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FCC Chairman Wants to Redefine Internet Video to Compete with Cable, Satellite Services

FCC Chairman Tom Wheeler said on Tuesday that he is proposing that the definition of a multichannel programming provider be extended to the fast-expanding market for Internet video, a move he said would boost competition with cable and satellite services.

Wheeler’s proposal, which he is circulating to other FCC commissioners, calls for adopting a “technology neutral” definition of multichannel video programming distributor. If such “over-the-top” Internet video services are given such a definition, they would fall under federal regulations that govern multichannel distributors like cable and satellite distributors. Such a move would give services that run multiple channels over the Internet access to cable channels, and the ability to negotiate with broadcasters to carry TV stations.

Such a move also could give new life to Aereo, which has sought to be defined as a multichannel distributor following its defeat in the Supreme Court over its carriage of local TV stations over the Internet. A federal judge recently rejected Aereo’s latest effort to be defined like a cable service, but Wheeler noted in a blog post that the company had recently visited the FCC to make the point that updating the definition of a multichannel distributor would expand choice and “perhaps consumers will not be forced to pay for channels they never watch.” Nevertheless, Aereo would have to alter its economic model, as it would most likely not be able to obtain broadcast streaming rights for free.

Wheeler also noted that such a move is necessary as satellite companies like Dish prepare to launch online services, and Sony, Verizon and DirecTV mull over whether to offer their own. CBS and HBO have announced that they will start their own streaming services separate from cable subscriptions. The definition would apply only to services that offer pre-scheduled programming lineups, an FCC official said, meaning that it would not include on-demand video providers like Netflix.

Wheeler wrote that the definition “should turn on the services that a provider offers, not on how those services reach viewers. Twenty-first century consumers shouldn’t be shackled to rules that only recognize 20th century technology.”

He also said that opening up access to programming for Internet video services will spur competition for high-speed broadband, something that he has said is lacking. “Those seeking to deploy new competitive broadband networks tell us that it’s hard to provide new high-speed Internet access without also being able to offer a competitive video package as well,” he wrote.

Chet Kanojia, the founder of Aereo, praised Wheeler’s move, saying, “By clarifying these rules, the FCC is taking a real and meaningful step forward for competition in the video market. The FCC recognizes that when competition flourishes, consumers win.”

The Writers Guild of America West issued a statement in which it said, “A technology-neutral definition of an MVPD is long overdue and will enhance consumer choice. With the largest MVPDs attempting to consolidate their control of content distribution through mergers, this game-changing proposal to allow new competitors is absolutely necessary.”

Their reference was to the proposed mergers of Comcast with Time Warner Cable, and AT&T with DirecTV, both of which face FCC review. The FCC proposal could strengthen the merging companies’ case that the multichannel market is facing robust competition from Internet video. But such competition also hinges on the offering of high-speed Internet from cable and telecom providers, issues that are likely to be part of the government’s consideration of the transactions.

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