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Commissioner Pai Proposes Forbearing Video Regs

The video marketplace is transforming into an IP-based
system and the FCC should transform as well, including considering not applying
video regulations to MVPDs on a case-by-case basis, as it currently forbears
regulation in the telecom space.

That was one of the messages of Republican Commissioner Aji
Pai to an audience of broadcast and cable execs and others at a Media Institute
luncheon Thursday in Washington. Pai talked of the massive changes in
viewership and distribution over the past four decades -- he just turned 40.

Pai suggested that while folks now wanted their TV whenever
and wherever they wanted it, regulations should be rather less ubiquitous, and
pointed to an example from the cable side, according to a copy of his prepared

"A cable company recently told me that the legal team
had to flyspeck every single idea for improving the business to make sure that
it was even allowed. Innovation shouldn't be frustrated by worries about
regulatory burdens. And it shouldn't be hindered by regulatory
uncertainty....In considering whether to develop a new service, the first
question cable operators should ask is: Would this add value for our
customers? Unfortunately, many in the industry now find themselves
pondering a different question: How would this service be regulated?"

While he said he recognized that there would not be a major
rewrite of the 1992 Cable Act, which established many of those cable-related
regs, he did suggest a more surgical strike was possible.

"Even minor statutory changes could yield major
benefits," he said, like extending forbearance to video regs. Over the
years, forbearance has allowed the FCC to remove outdated regulatory burdens
from telecommunications carriers. This, in turn, has encouraged infrastructure
investment and broadband deployment."

Given the competition in the video space, he says it makes
no sense not to be able to take the same steps not to apply laws aimed at
video. "Technology is turning voice and video into applications
transmitted over the Internet. Former monopoly providers are facing intense
competition as we move to an all-IP world. So it seems to me that the FCC
should have the same authority to relieve MVPDs from obsolete rules as we
currently have for carriers. Permitting forbearance for voice regulation but
not for video regulation is itself an anachronism."

Particularly, he suggests, when IP has turned competition
into a cottage industry. He cited actress Felicia Day (Dr. Horrible's
Sing-Along Blog), who he met at CES and who has become something of a YouTube programming
mogul thanks to the Internet.

"Felicia Day doesn't need the permission of gatekeepers
at MVPDs or broadcast networks [those outlets prefer the terms
"curators" or trusted sources" to "gatekeepers"] to
share her creative vision with the world," he told his audience.

Pai gave the FCC credit for the cable-friendly deregulatory
moves of ending the ban on basic tier encryption, modifying its viewability
mandate, and sunsetting the absolute ban on exclusive programming contracts.
But he said the commission had committed an unforced error in finding Comcast
had discriminated against Tennis Channel -- he opposed the decision. The D.C.
circuit will hear Comcast's challenge to that decision later this month.

"At a time when consumers have more options than ever
before for accessing video content, the FCC shouldn't go out of its way to
micromanage MVPDs' programming decisions," he said of that program
carriage complaint finding, the first time the FCC has upheld such a complaint.
But he was not done laying into the decision. "At a time when we would
like cable operators to devote more bandwidth to advanced services, we
shouldn't force them to carry more channels in order to avoid carriage
complaints. And at a time when video distributors and American consumers alike
are complaining about programming costs, we shouldn't order MVPDs -- and
ultimately, consumers -- to pay for programming that they don't want."

Asked whether the FCC didn't need to define the statue of MVPD as part of the move to IP delivery,. Pai told B&C he thought the FCC was "rapidly approaching the time when the FCC is going to have to make some basic and fundamental decisions" about how FCC video regs apply to people "in the same space...It becomes a challenge to apply certain regulations to what are classified as MVPDs when, as I said in the speech, business models are so dynamically changing right now that it doesn't make sense to lump cable operators and DBS providers on one side and then not even consider the insipient competition from new providers."