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Rockefeller to Introduce Bill to Give Online Video Parity With Cable and Satellite Providers

Sen. Jay Rockefeller (D-W. Va.), the chairman of the Senate Commerce Committee, is introducing legislation to bolster the online video market, what he says is an effort to prevent cable and satellite companies from using their power to limit the growth of services like Netflix and Amazon.

The Consumer Choice in Online Video Act, which Rockefeller intends to introduce on Tuesday afternoon, would bar cable, satellite and large media companies from engaging in “anti-competitive” practices against online video distributors. It would do so in part by putting “reasonable limits” on contractual provisions in carriage contracts that limit online providers’ access to programming.

An aide to Rockefeller said that the legislation would allow online video providers to choose to be considered like cable and satellite providers, giving them a “pathway to negotiate for content” the way that cable and satellite providers do. The 1992 Cable Act included regulations designed to prevent companies from limiting access to channels as a way to stifle competition. If an online service chooses to be treated like a cable or satellite provider, it also would face certain retransmission consent and must carry regulations over the carriage of broadcast signals.

The legislation also would limit the ability of a cable or satellite company that also provides Internet service to “degrade” competitive online video services. Specifics of the legislation have yet to be released.

A big concern among consumer groups has been that cable and satellite companies will try to stifle competition by implementing more restrictive pricing for their Internet customers based on their usage. Although the legislation would not prevent cable and satellite companies from offering usage-based pricing for their Internet service, the legislation is intended to make billing clearer and more understandable. It also would direct the FCC to “monitor broadband billing practices to make sure they are not used anticompetitively.”

Rockefeller’s proposed legislation also does not directly address the legality of Aereo, the online provider of broadcast signals that broadcasters are challenging in court. If courts deem that the service is legal, “then this would clarify then that they would not be subject to retransmission consent payments,” an aide to Rockefeller said.

In May, Sen. John McCain (R-Arizona) introduced legislation designed to end some of the cable and satellite bundling of channels, a primary complaint of consumers facing hefty bills, but his legislation has yet to advance. Rockefeller has the advantage of sitting on a powerful Senate committee, even if his proposals are likely to stir up contentious debate with the cable and satellite industry.

“We have all heard the familiar complaint that we have five hundred channels, but there is nothing to watch,” Rockefeller said in a statement. “My legislation aims to enable the ultimate ala carte — to give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay for only what they actually watch.”

Update: The National Cable and Telecommunications Assn. issued a statement in which it noted that online video services like Netflix, Hulu and Amazon Prime have flourished “facilitated in large part by massive ongoing investments in broadband networks.

“In a world marked by such dynamism and robust competition, prudent policy dictates the removal of regulatory obstacles for all instead of creating marketplace disparities that would ‘cherry pick’ rights and obligations for some,” the org said.

The National Assn. of Broadcasters expressed concern that the legislation would “legitimize” services like Aereo.  “Copyright theft poses a very real threat to the revenue stream that supports local television and the U.S. network-affiliate relationship that is the envy of the world,” the org said.

John Bergmayer, senior staff attorney at the public interest org Public Knowledge, said that the legislation “is the ambitious approach we need to ensure that the benefits of online competition come to the video marketplace. It will ensure that online video providers have access to the content they need to offer a service and the home broadband connections they need to deliver it. It would bring fairness, transparency, choice, and competition to online video.”

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