HWG Regulatory Advisory: FCC Issues Notice of Proposed Rulemaking Regarding Regulatory Classification of Online Video Providers

December 19, 2014

Michael Nilsson

On December 19, 2014, the Federal Communications Commission released a long-awaited Notice of Proposed Rulemaking proposing to classify certain online video providers as “multichannel video programming distributors,” or “MVPDs.”  While this might appear to be a straightforward exercise, the Notice tees up a series of thorny implementation issues—particularly those related to retransmission consent and copyright.  As the Notice explains, moreover, such classification promises both advantages and disadvantages to online providers.  Comments are due 30 days after Federal Register publication; reply comments are due 15 days later. 

1.         Background

            The Communications Act and the FCC’s rules place certain obligations on “MVPDs.”  They also give MVPDs certain regulatory advantages.  MVPDs, in turn, are those who “make[] available for purchase, by subscribers or customers, multiple channels of video programming.”  

            Nearly five years ago, an online video provider, Sky Angel, asked the Commission to confirm that it was an MVPD in the context of a complaint it had filed seeking access to Discovery’s programming.  The FCC’s Media Bureau provisionally determined that online video providers were not MVPDs, because they did not provide a physical “channel” of communications.  Today, the FCC proposes to reverse that determination—reasoning that the key statutory term “channel” means “channel of programming,” not a physical channel of communications. 

2.         Potential Scope of Application

            The FCC describes four kinds of online-delivered video programming:  “subscription linear,” “subscription on-demand,” “transactional on-demand,” and “ad-based linear and on-demand.”  It proposes that only those offering “subscription linear” programming be classified as MVPDs.  It also asks a variety of subsidiary questions, such as how many “channels” one must offer in order to become an MVPD. 

3.         Potential Advantages of MVPD Classification

            The FCC describes several potential advantages of MVPD classification for online providers.  Principal among these are:

  • The ability to require broadcasters to negotiate in “good faith” for retransmission consent.
  • The ability under the “program access” rules to demand nondiscriminatory access to certain cable-owned programming.

4.         Potential Disadvantages of MVPD Classification

            The FCC also lists potential disadvantages of MVPD classification for online providers.  Most important among these is the requirement to obtain retransmission consent from broadcasters and to negotiate with them in good faith.  The FCC asks whether this requirement would force nationwide online MVPDs to negotiate with thousands of broadcasters nationwide.  Other obligations include the following:

  • Program carriage” obligations restricting such providers’ relationships with programmers.
  • Closed captioning.
  • Description of video programming for the visually impaired.
  • Accessibility of emergency information to the visually impaired.
  • Accessibility to the visually impaired of user interfaces, guides, and the like.
  • Equal Employment Opportunity rules.
  • Rules regarding the compatibility of set-top boxes and other “navigation devices” with consumer electronics device.
  • Rules governing signal leakage.
  • Rules governing the loudness of commercials compared to that of other programming.
  • Rules governing the disposition of wiring in apartment buildings and other “multiple dwelling units,” or “MDUs.”
  • Rules governing exclusive service to MDUs.

The FCC seeks comment on whether to apply these regulations to online MVPDs.

5.         Copyright

            The FCC seeks comment on how its proposal would impact copyright law.  It asks specifically how the good faith negotiation and program access rules might apply where content owners do not or cannot grant online providers copyright licenses required for carriage.  At one point, the FCC suggests that programmers might be requiredto offer copyright licenses to online MVPDs in order to comply with the rules, even where they now lack the right to do so.  This, it seems to us, is the portion of the Notice likely to draw the most intense commentary. 

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For more information regarding copyright or Harris, Wiltshire & Grannis’s media practice, please contact Michael Nilsson at (202) 730-1334 or mnilsson@hwglaw.com, Bill Wiltshire at (202) 730-1350 or wwiltshire@hwglaw.com, or the HWG lawyer with whom you regularly work.

This client advisory is not intended to convey legal advice.  It is circulated to HWG clients and friends as a convenience and is not intended to reflect or create an attorney-client relationship as to its subject matter.

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