OTT Retransmission: The Next Net Neutrality

Come the fall, the Federal Communications Commssion’s consideration of its proposal to reclassify some over-the-top video services as multichannel video programming providers (MVPDs) is likely to become the agency’s next highly divisive issue, reprise the same ideological and partisan differences that marked the debate over net neutrality.

Last month, FCC chairman Tom Wheeler confirmed that the commission will take up the proposalin the fall, and indicated that he favored making the switch, which would grant online video distributors (OVDs) the same program access rights as cable and satellite providers while also imposing some of the same restrictions and requirements. But in a speech to the Churchill Club in Palo Alto, Calif., last week, Republican commissioner Ajit Pai, who had dissented at great length from the FCC’s net neutrality rules, laid down the gauntlet again.

“This morning, I would like to make clear that I strongly oppose this proposal,” Pai said. “Given the remarkable success of the over-the-top video industry, the burden should be on those who favor new regulations to prove what’s wrong and explain why we should change. That case just hasn’t been made.”

As with his opposition to net neutrality rules, Pai’s analysis of OVD reclassification leans heavily on standard conservative “free market: good; regulation: bad” framing. Beyond the boilerplate, though, he raises an issue that I also noted in a previous post here on OVD reclassification: Changing the FCC’s definition of who qualifies as a MVPD, by itself, will not guarantee OVDs will be able to retransmit broadcast signals on the same terms as cable and satellite providers because the FCC has no authority to convey a license to the copyrighted programming contained in those signals. Traditional cable TV systems operate under a compulsory license, created by Congress and administered by the U.S. Copyright Office, that gives them automatic permission to rebroadcast copyrighted programming in exchange for paying statutory royalties.

As I noted in the previous post, however, the Copyright Office has long held that non-facilities based distributors such as OVDs do not qualify for the statutory license. It’s not at all clear that the office would be persuaded otherwise just because the FCC changes its definition of a MVPD, setting up a real possibility of having two federal agencies pitted against each other over federal policy toward OVDs.

In Pai’s view, that disconnect is likely a showstopper:

Read the rest of this post at Concurrent Media.