FCC Rule Change Would Pave The Way For Internet TV

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A little while ago we brought you news that FCC Chairman Julius Genachowski had voiced support for usage-based pricing of broadband internet service. Speaking at the annual conference of the National Cable & Telecommunications Association, Genachowski said that such a pricing model would promote fairness to the customer and innovation among ISPs. Nevertheless, it's concerning for "cord cutters" who have scaled back or eliminated cable service in favor of streaming internet.

Genachowski's comments notwithstanding, however, it seems the FCC is also mulling changes that would be decidedly beneficial to cord cutters. The agency is considering changing the definition of "multichannel video programming distributor" (MVPD) to include internet based organizations like YouTube, Hulu, or Netflix.

Historically, MVPDs have been clearly defined as content providers like satellite and cable companies. Under existing FCC rules, networks are required to sell their content to any MVPD that wants it. By changing the definition of MVPD to include online-only services, the FCC would make it so that Hulu, for example, could purchase content from CBS and CBS would be obligated to sell (CBS is one of the few holdouts that does not allow its content on Hulu).

The question of what constitutes an MVPD arose when Sky Angel, an online-based Christian media company approached the Discovery Channel about offering Discovery Channel programming to Sky Angel customers. When Discovery refused to sell, Sky Angel appealed to the FCC. Though the FCC originally ruled that Sky Angel was not a MVPD, and thus Discovery was not obligated to sell Sky Angel their content, Sky Angel's continued appeals have prompted the FCC to consider changing the rules about what makes a MVPD.

Speaking at the NTCA conference, FCC General Counsel Austin Schlick acknowledged that the move would have "very, very broad implications." Not only is Schlick right, he may have left out a "very." So far, internet-based content services like Netflix, Hulu, and the like have been at the mercy of content owners. To return to a previous example, that's why you can't watch CBS programming on Hulu, but you can watch CBS on even the smallest and least significant cable provider in the country. According to the FCC's current rules, Jim's Cable TV and Used Car Repair in Podunk, USA counts as a MVPD, and CBS is obliged to sell their content. But since Hulu is not an MVPD, CBS is under no such obligations. If the FCC changes its rules about what makes an MVPD, all that could change.

Such a rule change would also pave the way for niche-based content providers like Sky Angel to offer a selection of cable and network programming tailored to the needs and desires of its audience. What's more, it would also pave the way for exactly the kind of content offerings that Apple reportedly wants for the long-rumored iTV. If the FCC does change the rules for what makes a MVPD, it could be a major game-changer for the whole TV industry.

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