Diller: Online Video Should Be Subject to Same Obligations as Traditional Distributors

IAC Chairman Barry Diller told a Senate panel Tuesday that
he thought 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 an attentive, though not entirely receptive,
audience in a Senate Commerce Committee hearing Tuesday (April 24) on "The
Emergence of Online Video: Is it the Future?" He also had an attentive online

After his comment about similar regulatory treatment for
online video, one Comcast exec tweeted: "Diller supports legacy
obligations on broadcasters and satellite to be applied to online video,"
while a cable association exec tweeted: "Level playing field = PEG,
must-carry, leased access, program carriage, program access, privacy, franchise
fees, etc."

Diller, former top Fox and Paramount exec, had definite
ideas about the online video future, including that world-leading -- or no worse
than second-place -- broadband access was crucial; that online video was a
complement, rather than a direct substitute for traditional video distribution;
and that without protections of network neutrality, traditional distributors
like broadcasters and cable operators would tie "anchors and tin
cans" around any competitor who tried to deliver content those legacy
distributors did not own.

Diller said he thought copyright law was working pretty well
and only needed tweaking, rather than what he said was the "ridiculous
overreach" of the Stop Online Protection Act, legislation backed by
studios but stopped by Google and other Web forces.

Diller made a pitch for his Aereo TV service, which charges
for what he describes as access to a remote broadcast antenna and cloud DVR
capabilities via the Internet, and what broadcasters suing him describe as
retransmission of their signals without compensation in violation of copyright
law. While Diller and broadcasters are currently at odds, since his service
charges access to broadcast TV, Diller pitched the value of local broadcasting,
saying he never held to the theory that it was outmoded, and that it continued
to provide important local news.

Committee Chairman Sen. Jay Rockefeller (D-W.Va.) gave
Diller a warm welcome, saying they had been together on a number of occasions
and adding a shout-out for his expertise and experience, even saying to his
wife -- noncommercial TV executive Sharon -- "hi."

Rockefeller was receptive to the prospect of over-the-top
services, like those represented by other witnesses from Amazon and Microsoft,
for potentially providing downward pricing pressure on cable bills, which he
criticized as outstripping inflation. He also talked about getting 500 channels
and only watching 10, but having to pay for them all.

Diller said that perhaps the biggest opportunity of the rise
of Internet video delivery was the prospect of a la carte, of programming
delivered in the narrowest of narrowcasts. Asked why an ESPN did not sell
itself separately to consumers, Diller said they would be insane to do so,
given the traditional model of 100% of cable subs having to pay for it whether
or not they watched it or not -- Diller said he didn't.

Diller got a grilling from Sen. Jim DeMint (R-S.C.) 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, 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.

Any technological development that threatens hegemony is
going to be challenged, he said. In fact, he conceded that if he were a
broadcaster, his reaction to Aereo would be the same, which he characterized as
attempting to protect their business at all costs. But he said he would also
recognize that the quid pro quo for their free government license was delivering
a signal that viewers had a right to receive through an antenna. "Aereo
simply allows consumers to get what was the quid pro quo for broadcasters to
receive their free license."

There were no broadcasters on the witness panel, but a
broadcast exec with one of the companies suing Aereo said of the Diller
explanation: "He is trying to make a buck without licensing the content
that he is retransmitting.

"This is not about new technology. This is about trying to
make money off of other's investment."

The DeMint exchange was the most heated of the hearing, with
the balance featuring legislators trying to understand the impact of online
video on cable prices, or what access or other regulations it should be subject
to, or what it would mean to broadband build-out.

There were not a lot of definitive answers from the panel,
comprising Diller, Blair Westlake, VP at Microsoft; Paul Misener, VP at Amazon;
and Susan Whiting, vice chairman of Nielsen, beyond the agreement that
universal broadband would be key to insuring that it was not a world of online
video haves and have-nots.

Diller said flatly: "We do not have a first-rate
broadband infrastructure in this country," and said universal broadband
access "should be the law."

There was no talk about broadband usage caps and what effect
that has on Internet video, a point Rockefeller made toward the end of the
hearing. But there was a lot of talk about network neutrality.  Diller
said that along with universal access, it was the other absolute necessity in
an online video world.

Network neutrality needs to be safeguarded," he said,
adding that there should be no toll bridges between producers and consumers.
Misener said he agreed completely, while Westlake talked about a balanced
approach, saying that is why Microsoft supported the FCC's compromise network
neutrality rules.

"We have to protect network neutrality," said

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.