Cablevision-Fox Raises Web Video Issue for First Time

That marked the first time a pay-TV provider’s subscribers couldn’t see any online content from a broadcaster during a linear carriage dispute, cable and other communications industry lawyers said. For several industry and non-profit groups, some of which back net neutrality rules, it raised the issue of such rules and also what obligations broadcasters have to pay-TV viewers during carriage blackouts. For about 16 hours Saturday, Hulu blocked any broadband subscriber using a Cablevision IP address from seeing the website’s Fox content, a decision that was reversed so all of the cable operator’s ISP customers -- who also include some viewers who subscribe to other pay-TV providers -- can go there, an industry executive said. That drew concern from Massachusetts Democrats Rep. Ed Markey and Sen. John Kerry, who said he would introduce legislation to keep broadcasts on pay-TV while the FCC reviews such contractual disputes.

The current impasse looks unlikely to end soon, as both Cablevision and News Corp. remain far apart on economic and other terms, industry and FCC officials said. They said representatives of both companies continue communicating with the FCC to pass along status updates, and some at the commission remain hopeful a new deal can be reached. The regulator is “continuing to urge the parties to reach a quick resolution for consumers,” FCC spokesman Jen Howard said. “Until this matter is resolved, the FCC will continue to educate consumers about all of their options.” Minutes after the signals were pulled, the agency posted online, at http://xrl.us/bh4wwo, an advisory to consumers listing pay-TV providers that serve the areas passed by Cablevision’s systems in Connecticut, New York and New Jersey.

"What we're seeing is the imposition of the cable model onto the Internet,” said Director Stephen Pastorkovich of the Organization for the Promotion and Advancement of Small Telecommunications Companies, among the 14 non-profits and cable, satellite and telco-TV providers seeking changes to FCC handling of retransmission disputes. “We don’t think that consumers should be stuck in the middle of these blackouts at all.” For Policy Counsel Parul Desai of Consumers Union, which is seeking changes to retrans handling but is not a petitioner, “I see this more akin to program access as opposed to net neutrality violations,” she said: If a broadcaster can’t withhold its terrestrial programming during a retrans dispute, it shouldn’t be able to withhold online video, either. Spokespeople for Cablevision, Fox and Hulu declined to comment about online video.

Under current FCC rules, neither Cablevision nor its subscribers have recourse for the half-day blocking of Fox online content, cable and other communications industry lawyers said. They said even if a fifth content non-discrimination principle were added to the FCC’s 2005 net neutrality guidelines, those provisions have been interpreted as applying to ISPs and not content providers. The commission can’t enforce those four principles because of the Comcast case, those attorneys said. “It certainly is permissible for the owner of a website to establish circumstances on who can sign up and who cannot, so this is not a net neutrality violation per se,” said Senior Vice President Andrew Schwartzman of the Media Access Project, which seeks net neutrality rules. “The commission has no regulatory authority over operators of websites.”

Fox and Cablevision made no significant progress during brief discussions Monday, Fox said. Cablevision’s continues to call for arbitration “despite knowing that this is not a serious solution,” Fox said. “After all, Cablevision would never agree to arbitration for its own MSG Cable Network.” And Fox isn’t seeking $150 million in affiliate fees as Cablevision has claimed in its ads, the broadcast network said.

A Cablevision spokesman on Sunday called the blackout “shameful” and renewed the cable operator’s request (CD Oct 18 p4) for Fox to enter binding arbitration. “Binding arbitration is the fastest and fairest way to return Fox programming to Cablevision customers,” he added. More than 50 legislators have sought such arbitration, and Fox should participate, the spokesman said Monday. Cablevision is trying to cause viewers “enough inconvenience” for politicians to intervene, General Manager Lew Leone of Fox’s New York market TV stations WNYW and WWOR wrote the company’s subscribers. News Corp.’s Philadelphia station is WTXF.

Markey is “particularly concerned” that Fox reportedly “blocked selectively” access for Cablevision broadband subscribers to Internet video from the broadcaster, he wrote FCC Chairman Julius Genachowski on Saturday. “This is not only contrary to the Commission’s” 2005 policy statement but also “a very serious concern” because cable content was tied to “Internet fare freely available to other consumers,” he added. Kerry plans a bill to avert blackouts while the commission considers a broadcaster and pay-TV provider’s “last best offer,” if it was made in good faith, and whether binding arbitration should occur during the contract dispute, he said. “If one party or the other rejects the recommendation, as they have in this instance, then a neutral notice would be issued to consumers that the signal will be coming down and both parties would have to publicly disclose the parameters of their last best offer."

Fox’s “stunningly anti-consumer” actions were not a violation of net neutrality principles as they have been traditionally understood, said Corie Wright, Free Press policy counsel. “It is definitely a really important consumer issue and one that definitely implicates a consumer’s freedom to access content, but it’s not the Internet service provider that’s engaging in it.” For that reason, the FCC’s net neutrality proceeding isn’t the right venue to address the types of harms that could result if more programmers were to limit certain ISPs’ access to online content, she said. The commission’s media ownership proceeding and review of Comcast’s planned purchase of control of NBC Universal would be better vehicles to raise such issues, she said.

Fox seemed to violate the commission’s net neutrality policy statement that consumers “are entitled to access the lawful Internet content of their choice,” said a Public Knowledge spokesman. “If that were in effect, this would be a violation.” The episode probably won’t prompt a complaint to the agency from consumer groups because Fox and Hulu quickly “saw the error of their ways and reversed themselves,” he said. Cablevision itself hadn’t made a retrans complaint to the commission arguing Fox wasn’t negotiating in good faith, as of Monday afternoon, agency officials said.

Hulu was “put into a position of needing to block Fox content on Hulu in order to remain neutral during contract negotiations between Fox and Cablevision,” a spokeswoman told The Wall Street Journal this weekend. She declined to comment to us on Monday. Such tactics as the one that occurred with Hulu only will be amplified if the FCC doesn’t address such issues in the context of Comcast-NBC Universal, Wright said. “Comcast has a lot of incentives to drive up the rates for NBC,” and can use those disputes to try to win subscribers from competitors, she said. “In markets where Comcast has operations and an NBC broadcast station, you'll see it get a lot uglier."

Dish Network “is hopeful” Fox’s “blackout” of Cablevision customers “will shed light on our own dispute with Fox and News Corp.,” a spokeswoman for the direct broadcast satellite provider said. “We are pleased that so many consumers, political leaders, and public policy groups have recognized the need for government intervention to protect consumer rights.”