JESSELL AT LARGE

Rockefeller’s Internet Video Bill Not All Bad

The lame duck senator’s Consumer Choice in Online Video Act has a lot wrong with it, not the least of which is a provision permitting what it calls “antenna rental services” (read Aereo). Not only does the bill say that the services are OK, but also that they "shall be exempt from paying retransmission consent fees." However, the legislation starts an important conversation on how the law should treat online distributors that want to offer broadcast signals and other video programming.

Jay Rockefeller looks like he wants to go down swinging.

The Senate Commerce Committee chairman who retires at the end of next year this week dropped a 63-page bill intended to turn the Internet into a full-fledged television medium.

The Consumer Choice in Online Video Act is a lousy bill for many reasons. For the sake of the online video distributors (OVDs) — that’s what the bill calls folks who transmit TV over the Internet — it punishes the traditional TV media that have gotten us this far.

It’s bad for broadcasting; it’s worse for cable and satellite — the MVPDs. It encourages OVDs to duplicate cable and satellite services,  while outlawing any attempts by the MVPDs to mitigate the competition via exclusive contracts with programmers or their ownership of ISPs.

The bill reads as if it were cooked up in the back offices of Intel.

But all that doesn’t much matter. The bill isn’t going anywhere. Rockefeller is a lame duck. He’s not running for reelection next fall and who knows what his successor as committee chair (likely Bill Nelson of Florida) will have in mind.

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Congress isn’t about to take on the TV establishment in an election year. And so much of the bill involves copyright that the Senate Judiciary Committee will want a say. Oh, and don’t forget the House of Representatives; it gets to vote, too.

That said, I have to give Rockefeller credit for starting the conversation (debate?) on the rights and obligations of companies pumping out TV over the Internet. It’s already a huge business. Nexflix alone is suddenly ringing up revenue of some $4 billion annually.

It’s time for Congress to come up with a legal framework that encourages OVDs that want to offer subscribers conventional TV programming, everything from ESPN and CNN to the local broadcast channels, but that also makes sure they fully compensate creators of the programming and don’t wreck the rest of the television business.

One of the best things about the Rockefeller bill is the section on “non-facilities-based multichannel video programming distributors.” (That’s a mouthful. Let’s shorten it to online MVPDs.)

Online MVPDs are similar to MVPDs. But rather than using their own distribution facilities as the MVPDs do, they use the Internet. Under the bill, the online MVPDs would have basically the same basic rights and obligations.

The principal reason an OVD would classify itself as an online MVPD would be so it could carry broadcast signals under the compulsory copyright license just as cable and satellite operators. That overcomes a lot of copyright hassles.

Although the Rockefeller bill does not explicitly say that the online MVPDs would have to get retransmission consent from broadcasters, it implies that they do. The bill requires broadcasters to negotiate with online MVPDs in “good faith” just as they have to do with plain old MVPDs.

Where I part ways with Rockefeller is over local program exclusivity. The good senator apparently doesn’t believe in it.

Under the bill, online MVPDs would be exempt from syndex, network non-dupe and the sports backout rule. Those rules empower the FCC to enforce broadcasters’ local exclusivity.

The Rockefeller bill would allow online MVPDs to carry two network affiliates, one from out of market. That’s a loss of exclusivity and a potential retrans killer. If a CBS affiliates denies an online MVPD carriage rights in a retrans dispute, the online MVPD could just go out and grab a CBS affiliate from another market.

Another negative for some broadcasters is that it doesn’t seem to impose must-carry obligations on online MVPDs — with one exception. Online MVPDs that pick up at least one commercial station in a market, have to pick up all the noncommercial stations in the market.

Now, I can see why the cable and satellite companies would not be eager to unleash online MVPDs under any circumstances. Cable and satellite would find themselves head-to-head with competitors operating with much the same programming, but without the costs of maintaining elaborate distribution facilities or meeting local franchising requirements.

But the establishment of online MVPDs might benefit broadcasters, assuming the online MVPDs end up with most of the same obligations as the regular MVPDs. Just their presence would give operators more leverage in retrans negotiations. What’s more, by their nature, the online MVPDs would provide a conduit for broadcast signals into the mobile world. That, as we know, is where the action is these days.

I cannot leave this discussion of the Rockefeller bill without commenting on one particularly odious section. It legitimizes Aereo, the Barry Diller-backed service that is stealing broadcast signals and then selling them online to paying subscribers.  A congressional blessing is just what Aereo needs. It’s now under multiple legal attack by the networks and their affiliates.

Of course, the bill makes no direct reference to Aereo. Instead, it talks about “an antenna rental service” that takes broadcast signals off air and distributes them over the Internet. That’s a perfect description of Aereo and only Aereo.

Not only does the bill say that antenna rental services are OK, but it also says they “shall be exempt from paying retransmission consent fees.”

I wonder whether Rockefeller staff actually wrote the language, or Diller just dropped it off on his way to some Democratic fundraiser.

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


Comments (6)

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Tammy Tankersley says:

November 15, 2013 at 5:05 pm

“Antenna Rental” seems way off the mark. How quickly would the “rental fees” paid allow a subscriber to buy and install an antenna? If it were an antenna purchase financing package you would be into usurous interest rate territory very quickly.

    mike tomasino says:

    November 15, 2013 at 5:26 pm

    And, one of the things is it is an antenna that isn’t at your place of residence. Many MVPDs use antennas to get their local channels, either as a primary or backup source, so the MVPD customers are effectively “renting an antenna.” The only difference is that the antenna isn’t the size of a thumb nail, and there isn’t the theoretical “one to one” antenna to customer ratio, but otherwise it’s accomplishing the same thing. I also don’t believe that the “one to one” antenna ratio is real. I think the whole thing is built on a lie.

mike tomasino says:

November 15, 2013 at 5:14 pm

If Diller did drop it off, it would mean that he wasn’t exactly sure that the courts would ultimately rule in his favor. As I’ve said before, I can’t see how the courts can rule that Aereos “antenna rental service” doesn’t violate the cable act. It rebroadcasts TV signals just like a cable service. Similar services have to play by the same rules, or the system just doesn’t work. If one service doesn’t have to pay, all the others will adapt so they don’t have to pay, which contradicts the clear intention of the current law.

Joel Ordesky says:

November 15, 2013 at 5:15 pm

Why should the rental provider have to pay a retrans fee? If I rent my house (with an antenna on it) my landlord shouldn’t have to pay a fee just because he’s making money delivering programming to my set (among other things.) The problem with the Rockefeller plan is that you can’t put online content providers into an MVPD model. And why should you? The business model of television distribution is going to change dramatically, thanks to the internet and five years from now, it’s going to look nothing like it does today. Consumers are expecting programming a la carte and on demand, and available everywhere. It just doesn’t fit the nice model that we’ve grown accustomed to.

    mike tomasino says:

    November 15, 2013 at 5:36 pm

    But the antennas aren’t anywhere close to the places of residence. It’s perfectly legal to have a Community Antenna System that collects and distributes OTA signals as long as the distribution system doesn’t cross a roadway or public easement. That is where Aereo ceases to be a Community Antenna System and becomes a MVPD.

Ellen Samrock says:

November 18, 2013 at 11:10 am

This is one of those “wave of the magic wand, Make it So” bills that blithely ignores existing laws as well as how the industry it’s regulating works. It’s the kind of bill that, if voted into law, will wend its way up and down the court system for years. No, Rockefeller bill is all bad and the senator gets an “F” for introducing it.


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