FCC looks to open ranks of MVPDs to Internet-delivered services – a move that could save what’s left of Aereo
It looks like the universe of multichannel video programming distributors (MVPDs) is going to be expanding considerably. Previously populated by the likes of cable, MMDS and broadcast satellite operators, the MVPD universe is set to be redefined to include services “untethered” from any infrastructure-based definition … if, that is, a proposal laid out in a Notice of Proposed Rulemaking (NPRM) last month (and just published in the Federal Register) takes hold. The result should expand consumer options for video program service, and might even revivify whatever may be left of Aereo once Aereo exits the bankruptcy process. And even if Aereo doesn’t survive, we can look for new Aereo-like services.
The proposed redefinition of what it means to be an MVPD is part of the Commission’s overall effort to encourage innovation and serve the “pro-consumer values embodied in MVPD regulation”. It’s also one more reflection of the FCC’s embrace of the technology transition – from old-fashioned, relatively inefficient analog service to digital, Internet protocol (IP) delivery – that is sweeping virtually all aspects of U.S. communications.
The Communications Act defines MVPD as a person (or entity) who “makes available for purchase, by subscribers or customers, multiple channels of video programming.” The Act cites some examples – “cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor” – but makes clear that those are not the only possible MVPDs. So the FCC appears to have some latitude when it comes to filling in the blanks Congress left.
And that’s what it’s now trying to do.
Historically, the Commission has been less than consistent in its interpretation of what Congress meant, particularly with respect to whether a program distributor must control its own transmission path to qualify as an MVPD. A “transmission path” could include direct, wired connections between distributor and consumer, as in a cable TV system, or spectrum-based delivery, such as direct satellite broadcasters use.
Requiring MVPD’s to control their own transmission path would not be an unreasonable reading of the Act – and there’s at least some passing reference to “facilities-based competition” in the legislative history of the 1992 Cable Act that could support that approach. Consistent with that, back in the 1990s the Commission stated with seeming clarity that entities need not “operate the vehicle for distribution” or be “facilities-based” in order to be an MVPD.
But within the last few years, the Media Bureau has taken a different tack. In 2010 a company called Sky Angel U.S., LLC, asserted that it was an MVPD because it distributed multiple different video programs through a national subscription-based service delivered over broadband connections. In other words, Sky Angel used the public Internet – and no specific facilities of its own – as its transmission path, a factor which, the Bureau figured, disqualified Sky Angel from MVPD status. Under that rationale, other Internet-delivered services that have been springing up in recent years – Aereo and FilmOn, for two – were similarly on the outside looking in as far as being FCC-defined MVPDs.
In the NPRM, the Commission appears set to adopt a definition of MVPD that does not require control of any particular transmission path. While the NPRM does invite comments on the Bureau’s “transmission path interpretation”, the Commission makes abundantly clear that it’s not inclined to embrace that interpretation. Rather, the Commission is leaning toward a “linear programming interpretation” under which the statutory term “multiple channels of video programming” would be read to mean “prescheduled streams of video programming”. (The FCC uses the shorthand term “linear” to refer to such prescheduled streams.) In other words, an entity providing multiple channels of “linear” programming could be deemed an MVPD without regard to whether it happens itself to be using its own the transmission path.
While formal adoption of the linear programming interpretation would clear up at least some uncertainty, it would still raise additional questions. For example, should the definition of “MVPD” also include a minimum number of channels, or a minimum daily or weekly operating schedule? Should the telecast of events that are prescheduled but which occur only sporadically – think sports, for example – count as “linear”? If so, the subscription packages marketed by various professional sports (MLB, NBA, NHL, Major League Soccer) could become MVPDs – is that a good idea? (As to that latter question, the Commission is thinking that it should exclude from the definition of MVPDs entities that make available only programming that they themselves own – a tweak that would remove the sports leagues, among others, from MVPD-dom.) The FCC is seeking input on these and related questions.
Those with MVPD status enjoy certain privileges and are subject to certain regulatory obligations. The privileges provide MVPDs (a) some protection in their ability to license cable-affiliated programming and (b) assurance that broadcasters will negotiate in good faith for carriage of broadcast programming (and also that broadcasters will not enter into any exclusive carriage deals with other MVPDs). The obligations cover a variety of areas, ranging from relatively broad concerns of program carriage and retransmission consent to nitty-gritty day-to-day chores like closed captioning, video description, accessibility of emergency information to persons with disabilities, EEO and CALM Act compliance and the like.
A redefinition of MVPD that significantly expands the universe of MVPDs could expose to new regulatory oversight a wide range of folks previously free of those rights and obligations. The FCC isn’t sure that that’s necessarily a good idea, so it has also requested comments on the extent to which Internet-based programming distributors could or should be exempted from regulatory constraints.
Redefinition of MVPD could also affect program suppliers and cable/satellite providers who already provide Internet-delivered video services. The NPRM solicits input on those questions as well.
Among other points, in a brief paragraph the Commission notes the interrelation of the Communications Act and the Copyright Act when it comes to the retransmission of copyrighted broadcast programming. Readers will recall the long-running Aereo saga, in which Aereo, an Internet-delivered programming service, initially claimed that it was exempt from copyright obligations to the broadcasters whose programming it retransmitted. The Supreme Court put the kibosh on that claim, largely because, in the Court’s view, the service Aereo was offering looked a lot like cable service (minus, of course, any actual “cable”).
As we reported, following the Court’s ruling Aereo moved to Plan B, which was to claim that the Court had in effect declared it to be a cable system, as a result of which Aereo was entitled to the compulsory copyright license afforded to cable systems by Section 111 of the Copyright Act. That plan was foiled by the Copyright Office, which (also as we reported) told Aereo that Internet retransmissions of broadcast programming “fall outside the scope of the Section 111 license”. To support that conclusion the Office cited not only its own previous holdings, but also the Second Circuit’s 2012 decision in the ivi, Inc. case in which the Court said that Section 111 covers only “localized retransmission services … regulated as cable systems by the FCC”.
But if Section 111’s compulsory license is available to services that the FCC chooses to regulate as cable systems, and the proposed redefinition of MVPD would effectively bring Internet-delivered services like Aereo into the cable fold, then that redefinition could make Aereo’s Plan B a winner – if only Aereo can survive its current bankruptcy proceeding.
The FCC’s proposal is far-reaching and important to anyone involved in the delivery of video programming. As noted above, the NPRM has been published in the Federal Register, so we know that comments are due to be filed by February 17, 2015 and replies are due by March 2. Comments and replies may be filed through the FCC’s ECFS online filing system; refer to Proceeding No.14-261.