FCC Seeks Input on Online Video in its Video Competition Inquiry
The FCC said it’s collecting data for the first time about how online video distributors operate and the extent to which they compete with or complement traditional pay-TV service. The questions are in a further notice of inquiry about the state of video competition released Thursday. The commission is required to submit a video competition report to Congress each year, but hasn’t produced one since January 2009. The forthcoming report, the FCC’s 14th, will look at the state of video competition from 2007 through June 30, 2010, the notice said. It also seeks comment on developments in the traditional pay-TV sector, and the prospects for broadcasters to build new businesses around delivering video on their digital spectrum.
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The FCC said it wants data on the number and size of online video distributors (OVDs). It said stand-alone distributors such as Hulu, Vudu, iTunes and Netflix are OVDs, as are the websites of TV networks such as hallmarkchannel.com and NBC.com. It asked how OVDs make money, whether it’s through ad support or subscription fees? “Is there a trend among OVDs toward greater reliance on charging consumers?” the notice asked. It also sought comment on how OVDs have affected pay-TV subscribership. “Has the entry of OVDs in the marketplace resulted in reduced viewership of video programming from MVPDs and broadcast television stations?” the notice asked. The notice also asked what data are available and what metrics should be used to measure “the extent to which OVDs’ services are a substitute or complement to MVPD service.” A Netflix spokesman said the company is reviewing the NOI and “will participate in the process with the FCC to help them better understand our business and how we help complement the video industry."
The commission also asked about the pay-TV industry’s practice of bundling online video access with pay-TV subscriptions. “For example, online programming available through TV Everywhere is only available to subscribers of specific MVPDs,” it said. “We seek comment on these and other developments in tying arrangements for video programming delivered over different delivery technologies,” it said. And it sought comment about whether broadcasters are using retransmission consent negotiations to tie access to online programming to carriage of their linear programming.
The timing of the notice, and the fact that it’s a notice of inquiry, rather than a report to Congress, is interesting, communications industry attorneys said. “They haven’t been too concerned about their congressional mandate before, so why are they doing it now, with the busy agenda they face?” a pay-TV attorney asked. “Are they seeking to come to some conclusion that might help them further a policy objective with an existing order or one that may be forthcoming?"
The time for notices of inquiry in this proceeding has passed, a cable attorney said. The attorney also questioned whether this proceeding is the proper venue to address online video issues? “There are some obvious things with over-the-top video that the commission may want to address, including closed captioning and EAS and how it works with the rest of its cable rules,” the lawyer said. “But I don’t know that issuing a further notice in this now very stale NOI is the best way to approach it.” An FCC spokesman didn’t respond to our query about the timing of the notice.
The notice also sought comment about the prospects for new business lines TV broadcasters are developing. “Do broadcasters have business plans to combine and transition some of their digital capacity into a subscription service or to lease part of their digital capacity” to others offering such a service it asked. It also sought data on the extent to which broadcasters are providing multicast programming “to attract viewers to over-the-air video service and away from” subscription pay-TV operators. Comments on the further notice are due June 8, replies July 8.