fee.

The U.S. Supreme Court saw things differently, and the Copyright Office declined to grant a compulsory license, pending more direction from the FCC or the courts.

If the FCC did provide direction by classifying Aereo as an MVPD, it would likely be eligible for that compulsory license (for the underlying programing on a TV station). But it would also have to negotiate for those ever-escalating retransmission fees with individual broadcasters.

CBS Corp. CEO Les Moonves, for one, has said he would be willing to talk to Aereo if it is willing to start paying for content, though CBS has just announced its own online subscription service that will deliver its TV stations. IAC, an early backer of Aereo, has written down its investment, and IAC chairman Barry Diller has signaled the service would likely not be a going proposition if it were a paying customer.

“[T]he value proposition would go out of the game, because Aereo is a low-cost method of receiving over-the-air broadcasting,” Diller told Bloomberg in April. “That’s the platform.”

But Aereo founder Chet Kanojia, and other Aereo execs have been meeting with FCC officials, including chairman Tom Wheeler, to lobby for the OVD classification proposal — retransmission and copyright payments and all.

“The commission could provide assurance to new market entrants like Aereo by defining or construing ‘MVPDs’ to include systems that transmit linear channels of video programming to consumers via the Internet — thereby securing to all MVPDs, in a technology-neutral way, the right to engage in timely, good-faith negotiations to license channels by retransmission consent,” Kanojia and company told the FCC, according to the filing.

The company has pushed the Copyright Office to grant it a compulsory license to deliver TV-station programming, pointing out that the Supreme Court in its decision likened its service to cable. The Copyright Office held that request in abeyance, pointing out the FCC was contemplating the definition of MVPD and might have more to say on the subject.

The FCC opened a proceeding to determine whether or not over-the-top providers are MVPDs after the Media Bureau tentatively concluded that, because they don’t control the facilities to transport the content, online video services are not MVPDS.

The NPRM, also from the Media Bureau, would reverse that decision and find that the transport element was not needed if the OVD was essentially mimicking the day-and-date character of cable and other MVPDs.

The definition is key to the regulatory status of online video delivery, which the FCC wants to promote as a competitor to traditional TV.

The NPRM has not been circulated to the other commissioners, and Wheeler downplayed it as something the bureau was “kicking around.”

But sources confirm that the NPRM was being teed up to circulate to the other commissioners before the story of its existence broke.


Meanwhile, American Cable Association president Matthew Polka had a chance to speak with Wheeler at the COMPTEL trade show in Dallas this month, contending that the FCC needs to close a “loophole” in the program-access rules before trying to extend those rules to over-the-top providers.

Polka said that before the FCC takes on the OVD classification, it needs to extend program access protections to the National Cable Television Cooperative, which negotiates programming deals for more than 900 small and medium-sized pay-TV providers. The ACA lobbies on behalf of those smaller operators.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.