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Nov. 12 -- Senate Commerce Chairman John D. Rockefeller IV (D-W.Va.) introduced a bill (S. 1680) that aims to level the playing field for online video companies by barring anticompetitive practices from cable, satellite, broadcast and media companies.
Rockefeller called the Consumer Choice in Online Video Act the “ultimate a la carte” legislation that would 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,” according to a Nov. 12 news release.
The pro-consumer legislation will ruffle the feathers of many in the media industry and potentially bring new regulatory benefits to online video providers like Aereo Inc., Netflix Inc. and others in the content community, industry sources said. Specifically, the bill aims to limit the ability of Internet service providers (ISPs) to degrade consumers' access to online video services, provide video distributors with reasonable access to broadcast and cable video content and require ISPs to offer consumers greater billing transparency for their services. The bill also directs the Federal Communications Commission to monitor broadband billing practices to make sure they are not used anti-competitively.
Rockefeller's bill would add some legal protections to Aereo's business model and limit the use of provisions in video programming carriage contracts that could harm online video competition, according to an executive summary of the bill. Aereo streams broadcast TV programming transmitted by tiny Web-connected antennae located in nine major U.S. cities and is planning to expand its service to at least 18 other markets. The bill does not address the copyright infringement implications of such services.
Broadcasters have sought to stem the growth of Aereo, which they say infringes their copyrights, by filing multiple lawsuits that claim Aereo's online video streaming amounts to a public performance. In April, Aereo won a 2nd U.S. Circuit Court of Appeals ruling denying broadcasters a preliminary injunction against the service (63 TCM, 4/2/13). In October, broadcasters filed a Supreme Court petition for writ of certiorari to review the Second Circuit Court's ruling (200 TCM, 10/16/13).
Aereo Founder Chet Kanojia said “we've longed believed that consumers deserve more choice and control when it comes to how they watch television,” in a statement sent via his spokesman. “Efforts to increase choice, competition and transparency for the consumer are a welcome step in the right direction,” Kanojia said. Netflix spokesman Joris Evers declined to comment.
Gordon Smith, president of the National Association of Broadcasters, said he's concerned the bill “may legitimize theft of copyrighted programming,” according to a news release. “Copyright theft poses a very real threat to the revenue stream that supports local television and the U.S. network-affiliate TV relationship that is the envy of the world,” Smith said. Several broadcast network executives had previously threatened to take their programming off the air in order to thwart Aereo's business model.
Rockefeller's legislation seeks to ensure that “entrenched incumbent media companies and broadband providers cannot use their market power anti-competitively in order to limit the ability of online video distributors to enter the market and respond to consumer demand,” said the executive summary of the bill.
The bill would require ISPs to offer customers with clear terms and conditions for their Internet service that disclose usage-based billing. The bill tasks the FCC with certifying that ISPs are using accurate data usage monitoring systems.
Rockefeller's bill would permit online video providers to be regulated as “non-facilities based multichannel video programming distributors” (MVPDs) and provide them with similar protections as regular MVPDs. Online video providers would be permitted to access and retransmit both cable and broadcast television content over their systems.
“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 National Cable and Telecommunications Association said in a news release. “We deeply respect Chairman Rockefeller and look forward to working with him and all members of the Committee towards our mutual goal of ensuring that the video marketplace continues to thrive.”
American Cable Association President Matthew Polka said the group shares Rockefeller's concerns “about the ease with which certain existing players in the market can use their market power to harm consumers and impede competition,” according to a news release. “This is a significant concern for small cable operators and reflects the need to consider a new approach.”
It was unclear whether Rockefeller will seek to incorporate the legislation into the Senate Commerce Committee's bid to reauthorize the 2010 Satellite Television Extension and Localism Act (STELA). STELA, which authorizes satellite providers to retransmit broadcast television signals, is set to expire on Dec. 31, 2014.
Lawmakers are interested in updating the laws governing the nation's video marketplace, namely the Telecommunications Act of 1996, the Cable Television Consumer Protection and Competition Act of 1992 and the Communications Act of 1934. Reauthorization of STELA could provide Congress with the opportunity to update these laws.
At a Senate Commerce Committee hearing in April, Rockefeller said Congress needs to seek a “solution” to fill the gaps in the laws that govern the telecommunications marketplace but said it won't happen this congress. Rockefeller previously said he will not run for re-election in 2014.
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