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Layer3 TV Drops Virtual MVPD Hints

Layer3 TV, the self-described “next-generation cable provider,” has remained coy about the actual service that will launch this summer, but a recent filing with the Federal Communications Commission has shed some more light on its plans.

The Denver-based startup, led up by several cable operations and engineering veterans, essentially told the FCC that it’s possible to build a platform that looks and acts like a traditional multichannel video programming distributor (MVPD) from a commission-requirements standpoint, but can still be innovative and compete head on with legacy pay TV service providers.

Layer3 TV has not announced if its service will be delivered “over-the-top” via a public Internet connection or as managed IP streams into the consumer home. However, a source familiar with the company’s plan did say it would be inaccurate to label it an OTT service because it’s aiming to become a “new class” of distributor.

COMPETITIVE KEYS

Layer3 TV did describe itself as having a “facilities-based architecture” to the FCC, which is looking to define online video providers (OVDs) that deliver a linear programming stream as MVPDs. If defined as such, an OVD would have access to content through the FCC’s program-access rules, but likewise would have to negotiate for retransmission consent with broadcasters.

The July 22 ex parte filing — which describes a meeting between several staff members of FCC chairman Tom Wheeler and Layer3 TV executives, including co-founders Jeffrey Binder (CEO) and David Fellows (chief technology officer) — appears to confirm that Layer3 TV is approaching its business as a bona fide MVPD with the rights and privileges that such status would confer.

And it appears to be of the opinion that video competition isn’t just about opening up programming distribution rights to OVDs.

As described in the filing, Layer3 TV noted that it “asserted that innovative companies like itself, that control the selection, management and operation of the facilities over which traditional MVPD services are provided, are not unduly or unnecessarily burdened by the fundamental regulatory obligations imposed on it and other MVPDs … provided that such regulatory obligations recognize basic technical differences in Internet Protocol (‘IP’) delivery of linear channels versus quadrature amplitude modulation (‘QAM’) delivery of such linear channels by the same cable systems.”

TREAD CAREFULLY ON MVPD OBLIGATIONS

Layer3 TV likewise proposed that a “technology-neutral” approach would paradoxically inhibit competition and degrade the quality of content that consumers demand, were the FCC to jettison certain obligations aimed at protecting the consumer interest, including requirements such as Emergency Alert System compliance, closed captioning, limits on commercial audio volume and the provision of public, educational and governmental (PEG) access channels.

“Compliance with those legacy rights and obligations that remain applicable, regardless of the delivery technology, is neither impossible nor anti-competitive,” Layer3 TV argued. “Nor is such a requirement unduly burdensome for new entrants, as Layer 3 TV said it would soon demonstrate.”

Layer3 TV hasn’t announced a launch date, but it is gearing up amid the recent debut of OTT-delivered pay TV services such as Sling TV, Dish Network’s slimmed-down service for cord-cutters, and PlayStation Vue, a more-robust multichannel offering Sony is currently selling in seven markets: Dallas, Miami, Chicago, Philadelphia, Los Angeles, New York and San Francisco.