OTT as MVPD, Net Neutrality Rule Show Wheeler Interest In Online Video, Says Blum

The FCC’s proposed plan to regulate ISPs as common carriers will unnecessarily displace the FTC from its role in protecting the Internet as an antitrust agency, FTC Commissioner Jacob Wright said in his keynote speech. If ISPs engage in throttling or blocking “we have a legal regime specifically designed to address these problems,” Wright said, referring to the FTC’s antitrust duties. “At least, until tomorrow,” he said. The planned Title II regulation is “categorically prohibitive,” Wright said, and will eliminate prioritization deals that would have benefitted consumers along with those that harm them. Under Wheeler’s plan “there are no false negatives, only false positives, “ Wright said.

Depending on antitrust cases to stop companies from blocking Internet competitors has the disadvantage of taking too long and costing too much, Blum said. Few have the resources to pursue antitrust cases against large companies, and few new entrants can afford to wait for them to be resolved, he said.

FTC's Wright conceded that a more discriminating open Internet order would require more resources to administer, but said the Title II plan is likely to use up just as much in protracted legal battles. The net neutrality rules will also have the consequence of making the FTC’s jurisdiction over the Internet unclear, Wright said. Some in the FTC believe the agency’s common carrier exemption will be lifted by Congress, but Wright said they shouldn’t “hold their breath.” It’s also possible the new FCC rule could lead to challenges of previous FCC rulings, Wright said.

The net neutrality and OTT/MVPD proceedings show “a recognition by Wheeler that there are a lot of exciting things happening in over-the-top,” Blum said. The FCC is “trying to figure the best framework” to handle that evolution, he said. He pointed to a third ongoing proceeding that might also affect online video: the Comcast/Time Warner Cable deal. “Comcast doesn’t necessarily want OTT to be successful,” said Blum. Dish opposes the deal, and Blum has previously spoken on behalf of the anti-Comcast/TWC group Stop MegaComcast Coalition. “Sometime you need to regulate and sometimes you need to say 'no' to a merger,” Blum said.

The importance of the NPRM broadening the definition of MVPD has been overstated, said NAB Executive Vice President Rick Kaplan. Since the OTT companies it affects would still have to negotiate for copyright and wouldn’t be eligible for compulsory licenses, it wouldn’t have much of an effect, he said. Netflix and Amazon have been able to amass millions of subscribers through individually negotiating rights to content, said Ryan Radia, associate director-technology studies at the Competitive Enterprise Institute.

Cable, DBS and broadcast executives are concerned about the FCC’s plan to broaden the definition because it doesn’t apply the same obligations to the OTT companies as to existing MVPDs said Kaplan, Blum and Cox Enterprises Vice President Regulatory Affairs Barry Ohlson. Though the language requiring those companies to abide by must-carry rules and other obligations specifically mentions the cable and satellite industries, Congress intended those rules to apply to MVPDs, Kaplan said. Any order broadening the definition should also address other services that are MVPD-like, said Ohlson, referring to AT&T’s U-verse, which isn't classified as an MVPD. “The order should address IPTV providers who say they aren’t MVPDs, Ohlson said. Cable providers like Cox have to bear more of a burden than “way larger companies” in other industries, he said.