Linear broadcast over OTT would throw viewers 'back to 1985,' analyst says

While it's about time the FCC finally recognized that regulations for facilities-based MVPDs are "anachronistic," the commission is completely clueless about what broadband video really is, and what it means for media and entertainment's future.

That's according to Joel Espelien, senior advisor for The Diffusion Group, in a blog post that argues the Notice of Proposed Rulemaking circulated by FCC Chairman Tom Wheeler last week is basically dead on arrival.

"This entire proposal reveals how far behind the curve the FCC is when it comes to understanding the future of TV," Espelien wrote.

Three factors make the idea of linear video over OTT impractical, according to the post: the quality of the video stream, difficulty in creating a seamless time-shifting experience, particularly on mobile devices, and the cost of retransmitting that video.

Current OTT apps like WatchESPN and HBO GO, he argues, stream recent content (such as new episodes of a TV series like True Detective). However, subscribers to those services can access that content on demand from a cached location. Viewers watching live-streamed TV don't have that luxury, and they won't have the ability to record the streams on a remote DVR. Recording a live stream on a mobile device is a practical impossibility at this point because of storage requirements, according to Espelien.

"The result is that linear broadcast on a tablet or smartphone means TV circa 1985. Remember this? You start the app at 8:10 p.m. and you've just missed the beginning of the show that explains what happened last week (with no opportunity to restart)," he said.

Further, the cost to consumers won't decrease, thanks to ever-increasing retransmission fees. "For a package of CBS, ABC, NBC, and Fox you are talking about $6-8/month in retransmission fees. By way of reference, Aereo's basic package started at $8/month," Espelien said.

That prediction is already being borne out as early linear OTT entrants Sony and Dish Network (NASDAQ: DISH) struggle to license linear content for their planned service packages.

While OTT providers like Dish and Sony, as well as Aereo and FilmOn, are probably hopeful that the FCC will take into account issues like cloud-based DVRs (Aereo's service leased an antenna and remote DVR to subscribers), Espelien's post sounds a warning to both regulators and potential online MVPDs that the road to all-IP television will continue to be a rocky one.

For more:
- see this blog post (reg. req.)

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