VDC Still Hopes FCC Will Act on Program Access Complaint
Online video streamer Virtual Digital Cable largely called it quits in March after struggling to enlist new programmers and keep the ones it had, said co-founder Scott Wolf. VDC.com charged a monthly fee for a package of linear pay-TV networks delivered online, tagging itself a multichannel video programming distributor under federal rules. It filed a complaint asking the FCC to enforce program-access rights with Time Warner (WID Jan 22/07 p7). That request and a complaint against CBS survive, though the company’s service no longer is available. “I feel like we deserve a response,” Wolf said.
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“The final nail in the coffin… was we had started to have some problems with Al Jazeera English,” Wolf said. “The original people we had communicated with before their launch had all left,” he said. The network’s new strategy called for closer contact with U.S. cable operators and other pay-TV operators that haven’t taken kindly to VDC, Wolf said: “So they started to look for ways to get out of the contract with VDC.” Al Jazeera didn’t respond to our inquiries.
Al Jazeera’s shift spooked other programmers and the site stopped offering service to most subscribers, though VDC lives on as a company and is ready to resume service if it can add programming, Wolf said: “It was just not a very friendly environment for content acquisition.” VDC wrote March 5 to subscribers offering prorated refunds of fees paid.
Not all VDC programmers got notice. “They dropped off the face of the earth,” said John Marsh, chief operating officer at non-profit Starfish Network. “We could not contact them,” he said. “We've never heard a single word about why they went off the air.” Registered mail sent to VDC’s office never was signed for, he said. Another small programmer that had worked with VDC wasn’t aware that the service had stopped when we contacted them this month.
Some programmers probably weren’t sorry to see VDC go, Wolf said. “Even when we did get distribution agreements with these channels, the channels themselves wouldn’t advertise they were available on VDC,” he said. He feared that larger distributors weren’t happy with networks using VDC, Wolf said. “Sure, they're going to put their DirecTV contract before the VDC contract,” he said. Because VDC charged a monthly fee for its service, affiliating with it didn’t violate other distribution agreements, said an executive at another network that VDC carried. “It was a subscription model and they were paying license fees just like a conventional cable operator,” the executive said. “For us that seemed to work and make sense.” Other programmers may have had online rights trouble, the executive said. “When it comes to networks that are doing live sports, it gets a lot more complicated.”
VDC complaints against Time Warner and CBS still are pending at the FCC. Wolf e-mailed FCC Media Bureau Deputy Chief Rosemary Harold May 13 to let the agency know that VDC had discontinued service except for a limited channel lineup and a few subscribers. Harold responded the next day, passing Wolf’s note to Steven Broekaert, senior deputy chief of the Policy Division, a copy of the e-mail shows. “Between Steve and me, we will let the appropriate people know,” she wrote in the e-mail.
Some lawyers thought that online distributor rights to programming would come up in a 2007 FCC rulemaking that extended a ban on exclusive contracts for networks owned by cable operators (WID March 5/07 p2). But no one raised the question, said Marty Stern, an attorney who has followed VDC’s complaints. “It’s quite possible there are others in the industry who would have been supportive of VDC’s position who had not surfaced in the context of a restricted program access complaint, but might have surfaced in the context of a rulemaking,” he said.
VDC’s complaints raise the same sorts of point as competing distribution technologies raised in the 1980s and 1990s and that challengers to incumbents and vertically integrated cable operators raise today -- that access to programming is crucial to offering a competitive service, Stern said. “This just happened to be a venture that was attempting to launch a new platform over the Internet, as opposed to via satellite or via cable or via some other technology.”
Internet distribution of video programming is starting to take off, Stern said, citing efforts by Hulu.com and other broadcast networks. “VDC was really one of the first ones that came along involving traditional cable programming. They had some challenges, but that’s not to say others won’t try it with traditional cable fare,” he said.