MVPDs, OTT Services Tussle Over MVPD Definition

Pay-TV services, online video distributors (OVDs) and programmers don’t agree on whether an FCC proposal to adjust the meaning of the term multichannel video programming distributor (MVPD) to include over-the-top (OTT) video providers is good for online video, according to reply comments filed Wednesday in docket 14-261. “No commenter has identified any evidence of a problem in the OTT ecosystem that could warrant regulatory intervention now,” said AT&T, echoing Amazon and MLB Advanced Media. Extending MVPD status to OVDs would “facilitate online providers’ ability to gain access to video programming and enable the Commission to address practices by programmers that stymie greater video competition,” countered Verizon, echoed by online TV service FilmOn and the Tennis Channel.

NCTA and the American Cable Association disagreed, in their reply comments, on whether the commission should extend the term MVPD to online video, but agreed the law doesn’t allow it to do so. Classifying online video services as MVPDs “is foreclosed as a matter of law,” NCTA said. Classifying linear OVDs as MVPDs “cannot be reconciled with either the Act’s statutory language or the Commission’s own previous interpretations of the Term MVPD,” ACA said. Arguments that extending program access provisions to OVDs is procompetitive ignore "the difference between protecting competitors and promoting competition,” NCTA said.

The definition change could lead to a “dismantling” of cable TV franchising, said franchising authority Northwest Suburbs Cable Communications Commission of Minnesota. OTT services transmitted over a cable company’s infrastructure should be treated as cable services, they said. NCTA, Cablevision and others disagreed. “A number of municipalities appear to be concerned only with their entitlement to regulate all video services offered online by a franchised cable operator -- even if those services are offered, like those of other OVDs, on the Internet to customers other than those subscribing to the operator’s cable service,” NCTA said. “The statutory definition of a cable service cannot reasonably be interpreted to apply to services generally available to customers via the Internet,” NCTA said.

Treating online video differently from cable companies was a concern of many commenters including NCTA and affiliate organizations for the Big Four broadcasters. “Regulatory parity and fair competition require, among other things, that OVDs be subject to the program exclusivity requirements applicable to cable systems,” the affiliate organizations said in a joint filing. NCTA was concerned that too much help for OVD services would quickly lead to facilities-based MVPDs being left behind. “The fees and compliance costs incurred by existing MVPDs can translate to tens of thousands of dollars to millions annually, and these costs must be passed on to customers,” NCTA said. “New entrants would not have these fees and would have the opportunity to offer service at a substantially reduced rate and compete unfairly.”

Providing an advantage to OVD services is the point of the change, Verizon said. The FCC “should confirm that legacy cable regulation and franchising rules will not apply to over-the-top video services,” Verizon said. Such rules also shouldn’t apply to U-verse, AT&T said. U-verse TV is “appropriately categorized and regulated” as an MVPD service but isn’t a “cable service,” AT&T said. Since the FCC didn’t specifically seek comment on reclassifying U-verse as a cable service in this rulemaking, it can’t do so in this proceeding, AT&T said.