FCC Needs To Give OVDs MPVD Status

At the NAB Show last month, I was delighted to hear NAB President Gordon Smith talk about ubiquity, about how broadcast signals need to be everywhere.

“Ubiquity [previously] meant a television in every living room — these days, almost every room of the house,” Smith said. “But ubiquity tomorrow must mean broadcasting’s availability to all people at all times in all places and on all devices…. We … need to be on tablets, laptops and game consoles and on mobile devices not yet developed. “

I couldn’t have said it better and I’ve tried on at least three other occasions — July 8, 2008; Jan. 23, 2009; and Oct. 8, 2010.

The principal way that TV stations can restore their ubiquity is by streaming their signals online — their entire signals, 24/7 — just as they broadcast them. The Internet is a path to all those second and third screens.

TV is way behind radio on this front. As I sit here, I am listening to WQXR-FM New York (ugh, it’s pledge week), one of, I presume, thousands of radio stations that now simulcast on the Web.

As far as I know, not a single TV station is being simulcast online.

It’s a sad state of affairs. TV broadcasting is still reliant mostly on advertising revenue and the only way to reverse the long slide in viewership is for stations to break out of the box in the living room and leap onto the Internet.

The reason they don’t is because they can’t. They don’t control the online rights to the network and syndicated programming that comprises much of their schedule, and the networks and syndicators for the most part don’t want to give them those rights.

That is why I think the FCC’s Sky Angel proceeding I wrote about a couple of weeks ago is so important. It could give stations a big and badly needed boost toward the Internet. It’s become clearer to me as I read the comments in the proceeding this week.

In the proceeding, the FCC is considering whether it should regulate online video distributors (OVDs) like Sky Angel just as it now does cable and satellite operators — or, legally speaking, multichannel video program distributors (MVPDs).

Such regulation would bring with it entitlements and obligations.

Primarily a distributor of Christian programming, Sky Angel wants the MVPD designation so that it can take advantage of the public access rules to add popular cable networks to its lineup. The rules say that vertically integrated programmers like Discovery Communications must make their channels available to all MVPDs.

The whole proceeding arose from Discovery’s refusal to deal with Sky Angel.

The MVPD imprimatur also brings with it obligations. Most important from the broadcasters’ perspective, MVPDs would have to get retransmission consent from broadcasters before carrying their signals.

This is why the ABC, CBS and NBC affiliates, in joint comments this week on the Sky Angel proceeding, argue for treating OVDs as MVPDs. The affiliates don’t want OVDs streaming their signals unless they say so and get compensation for it.

Not regulating OVDs as MVPDs poses a “serious threat” to broadcasting, the affiliates say.

“Already various entities, such as ivi.tv, FilmOn.com and Aereo, that have used the Internet to stream broadcast television signals have taken the position that they are not ‘MVPDs’ and thus are not required to obtain the consent of a station before retransmitting its signal,” they say.

“[OVDs] cannot be left to retransmit television broadcast signals online at will, leaving broadcast stations both unable to control the distribution of their signals over the Internet and unable to recapture the value of retransmission and resale of their signal, as this would have obvious and potentially devastating consequences for broadcasters.”

The NAB seconded the affiliates’ argument, although possibly in deference to the networks on its board it stopped short of calling for MVPD regulation.

OVD’s cannot be “permitted to expropriate broadcast signals at will,” the NAB says in its comments. “Broadcasters must continue to have the right to control the distribution of their signals over the Internet and to obtain compensation from broadband video service providers seeking to retransmit such signals.”

For the sake of their arguments, the affiliates and the NAB make it sound as if regulating OVDs as MVPDs is the only bulwark against OVDs stealing their signals. It’s not true.

As I said in the last column, it would, in fact, be a second line of defense. The first line is the copyright laws.

The Copyright Office has made it clear that the compulsory copyright license that entitles cable and satellite operators to carry broadcast signals for token payments does not extend to OVDs. As so far, the courts have agreed, enjoining ivi.com and FilmOn.com from distributing broadcast signals while considering the merits of the practice.

If the networks, syndicators and other copyright holders had their way, the compulsory license would never be extended to OVDs.

However, I believe it would be in the best interest of stations (and ultimately the networks) if the compulsory license were extended to OVDs as long as they are governed as MVPDs.

And the first step is the Sky Angel proceeding.

If the FCC legitimizes OVDs by declaring them MVPDs, the OVDs should be able to make a solid argument at the Copyright Office or in court that they are deserving of the compulsory license. If they are going to behave like a cable system, they should have the full benefits of a cable system.

To make this all work, one other thing has to happen. Broadcasters have to come up with a mechanism restricting their online signals to their over-the-air markets. MVPD regulation is based on keeping each broadcast signal inside its DMA, regardless of medium.

Fortunately, I think there is such a mechanism — the technology developed by Syncbak, a company partially funded by NAB. Knowing where its future lies, it filed comments urging MVPD regulation of OVDs.

I don’t know where the FCC is going with this proceeding, especially now that there are two new commissioners on board.

Aligned against turning OVDs into MVPDs are the established MVPDs that, no surprise, aren’t looking for direct competition from the Internet. NCTA, the American Cable Association, Comcast, Time Warner Cable, Cablevision, AT&T and Verizon submitted comments opposing it.

Comcast, which owns NBC as well as cable systems, had one argument that gave me pause, however. If OVDs are MPVDs, it says, “broadcasters potentially would face the prospect of having to negotiate retransmission consent agreements — and the duty to bargain in good faith — with thousands of OVDs.” That’s a frightening prospect.

Broadcasters were not alone in calling for MPVD status for OVDs. Public Knowledge, an interest group often at odds with broadcasters, argues that it would be good for the public.

“[B]y clarifying that online systems can qualify as MVPDs, the [FCC] will make it so that viewers can choose from between a large number of competitive MVPDs instead of being limited to the same few options, year after year.”

It would be good for the public — and for broadcasters.

With the compulsory license, Syncbak (or something like it) and a willingness to pay broadcasters fairly for retransmission consent, broadcast-friendly or even broadcast-controlled OVDs would put TV stations where they need to be — on the Internet and on all those millions of desktops and mobile screens.

Ubiquity redux.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.