FCC officially proposes pay-TV status for linear OTT services

The FCC has circulated a memo through its Media Bureau, formally proposing that linear over-the-top services like Aereo be considered multichannel video program distributors (MVPDs), with accompanying rights to retransmission consent licensing agreements.

"Consumers have long complained about how their cable service forces them to buy channels they never watch," writes Federal Communications Commission chairman Tom Wheeler, in a Tuesday blog post. "The move of video onto the Internet can do something about that frustration--but first Internet video services need access to the programs. Today the FCC takes the first step to open access to cable programs as well as local television.  The result should be to give consumers more alternatives from which to choose so they can buy the programs they want."

Should the proposal become a rule, it would signal an important victory for an online video company that could really use one, Aereo. Since having its original business model of converting broadcast signals to video streams for mobile devices was shot down, the company has been litigating unsuccessfully in federal court to achieve MVPD status.

Wrote Aereo CEO Chet Kanojia on Aereo's Facebook page: "By moving this Notice of Proposed Rulemaking (NPRM) forward, the FCC will provide much-needed regulatory clarity and a clear set of rules for linear video programming systems, which ultimately, will increase investment in the video programming market. As a result, innovation will flourish and new video products and services will emerge, providing consumers with more choices in programming and pricing.

As precedent, Wheeler cited the introduction of rules two decades ago that gave satellite pay-TV operators similar MVPD status.

"In 1992 Congress realized that the then-nascent satellite industry would have a hard time competing because much cable programming was owned by cable companies who frequently kept it from competitors," he writes. "Congress mandated access to cable channels for satellite services, and competition flourished. Today I am proposing to extend the same concept to the providers of linear, Internet-based services; to encourage new video alternatives by opening up access to content previously locked on cable channels. What could these over-the-top video providers (OTTs) supply to consumers? Many different kinds of multichannel video packages designed for different tastes and preferences. A better ability for a consumer to order the channels he or she wants to watch."

Noted the National Association of Broadcasters, in a statement: "NAB welcomes video distribution platforms that legally deliver local TV content to consumers when and where they want it. We look forward to engaging with the FCC to ensure that this new competition enhances rather than undermines localism."

For more:
- read this FCC blog post

Related links:
Federal court enjoins Aereo's live TV operations but leaves open cloud-DVR option
Aereo asks FCC for pay-TV operator status
Aereo urges FCC to expand MVPD definition, retrans rules

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