Redefining MVPD to Include OTT Will Receive Bipartisan, 'Bi-industry' Support, Sohn Says

A draft NPRM to change the definition of a multichannel video programming distributor to include linear over-the-top video providers will receive broad bipartisan and “bi-industry” support, said FCC Special Counsel for External Affairs Gigi Sohn. The item appeals to broadcasters and cable providers because it will allow more retransmission consent deals and more options for cable companies to provide content, she told the Practising Law Institute's Communications Law in the Digital Age seminar Thursday. Sohn, NAB Executive Vice President Strategic Planning Rick Kaplan, Paul Hastings attorney Sherrese Smith and other panelists also discussed net neutrality, the commission's new rules for joint sales agreements, and the incentive auction.

Kaplan disagreed with Sohn about the effort involved in redefining MVPDs, a rule change he called “potentially exciting.” Because of the many difficult questions such a rule would raise, Kaplan projected that the effort would take more time than FCC Chairman Tom Wheeler has left in office. “It's extremely complicated,” Kaplan said. The NPRM seeks comment on what MVPD obligations should apply to the new OTT MVPDs, but doesn't ask about the obligations that go with being a cable system, Sohn said. The full effect the rule change would have on linear OTT companies is still unclear since the rule change wouldn't make them eligible for a compulsory copyright license, Sohn said.

Many recent FCC policies toward broadcasters have caused them to mistrust the commission and made it harder for broadcasters to find financing, said Kaplan and Smith. The failure to grandfather existing JSAs when the rules changed has led broadcasters to believe that no FCC policy is final, Kaplan said. Banks are less willing to take a chance on financing investments in broadcasting, Smith said. Sohn said part of the reason for the commission making attributable JSAs when the non-commonly owned station brokers more than 15 percent of the JSA station's advertising time was to encourage minority ownership. Banks are largely unwilling to finance independent owners without the backing of a larger company, said Smith, who used to advise then-FCC Chairman Julius Genachowski on media issues. ”Uncertainty has consequences."

That uncertainty also affects broadcasters deciding on whether to participate in the incentive auction, Smith and Kaplan said. Because the FCC changed its policies on JSAs, broadcasters have doubts about FCC exhortations to sell their spectrum and channel share, Smith said. “How is the channel sharing arrangement supposed to work if the FCC is not OK with JSAs?” Sohn emphasized the difficult nature of the auction and said Wheeler's policies weren't intended to kill broadcasting, which he believes is a “public trust.” Holding all broadcasters who don't participate in the auction completely harmless in the repacking is likely impossible, Sohn said. That's true, Kaplan conceded, but he said the commission should try harder to maintain broadcast stations' original contours. “We will win this lawsuit,” he said of the NAB and Sinclair's challenge of the incentive auction order (see 1411100037).

Most commenters in the commission’s open Internet proceeding want rules that protect free speech and new entrants, and most are against paid prioritization, Sohn said. “People don't want big companies paying for favor,” she said. A large number of comments specifically call for regulation under Communications Act Title II, she said, though all options are still on the table. Regulation under Title II would severely hamper ISPs, said Time Warner Cable Vice President-Regulatory Affairs Cristina Chou Pauzé.

“This isn't a popularity contest,” Sohn said. The FCC has to create strong rules that are enforceable and withstand an inevitable legal challenge, she said. Whatever open Internet rules the FCC creates, “the only way we don't get sued is if we do nothing, and that ain't happening,” Sohn said. Wheeler has told advocates that have asked him not to take action on net neutrality that he “believes in government,” Sohn said. “He wants rules that outlast him.”