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Back in 2010, and then again in 2012, I wrote columns about the uncertain regulatory policies that apply to online video distributors (OVD). See Capital Currents - Online video uncertainties.

Guess what. The situation hasn’t changed. The FCC Media Bureau issued a Public Notice in 2012 asking for comments on whether the term “multichannel video programming distributor”(MVPD) should be interpreted to include OVDs, and they got about 80 comments, but the FCC never took any action.

But in late October 2014, FCC Chairman Tom Wheeler again raised the issue in a blog. He threatened to issue a notice of proposed rulemaking (NPRM) that would “open up” program access so that OVDs could have the same access to programming as cable systems and satellite operators. “I am asking the Commission to start a rulemaking proceeding in which we would modernize our interpretation of the term ‘multichannel video programming distributor’ (MVPD) so that it is technology-neutral.” 

Now that the NPRM has been published, we can see the legal and policy problems that it will face. There are many.

If OVDs are determined by the FCC to qualify as MVPDs, then it might give them certain program access rights. But MVPDs also face certain obligations. Will these same obligations apply to OVDs?

For example, MVPDs have obligations to carry emergency alert messages and emergency alert information that are accessible to hearing-impaired and sight-impaired customers. Will a technology-neutral regulatory scheme impose the same requirements on OVDs? How will it be accomplished? The FCC’s Emergency Alert System may be used by state and local authorities to deliver important emergency information such as AMBER (missing children) alerts and emergency weather information targeted to a specific area. Will OVDs be required to support this capability?

The FCC might try to impose whatever new rules are adopted on OVDs that are based outside of the United States. It isn’t clear how the FCC could enforce rules if the OVD is operating overseas.

The policies that led to Public, Educational, and Governmental Access Channels ("PEG Channels") are also worth considering. PEG channels are not required by FCC rules, rather they are a right given to the local franchising authority by Section 611 of the Communications Act. Educational access channels are used by local schools, colleges and universities to deliver courses and school board meetings. Governmental access channels are used to deliver public hearings and local government information such as trash pickup schedules. The Congress had specific public interest goals in mind when it gave local franchising authorities the right to demand these PEG access channels. How will the FCC translate those Congressional goals into obligations on OVDs?

Cable systems are required to carry virtually all local TV broadcast stations. Direct broadcast satellite operators, which are also MVPDs, have similar obligations. Both cable systems and satellite operators negotiate with the broadcasters over the contractual terms of carriage, which is becoming an important source of revenue for the broadcasters. Would that same set of program carriage rules apply to OVDs?

The FCC’s program carriage rules give broadcasters the exclusive right to control where their programming can be delivered to MVPD customers. Will these same geographic exclusivity rules apply to OVDs? How will that apply to customers who access OVDs using tablets that might be located anywhere in the world. 

But even if the FCC resolves all these issues in a technology-neutral manner, there’s still a fly in the ointment. MVPDs have a right to carry broadcast programming known as a statutory copyright license. A similar license applies to satellite systems. The U.S. Copyright Office has not expanded the cable statutory license to cover OVDs, and some believe that Congress would have to change the Copyright Act to make that possible. I invite you to take a look at Section 111 of the Copyright Act and see what you think. Anyway, an FCC action to redefine OVDs as MVPDs would not mean that OVDs would have any right to redistribute broadcast TV channels. This is not a right that the FCC can grant.

The term “multichannel video programming distributor” is defined in Section 602 of the Communications Act. Sort of. It says “the term ‘multichannel video programming distributor’ means a person such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming.” The word “channel” is key. It has been interpreted by FCC staff and by MVPDs to mean a physical transmission path. But FCC Chairman Wheeler intends to overturn that interpretation and redefine it.

There are lots more questions. Will cable operators that own programming services be required to license content carried on those services to OVDs? Will the accessibility obligations flowing from the Twenty-First Century Communications and Video Accessibility Act apply to OVDs? Regardless of which way the FCC rules, somebody is sure to say “we’ll see you in court.”

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