Wheeler Announces Circulation of Proposal to Change MVPD Definition

FCC Chairman Tom Wheeler circulated a proposal Tuesday to change the definition of a multichannel video programming distributor to be “technology neutral,” he said in a blog post Tuesday. As expected (see 1410220044), the draft proposal would open the definition up to include providers of linear online video, the blog post said. The change would give the new MVPDs “the same access to programming owned by cable operators and the same ability to negotiate to carry broadcast TV stations that Congress gave to satellite systems in order to ensure competitive video markets,” Wheeler said, referring to program access and retransmission consent rules.

Commissioner Mike O’Rielly and others have suggested the push to broaden the definition of an MVPD is connected with trying to extend FCC jurisdiction into Internet programming (see 1410270035). Wheeler presented the move as an antidote to cable bundling. “Consumers have long complained about how their cable service forces them to buy channels they never watch,” Wheeler said. “The move of video onto the Internet can do something about that frustration -- but first Internet video services need access to the programs.” Speculation about the proposal has also connected it with the plight of streaming TV service Aereo, and Wheeler pointed to the company as raising the point that “updating the definition of an MVPD will provide consumers with new choices.” Wheeler also said that broadening the definition of an MVPD would “stimulate the high-speed broadband buildout.”

Since the Media Bureau reopened docket 12-83, NCTA, Verizon and others have lobbied about what rules that apply to MVPDs and cable systems would also apply to new over-the-top MVPDs. Though Wheeler’s blog indicates that program access and retrans rules would apply to the new MVPDs, it’s not as explicit about other obligations such as must-carry rules. Though Aereo and FilmOn have told the FCC they would accept such rules if they were redefined as MVPDs, Verizon asked the commission not to apply such “legacy” obligations to nascent OTT offerings. “Twenty-first century consumers shouldn’t be shackled to rules that only recognize 20th century technology,” Wheeler said.

Applying must-carry rules to OTT companies would likely be “a heavy lift,” said BakerHostetler cable attorney Gary Lutzker, who has met with commission staff to discuss the proposed rules. The blog suggests that cable-centric rules like must carry would still apply to cable systems that move to all-IP delivery, Lutzker said. “This proposal recognizes that a cable system would continue to be regulated as a cable system, even if it migrates to IP delivery,” Wheeler said.

Program access rules that kept cable from raising “artificial barriers” to satellite companies using their content helped keep video competitive in the past, and opening up the field to OTT providers is a similar move, Wheeler said. Cable consultant Steve Effros pointed to Congress's role in that earlier rule change. The FCC's changing the definition of an MVPD “on its own” without involving Congress is “a unique way of looking at the law” that may not work, Effros said.

The proceeding to change the definition could have ancillary effects, said cable attorneys. The American Cable Association has asked the FCC to address ACA's request to extend program access rules to the National Cable Television Cooperative before extending them to OTT companies, and efforts to stop broadcasters from bundling broadcast and nonbroadcast channels could also see an opportunity in Wheeler’s proposal, Lutzker said. Broadening the definition will "provide much-needed regulatory clarity and a clear set of rules for linear video programming systems, which ultimately, will increase investment in the video programming market," said Aereo CEO Chet Kanojia in an emailed statement. NAB said it will work with the FCC "to ensure that this new competition enhances rather than undermines localism."