Cable Pushes Back on Over-the-Top

WASHINGTON — Cable groups are telling the Federal Communications Commission that its proposal to redefine online video distributors is, well, over the top.

FCC chairman Tom Wheeler has signaled a vote by year-end on his proposal to define some over-the-top (OTT) programming services as multichannel video programming distributors, with program-access and retransmission-consent negotiation rights — and potentially other rights and obligations. That, in turn, has prompted a flurry of activity from cable operators trying to head off such as reclassification.

The National Cable & Telecommunications Association has long argued that MVPDs must have facilities as well as programming to meet that definition, something the FCC also tentatively concluded.

But in his ongoing push to promote competition to cable, Wheeler proposed to factor facilities out of that tentative definition when it comes to OTT providers that deliver linear channels of programming around the clock.

That would initially apply to Aereo, were that company still in business, and religious-programming provider Sky Angel, whose years-old petition the FCC is resolving in the proposed redefinition. But the FCC is aiming ahead of the target, anticipating and promoting linear over-the-top services that could compete with traditional cable.

With a deadline for action, cable operators and studios and others have been meeting with top FCC staffers to try and dissuade them from following the chairman’s lead.

Gleaned from ex parte filings about those letters filed with the commission, here is a highlight reel of the arguments they hope will gain some purchase with the other four commissioners — or perhaps even the chairman.

Washington-based executives from Time Warner Inc., 21st Century Fox, The Walt Disney Co., Viacom and CBS converged met with Wheeler aides to make two key points.

One, they expressed their belief that online programming rights are best dealt with separately, under copyright law, rather than by the FCC “influencing” their acquisition, the studios don’t want the FCC to apply program access rules to any over-the-top services the programmers operate themselves via their own applications, services or websites.

The FCC has tentatively agreed, saying that it does not think the MVPD definition should apply to “a distributor that makes available only programming that it owns — for example, sports leagues or standalone services like CBS’s new streaming service.”

The NCTA picked a Republican, meeting with commissioner Ajit Pai’s chief of staff to argue that giving OTTs MVPD status contradicts the clear definition of an MVPD as a provider with a transmission path — network or signal — and not just the content, which has been the trade group’s main argument.

The FCC has proposed making OTT providers subject to the good-faith bargaining requirement for retransmission-consent negotiations with MVPDs. That would require OVDs to negotiate for the right to retransmit each program on a TV station, since OVDs don’t have a compulsory license, as cable operators do, the NCTA has said.

The NCTA agrees with the FCC that cable operators aren’t cable operators when they migrate to Internet-protocol delivery or deliver a TV Everywhere version of their traditional lineups. It also agrees with the FCC’s tentative conclusion that when cable operators deliver a separate OTT service they are not cable operators and, if the NCTA could persuade the commission from its redefinition, not subject to program-access rules.

AMC Networks had the NCTA’s back on the issue of networks necessarily having the online rights to their programs.

In its filing, AMC said that if the FCC forces such negotiations it could actually raise programming costs, “especially due to the increased leverage content holders will have in negotiations with affected programmers.”

That would run counter to Wheeler’s oftcited goal of finding a way to reduce cable bills, instead of increasing them.

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.