Wheeler proposes allowing OTT companies to compete directly with cable

FCC Chairman Tom Wheeler on Tuesday afternoon formally proposed that web-only, over the top (OTT) video distributors be given the same rights to retransmit broadcast stations and to distribute linear channels as any telco, cable company, or satellite broadcaster.

Wheeler published a blog saying he intends to asking the full Commission to start a rulemaking proceeding to “modernize our interpretation of the term multichannel video programming distributor (MVPD) so that it is technology-neutral.”

Cable companies are making the transition to IP-based delivery. If they thought that in so doing, they might be relieved of the few regulations that apply to them, Wheeler put them on notice that they’re going to have to fight for that. According to Wheeler, “And cable systems – already the dominant providers of high speed broadband – are moving their traditional services to IP-based delivery. This proposal recognizes that a cable system would continue to be regulated as a cable system, even if it migrates to IP delivery.”

The old TV model seems to be breaking down faster than anyone had anticipated. HBO and CBS have decided to sell subscriptions directly to consumers. Wheeler noted that Dish has stated its intention to provide a web-based service, and observed that Sony, DirecTV, and Verizon all appear interested in doing likewise.

Meanwhile, Aereo and FilmOn have petitioned the FCC to be classified as multichannel video programming distributors (MVPDs), which would enable them to similarly offer broadcast and other linear channels.

“What could these over-the-top video providers (OTTs) supply to consumers?” Wheeler wrote in a blog post. “Many different kinds of multichannel video packages designed for different tastes and preferences. A better ability for a consumer to order the channels he or she wants to watch.”

He said today’s action – asking for a rulemaking – represents a first step in that direction.

The American Cable Association responded immediately, asking the FCC to remain focused on an outstanding issue important to hundreds of its members:

“With today’s announcement regarding a new technology-neutral definition of a multichannel video programming distributor (MVPD), the American Cable Association is hopeful that FCC Chairman Wheeler will also direct the Media Bureau to finish work on the FCC’s longstanding proposal to reform its program access rules,” wrote ACA president Matthew Polka.

“This action is needed to effectuate Congress’ intent that the National Cable Television Cooperative (NCTC) – a cable programming buying group used by nearly all small and medium-sized MVPDs – receives the same program access protections that Chairman Wheeler recognizes are vital to the ability of over-the-top video programming distributors to enter and compete in this market.

“Hundreds of small MVPDs that are also broadband Internet service providers — including dozens of new competitive entrants in the market that joined NCTC in the last few years — would benefit from reform of the FCCs program access rules and, as a result, would be better positioned to continue their broadband deployment efforts.”