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FCC to consider classifying “linear” online video distributors as “MVPDs”

Potential boost for online video distribution

As previously noted in this blog, one of the major obstacles to the growth of online video distribution (or “OVD”) has been the inability of OVD companies to acquire valuable “must-see” television programming from content owners who fear that licensing content for online distribution will threaten their lucrative deals with cable networks and other multi-channel video programming distributors (“MVPDs”). While competitive MVPDs have a legal right under the FCC’s program access rules to acquire cable-affiliated video programming on non-discriminatory terms, in 2010 the FCC tentatively ruled that an OVD company (SkyAngel) did not have standing to assert a claim under the program access rules because it was not a MVPD. The FCC’s tentative ruling was based on the assumption that in order to qualify as an MVPD, a company must control a facilities-based channel for video content delivery; because SkyAngel distributed programming content to subscribers by means of the public internet and the subscriber’s broadband connection, SkyAngel did not qualify as an MVPD. However, in issuing its tentative ruling in the SkyAngel case, the Commission also initiated a notice of inquiry concerning whether the definition of “MVPD” should be modified to include OVDs within its scope.

Yesterday, an article in Multichannel News announced that the FCC has decided to issue a notice of proposed rulemaking (“NPRN”) on this question. See According to the article, the NPRN will tentatively conclude that an entity does not need to own the transmission path to qualify as an MVPD as long as it provides a continuous stream of pre-scheduled programming. (Netflix and other on-demand video providers do not offer a continuous stream of pre-scheduled programming and thus would not meet the new definition of MVPD.)

Assuming that the article is accurate, the NPRN would be a welcome development and a step toward removing the obstacles that prevent innovative OVDs from competing with entrenched and monopolistic cable operators like the soon-to-be-merged Comcast and Time Warner Cable. If the FCC follows through, OVDs that qualify as MVPDs could gain a legal right of access to “must-see” broadcast programming by means of the FCC’s program access rules. The downside would be that the new online MVPDs would have to pay retransmission consent fees to the broadcast stations for popular programming, but the entire retransmission consent regime appears to be in flux. Such a change in the definition of MVPD would in effect resurrect Aereo TV, which would qualify for compulsory license to carry copyrighted material, just like cable and satellite MVPDs, so long as the company agrees to pay retransmission consent fees to the broadcasters.


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