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By Lydia Beyoud
Oct. 21 — Verizon Communications Inc. recently added its voice to those of companies operating in the digital video content space trying to get out ahead of likely Federal Communications Commission proposed rules on multichannel video programming distributors.
Verizon met with members of the FCC's Media Bureau and Office of General Counsel on Oct. 17 to discuss possible rulemaking (MB Docket No. 12-83) that could classify online video companies like Netflix Inc. Hulu.com, Amazon Prime and others as MVPDs, according to an FCC filing issued Oct. 20.
While Verizon would go along with classifying online over-the-top video providers as MVPDs, it said that applying a more stringent “legacy regulatory regime” applicable to cable operators to OTT video could prove “fatal” to emerging online video services.
Traditional MVPDs include primarily satellite and cable companies like Comcast Corp., Time Warner Cable or DirecTV. Classification of online video streaming services as MVPDs could bring with it both additional regulatory compliance and fees, as well as important competition provisions, including “program access,” which requires vertically integrated cable companies to make programming available for a qualifying MVPD.
Verizon's opposition to more stringent regulation of digital video could be due in part to efforts to build out its online video services platform, Verizon Digital Media. The service delivers live events, linear TV and video on demand.
In late 2013, Verizon Digital Media acquired upLynk, a technology and TV cloud company, as well as EdgeCast Networks, a digital content delivery service.
In January, Verizon also expanded its cloud-based media production and delivery capabilities with the acquisition of Intel Media, including intellectual property rights and other assets underlying the OnCue Cloud TV platform.
In a Jan. 21 statement on the acquisition of Intel Media's assets, Verizon said “the transaction will accelerate the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered ‘over the top' to any device.”
Of the upLynk acquisition, Verizon said the deal would provide the ability to scale up its streaming video services, according to a Nov. 13 statement.
“OTT video services are in a nascent stage of development,” Verizon said in the ex parte filing, adding that the FCC should allow OTT video providers “the flexibility to adopt different technologies for providing their services rather than imposing legacy technology mandates.”
Instead, Verizon asked that the FCC exempt OTT video distributors from franchising, must-carry obligations, and other requirements that typically apply to cable operators. “With this approach, OTT video offerings would offer the promise of new competitive choices to consumers and increased competition to incumbent cable operators,” it said.
The company cited Section 629(c) of the Communications Act of 1934 as support for Verizon's positions that MVPD designation to OTT video providers would cause regulatory concerns for navigation devices.
The section “recognizes the need to limit regulation in order to promote new technologies by giving the Commission authority to waive navigation device rules when doing so would assist the development or introduction of a new or improved multichannel video programming or other service offered over multichannel video programming systems, technology, or products,' ” Verizon said.
Verizon hasn't been the only company to weigh in on the issue recently. The National Cable & Telecommunications Association also met with Media Bureau officials to encourage the commission to oppose classification of online video programming distributors as MVPDs.
Doing so “would misconstrue the relevant statutory provisions of the Communications Act and raise a host of practical and regulatory concerns,” NCTA said in at Oct. 14 filing.
The association raised concerns about “practical issues” that could be raised by extending MVPD status to online video providers that provide multiple streams of “linear programming” for purchase.
NCTA echoed Verizon's remarks that obligations of cable operators could also be burdensome for OTT video distributors.
Comcast Corp., the American Cable Association and Aereo Inc. have also weighed in on the matter.
The FCC hasn't publicly released any information about the proposed rules, but Chairman Tom Wheeler told reporters Oct. 17 to “stay tuned” for new movement on the issue.
The FCC began looking into the issue several years ago, after a Christian media company called Sky Angel tried and failed to add the Discovery Channel to its lineup of channels that it sells over the Internet.
In such a case when a programmer like Discovery refuses to do business, MVPDs can file what is known as a “program access” complaint. But because Sky Angel is not an MVPD, there is no legal recourse.
If Sky Angel were to be legally deemed an MVPD by the commission, Discovery and other programmers would be forced to do business with them, under the provisions of the Communications Act as amended by the 1992 Cable Television Consumer Protection and Competition Act.
A rewrite of the nation's cable laws could be incorporated in an update to the Communications Act of 1996.
Reps. Fred Upton (R-Mich.) and Greg Walden (R-Ore.), the chairmen of the House Energy and Commerce Committee and its Communications and Technology Subcommittee, respectively, also have begun a process to update the Communications Act.
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