OTT-as-MVPD Proceeding Seen at Standstill as Idea Lacks Strong Support

The FCC proceeding on whether a particular type of over-the-top service should be considered a multichannel video programming distributor seems at a standstill, said an agency official and lawyers who have recently spoken with agency officials. The initiative spearheaded by Chairman Tom Wheeler is opposed by a majority of the other commissioners, as far as all stakeholders we interviewed are aware. Because there are many stakeholders with concerns about the NPRM, many of those interviewed represent interested clients.

It increasingly appears likely to end up a perpetually open docket, multiple attorneys involved in the proceeding said. There also was strong pushback earlier this month from House Commerce Committee ranking member Frank Pallone (see 1510090054) on what the NPRM proposed, which would presumably be dealt with in any forthcoming draft order. A Media Bureau spokeswoman wouldn't comment for this story.

Rumblings about the proceeding are likely motivated more by people having a particular agenda against it going forward, said John Bergmayer, senior staff attorney at Public Knowledge, which has strongly backed the proposal. "It's maybe not going to happen as soon as we thought. [But] it'd be a mistake to view that as the issue is over."

The four regular commissioners have expressed some skepticism that over-the-top (OTT) is demonstrating any market failure that needs such regulatory solutions, especially as the online video distribution market seems to be doing well as competitors proliferate, said one communications attorney who has been part of ex parte meetings with the FCC on the OTT-as-MVPD proceeding in docket 14-261. Commissioner Ajit Pai went public with such opposition this summer, saying the online video market "has thrived precisely because of the government's hands-off approach" (see 1507170030). One FCC staffer said the proceeding is unlikely to go any further, at least this calendar year, and agency personnel who had been assigned to the proceeding may have been sent to other Media Bureau assignments.

The recrafting of the MVPD definition has been a particular priority of Wheeler's. Including OTT providers of multiple streams of prescheduled, linear video programming as MVPDs was one of five items Gigi Sohn, counselor to Wheeler, listed as on the agency's to-do list, while speaking at a Media Institute event over the summer (see 1506040027). While the proceeding seemed to be a higher priority months ago than it is now, it's unclear whether that's because it lacks traction among commissioners or because other matters like the upcoming broadcast TV incentive auction have made it a lower priority for now, said another industry attorney who has been part of ex parte meetings with the FCC on the OTT-as-MVPD proceeding.

The conventional wisdom is that the NPRM was inspired by Wheeler's meetings with now-defunct OTT Aereo, one attorney told us. Wheeler last year said barriers to broadcaster- and cable company-controlled content were responsible for causing online video services to falter, and he intended to tackle the issue of broadening the definition of MVPD (see 1411040058).

Given the unlikelihood of Wheeler bringing up a matter on which he then gets outvoted, he likely won't bother and the NPRM will go into limbo, never to be brought up, an industry lawyer said. But Wheeler seemingly hasn't abandoned the idea and might force a showdown with his fellow Democrats by forcing a vote on the NPRM, another attorney who has been part of ex parte meetings in the NPRM told us. Wheeler also could point to the very threat of the proceeding as having affected the market without having to actually enact any rules, and thus declare it a victory, the attorney said.

The idea has received mixed support in the OTT industry. Netflix -- the largest OTT provider -- has been notably silent in the proceeding, an attorney noted. FilmOn X in an ex parte filing earlier this month pushed the FCC "to move forward expeditiously," saying such rules -- plus "a light regulatory touch" -- "would remove barriers to entry that prevent small and nascent online video distributors ... from competing with entrenched legacy video providers and large-scale media companies." Stretching the MVPD umbrella would give such OTT operators program access rights. Programmers, however, have argued they often don't have such online rights anyway that they then could offer to OTT services (see 1507280035). The NPRM also has caught flack from public, educational and government (PEG) channels and allies about language they say means cable operators' OTT services won't need to carry their programming or pay franchise and/or PEG fees that fund the channels (see 1509180037).