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FCC Engages in Linear Thinking on MVPDs

WASHINGTON — Federal Communications Commission chairman Tom Wheeler was as good as his word, if he was keeping the most important acronyms close to his vest: MVPD and NPRM.

Three weeks ago, Wheeler told Multichannel News that whether online video distributors (OVDs), a l so known a s over-the-top video providers, should be defined as multichannel video-programming distributors (MVPDs) was something the agency “has got to look at.”

The FCC is doing more than that.

As first reported online by Multichannel News, the regulator’s Media Bureau is working on a notice of proposed rulemaking tentatively concluding that over-the-top providers that replicate the linear programming model of traditional cable or telco or satellite providers over the Internet would be regulated as MVPDs, whether or not they have a dedicated transmission path.

That means such over-the-top players would have access to pay TV content through the FCC’s programaccess rules, as traditional facilities-based cable, satellite and telco providers do. They would also be required to negotiate for retransmission consent with broadcast TV stations.

Wheeler would only confirm that the FCC was “kicking around” the idea, but sources maintain that “kicking” included work on the NPRM, which could be circulated any day.

The idea behind the NPRM, a source said, is that over-the top providers would have an FCC-enforced access to vertically integrated programming.

The item reportedly asks which other MVPD rights and responsibilities, beyond program-access and retransmission-consent rules, should extend to over-the-top providers, leaving the possibility of some hybrid status.

NOT TECH-SPECIFIC

An FCC spokesperson had no comment. But an agency official speaking on background confirmed that the item proposed adopting a technology-neutral definition of an MVPD.

Should such a definition be adopted, the FCC would reverse a tentative 2010 bureau-level conclusion in a program-access complaint filed by Sky Angel, a Christian-oriented provider of Internet-delivered subscription linear and on-demand programming, that it is necessary to have a facilities-based transmission path to qualify as an MVPD.

Sky Angel, once a direct-broadcast satellite service, converted to IPTV delivery in 2008, prompting some cable networks to withhold programming. It filed a program-access complaint against Discovery Communications in 2010, after Discovery decided to withdraw its networks. However, as the FCC acknowledged in seeking input on the definition of an MVPD in 2012, “the interpretation of these terms has legal and policy implications that extend beyond the parties to this complaint.”

Though the programaccess complaint is still unresolved, the FCC’s Media Bureau tentatively concluded that an MVPD has to have control of both the content and the transmission path — copper, fiber or satellite signal — to deliver a channel and that an online video distributor lacks that path, since it does not control a facilities-based channel to deliver it.

That meant Sky Angel did not have standing to file its program-access complaint against Discovery for taking programming off the over-the-top service.

The NPRM tentatively concludes that a provider would not need to own the transmission path to be an MVPD as long as it provides a continuous linear stream of pre-scheduled programming. That would rule out such online providers as Netflix, Hulu Plus or any other subscription on-demand type of service.

The FCC had been considering giving OVDs a path to MVPD status through a marketing or joint venture with Internet-service providers, but there appears to be no opt-in or opt-out status, the FCC official said. Instead, providers either are or aren’t an MVPD, keyed to delivering that linear lineup.

Sky Angel suspended operations in January, it noted in a June FCC filing, citing its inability to compete with traditional MVPDs because it lacked access to content afforded those providers via program-access rules.

If OTT providers are afforded legal MVPD status, they would get access to TV stations via must-carry and retransmission-consent rules — but would also be subject to the same program carriage requirements as cable, satellite and telco providers.

Such a decision could also insure that online video distributors have access to must-have video networks that would allow them to be competitive with traditional video suppliers like cable and satellite.

In approving Comcast’s acquisition of NBCUniversal, the FCC signaled that it expected over-the-top video to become a competitor to traditional cable and satellite services, and therefore included conditions requiring the industry giant to make its programming available to OTT providers under nondiscriminatory terms and conditions.

AEREO REDUX?

Giving over-the-top players MVPD status would also appear to give online TV-station distributors such as Aereo a path forward to qualify for a compulsory license — but would also mean that such services would need to negotiate for retransmission consent with stations that don’t opt for must-carry status.

But as with the FCC’s NPRM on new Internet neutrality rules, the agency is still soliciting comment and the item is far from set in stone.

The National Cable & Telecommunications Association (NCTA) has argued that a transmission path is necessary to be an MVPD. It told the FCC in comments on Sky Angel that the 1992 Cable Act was clearly intended to promote “facilities-based MVPD competitors.”

To define it otherwise, the NCTA said, would result in “expansive regulation of the Internet” and conferring rights and obligations on online entities that the FCC does not track or license, that may not have physical facilities in the U.S. and which “were never intended to be the subjects of such regulations.”

Broadcasters have argued that if the FCC does give over-the-top providers the right to carry TV-station signals, they must also be subject to retransmission consent and program exclusivity rules.

However, as the FCC acknowledged in seeking input on the definition of an MVPD, “the interpretation of these terms has legal and policy implications that extend beyond the parties to this complaint.”

After a federal court asked the FCC in 2012 why it had not acted on the Sky Angel complaint, the commission issued a public notice asking for input on the definition of MVPD. It has been more than two years since the FCC collected comments on that definition.