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Editorial: Thinking 'Over the Top'

We must admit, we were a little surprised two weeks ago by the court ruling approving the settlement that cleared the way for the Comcast/NBCU merger. Most everybody has been treating it as a done deal since January, but there was still a shoe to drop, which was the D.C. District Court’s approval of that settlement agreement between Justice and Comcast/NBCU.

But rather that simply sign off, the court made a point of giving the government some homework. Judge Richard Leon required it to report on any program access complaints filed by over-the-top video providers, saying he was concerned the government would not be able to enforce the arbitration mechanism it had set up.

The court, like the FCC, is anticipating that online video is going to be a competitive alternative to traditional cable. And the FCC is doing more than just anticipating. It is currently deciding whether and how to turn set-top boxes into universal home gateways to content, turning the TV set into a broadband player.

The FCC will need to weigh in on the subject and decide what rights and responsibilities online video providers are going to have. Giving them access rights to Comcast content as conditions in a merger deal that will eventually sunset is one thing. But the thicket gets thornier if the FCC wants to grow online video distribution as a driver of broadband deployment. And clearly it is looking eagerly in that direction.

In the Comcast order, which was full of protections for competitive online video providers, the FCC looked beyond checks on potential Comcast behavior to a wider market where competing online video providers “increase consumers’ choice of video providers, enhance the mix and availability of content, drive innovation, and lower prices for OVD and MVPD services.”

The Copyright Office isn’t looking to start grafting broadcast or cable models onto Internet delivery. In a report to Congress two weeks ago, it declined to go along with ivi TV’s argument that it was covered by the statutory license that allows cable operators to retransmit TV station signals without negotiating individual programming licenses, saying there were signal piracy and security issues that still needed resolving.

And they must be resolved. As the Copyright Office pointed out in its report, “[T]he Internet has become an integral part of the video distribution chain as more and more content, including broadcast content, is migrating online.”

It would be hard for the FCC to apply mustcarry to online content providers and stick to its guns about not regulating Internet content, which was at the root of its defense of net neutrality rules as applying to transmissions, not content. But it would also be tough to apply must-carry rules to cable and satellite operators, while not applying them to a competitive service the FCC is promoting as a price and service competitor to cable.

During the Comcast/NBCU merger-vetting process, one FCC staffer suggested it was an issue that was on the horizon rather than in their faces, but it seems to us that this “horizon” is approaching at the speed of 4 megabytes downstream.

As the story in this week’s Washington Watch section makes clear, the FCC has a lot on its plate in the coming months, from its long-overdue media ownership review, to its not-quite-as-overdue decision on universal service reform, to what cable operators hope is serious retrans reform and broadcasters hope is no more than tweaks to the system. But the commission also needs to start thinking seriously about how online programming services fit in its world—and perhaps more importantly, how broadcasting and cable fit in its online world view.