Charter Petition Seen Raising OTT-as-MVPD Implications
Some see FCC consideration of a declaration of effective competition due to the AT&T TV Now's vMVPD service in the last few spots where there's local cable TV basic rate regulation as potentially resurrecting questions of agency regulation of over-the-top services that were central in the dormant OTT-as-MVPD proceeding. An official said it's not clear whether commissioner will be unanimous on the draft opinion and order on next week's meeting agenda since it raises questions about OTT as effective competition to MVPDs and how that might lead to regulation of OTT. Local governments lawyer Tim Lay of Spiegel & McDiarmid agreed being an MVPD creates obligations, and it's not clear if the draft order would mean AT&T TV Now is an MVPD service that must comply with MVPD rules.
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The Massachusetts Department of Telecommunications and Cable, which is fighting Charter's petition, argued to the FCC that the order could lead to broadcasters imposing a retransmission consent regime on online video distributors. MDTC said those OVDs could use the order to impose nondiscriminatory program access requirements on cable operators.
According to the draft, recognizing AT&T TV Now effective competition in the Massachusetts and Hawaii franchise areas doesn't automatically mean increased AT&T regulation under FCC precedent or the Telecom Act. The act's LEC test, which determines if a cable system is subject to effective competition, "has no bearing on whether a video programming service that is affiliated with a LEC is an MVPD, and therefore we see no need to litigate that issue here," the draft order says.
Local government lawyers said the draft rules could open the door to other streaming services filling that effective competition hole if AT&T TV Now goes away. That could be significant if DBS subscriptions, which continue to decline, drop below the threshold for DBS to provide effective competition to cable in most of the U.S. (see 1506020060), we were told.
Seth Cooper, Free State Foundation senior fellow, emailed that the draft order, adopted along with the 2015 order effective competition order, "would provide overlapping bases for relief from regulation." A local franchise authority would have a tough time mounting a case for re-regulation, he added.
Most communities gave up regulating basic rates years ago, localities lawyers said. Municipal lawyer Dan Cohen said the heyday of rate regulation was in the early 1990s, before the Telecom Act.
Even before 2015 declaration of effective competition, FCC staff for years had been liberally granting individual effective competition petitions, said localities lawyer Gary Resnick of GrayRobinson. The Charter petition "is just a step further," he said. He said arguably more important than basic rate regulation, an effective competition determination ends a variety of other consumer protections such as rates for converter boxes and rules that subscribers don't have to buy a particular tier of programming to access another tier. Communities can seek to recertify for basic rate regulation, but that's already a difficult process, and the streaming service decision could raise the bar to near impossibility, he said.
Basic cable is more expensive in Massachusetts communities where there's no rate regulation than where there is, said Linda Miller, chairwoman of the Five Town Cable Advisory Committee. The committee covers the western Massachusetts towns of Great Barrington, Lee, Lenox, Sheffield and Stockbridge, some of which have local rate regulation, she said. Asked about possible basic rate increases in the affected communities, Charter didn't comment. Miller said AT&T TV Now is closer to cable TV than DBS is, but it still lacks public, educational and government channels.
MDTC, in a call with Commissioner Geoffrey Starks staffers, argued Charter hasn't made its case that AT&T TV Now is effective competition. In a docket 18-283 posting Tuesday, it said AT&T's need to use Charter facilities to offer the service, and that the cable operator says cable rates would go up, point to lack of true competition. MDTC said because AT&T TV Now replaced DirecTV Now service, which was the subject of the Charter petition, the FCC should reject the petition because DirecTV Now is no longer available. Hawaii's Department of Commerce and Consumer Affairs didn't comment.