Trying to rewrite the online video rules

Josh Wein

For the second time this year, a veteran U.S. senator has introduced legislation that, if enacted, could have real implications for the online video industry. This time, that senator happens to be chair of the committee in charge of most media legislation. So this bill has a better chance of actually becoming a law.

But that's not saying much, because the bar has been set pretty low. While the video legislation introduced by Arizona Republican John McCain earlier this year gained an important co-sponsor in Sen. Richard Blumenthal (D-Conn.) over the summer, McCain lacks a spot on the Senate Commerce Committee needed to shepherd the bill though the legislative process. That bill would require certain a la carte provisions for pay-TV distributors and their suppliers and create some restrictions for how broadcasters could react to the threat presented by Aereo's legal victories. Its prospects are slim at best.

The Consumer Choice in Online Video Act, which Senate Commerce Committee Chairman John D. Rockefeller (D-W.Va.) said he would introduce Tuesday, has no such committee handicap. Rockefeller is exactly the right person to sponsor such legislation if it is to have any chance of passing. As chairman of the Senate Committee on Commerce, Science, and Transportation, he sets the agenda for the committee and controls what bills move toward a vote. In essence, McCain would have to convince Rockefeller to take up his a la carte bill if he wants it to have a shot at passing the Senate. Rockefeller only has to convince himself.

But that doesn't mean the Rockefeller bill's prospects are good--just a bit less slim.

"We think the bill faces an uphill battle to pass Congress simply because it takes on the influential pay TV sector and broadcast companies," Paul Gallant, an analyst with Guggenheim Partners, wrote in a note to investors Tuesday night.

He's right. The NCTA, the trade association that represents the largest cable operators and cable programming networks, issued a statement defending the level of competition that already exists among video providers and warned against "creating marketplace disparities that would 'cherry pick' rights and obligations for some" players in the market. The National Association of Broadcasters issued a statement that was slightly warmer but also urged caution. The NAB supports efforts to encourage "the legal distribution of our highly-valued broadcast programming to on-line platforms," CEO and former Sen. Gordon Smith said. But the group "remains concerned about proposals that may legitimize theft of copyrighted programming."

It's hard to know exactly how these groups or others will react to the bill because details about what's in it are so scarce. While Rockefeller said he would introduce the bill Tuesday, its text has yet to appear in the Library of Congress. This forces observers to read between the lines of the press release and fact-sheet released by the Commerce Committee for any insights into what Rockefeller might mean by "regulatory parity," what ways broadband providers will be limited in their ability to degrade OTT programming and what sort of "reasonable access" to programming OTT providers will be entitled to.

Barring an unprecedented turn of events, these details will be revealed very soon. Then, online video companies themselves will be able to assess whether they will support the legislation. --Josh | +Josh Wein | @JoshWein