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FCC Drills Into Online Video

THE FEDERAL Communications Commission’s focus on online video distributors (OVDs) as the next big thing in content delivery is obvious from its latest request for comment on the annual state of video competition report it will be preparing.

FCC chairman Tom Wheeler has made no secret of where he thinks content delivery is headed and why he wants it to go in that direction.

“Consumers have long complained about how their cable service forces them to buy channels they never watch,” Wheeler said last fall in announcing the proposal to redefine linear OVDs as multichannel video programming distributors (MVPDs), at least in terms of access to programming. “The move of video onto the Internet can do something about that frustration.”

The FCC has given interested parties until Sept. 21 to weigh in for the report, a deadline which dovetails with Wheeler’s plans to hold a vote this fall on his redefinition proposal.

The FCC’s Media Bureau, which is putting together the report, conceded the OVD definition was likely changing with that vote, but said in the interim it would stick with the facilities-based definition of MVPD that excludes OVDs, for now.

In its request for comment on the 17th video competition report, the bureau said it is looking to collect data on the amount and type of OVD programming available, including:

■ The number of consumers who view OVD programming;

■ The number of programs they view;

■ Amount of time spent viewing; and

■ Revenues from subscriptions, advertising and video-rental fees and sales.

Although the FCC said it will continue to divide video distributors into MVPD, TV station and OVD categories, it conceded that there is overlap, and demonstrates it. Both the TV station and MVPD categories include much talk about their respective relationships to online distribution.

That includes the degree to which MVPDs can be substituted for OVDs, and the competitive strategies of MVPDs launching online video services separate from their traditional, facilities-based services.

The commission is obviously pondering how to treat the OVD video marketplace, both relative to other players, and among players in the online-video space. Wheeler has billed over-the-top as a potential competitor to MVPDs, but not yet a full-fledged one.

The term of art is “substitution,” and the FCC is asking a lot about the degree to which OVDs, MVPDs and TV stations are interchangeable as video competitors.

Within the OVD ranks, it asks, “Do all OVDs compete with all other OVDs, or do OVDs compete mainly with OVDs with similar business models?” It wants to know if OVDs that rely on subscriptions compete with ad-based models — the same question it has long pondered about cable and broadcast substitutability.

In the wider video world, the FCC asks: “To what extent do OVDs compete with MVPDs and with over-the-air broadcast services? Have OVDs been a better substitute for the VOD programming offered by MVPDs than the live programming offered by MVPDs? Is competition between OVDs and MVPDs increasing with the growing amount of live programming offered by OVDs? What actions have OVDs taken in response to competition from MVPDs and broadcast stations?”

The answers the FCC gets will help it to figure out how to regulate all three spaces as it promotes online video as a full-fledged competitor.