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Thursday, September 20, 2012

Online Video Distributors and the Current Statutory and Regulatory Framework: Issues for Congress

Charles B. Goldfarb
Specialist in Telecommunications Policy

Kathleen Ann Ruane
Legislative Attorney

Digital and Internet protocol technologies have spawned a number of online video distributors (OVDs) whose “over-the-top” video services are in some ways akin to, and in some ways different from, traditional cable and satellite video programming distribution services. However, most of the statutory and regulatory framework for video predates the commercial Internet and was developed within a policy debate that could not consider digital technology and online services. As a result, many statutory provisions apply only to cable companies or satellite carriers, or only to “multichannel video programming distributors” (MVPDs)—a category that includes cable and satellite operators, but as currently interpreted by the Federal Communications Commission excludes online video distributors.

Congress has begun to consider this issue. At both the June 27, 2012, House Energy and Commerce Subcommittee on Communications and Technology hearing on “The Future of Video” and the July 24, 2012, Senate Commerce, Science, and Transportation Committee hearing on “The Cable Act at 20,” questions were posed about which of the existing statutory provisions and regulatory rules, if any, should be applied to the new service providers, which provisions and rules should be modified in light of the new technologies and new market realities, and even whether changed circumstances are so great that major statutory reform is needed. Identical bills introduced in the 112th Congress, H.R. 3675 and S. 2008, would, among other things, make major changes to the statutory framework for video.

Statutory provisions and regulatory rules affecting media and communications typically are shaped by negotiations among the many stakeholders present at the time the statutes and regulations are being developed. The resulting framework creates obligations, prohibitions, privileges, and even rights for the various stakeholders. The industry players construct business models based on these. But statutes and regulations that are tailored to existing technologies may create impediments to the deployment of new technologies, especially if they create privileges or rights that are technology-specific.

Some observers have raised concerns that the current statutory and regulatory framework no longer fosters the long-standing U.S. media policy goals of competition, diversity of voices, localism, and innovation because it does not extend to online video distributors the privileges and rights—and also the obligations and prohibitions—that are applicable to traditional video distributors. For example, competition and innovation may be harmed if online video distributors are denied the access to programming that MVPDs enjoy through the program access and retransmission consent rules or if they are denied the guaranteed low cost compulsory copyright license that cable companies and satellite carriers enjoy. At the same time, localism may be harmed if online video distributors that rebroadcast broadcast television signals are not required to carry their subscribers’ local broadcast stations and are not required to black out distant broadcast signals that duplicate the network and syndicated programming on local stations.

Date of Report: September 11, 2012
Number of Pages: 31
Order Number: R42722
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