October 28, 2014 - 2:48 pm
By Tom Wheeler | FCC Chairman

Consumers have long complained about how their cable service forces them to buy channels they never watch.  The move of video onto the Internet can do something about that frustration – but first Internet video services need access to the programs.  Today the FCC takes the first step to open access to cable programs as well as local television.  The result should be to give consumers more alternatives from which to choose so they can buy the programs they want. 

In 1992 Congress realized that the then-nascent satellite industry would have a hard time competing because much cable programming was owned by cable companies who frequently kept it from competitors.  Congress mandated access to cable channels for satellite services, and competition flourished.  Today I am proposing to extend the same concept to the providers of linear, Internet-based services; to encourage new video alternatives by opening up access to content previously locked on cable channels.  What could these over-the-top video providers (OTTs) supply to consumers?  Many different kinds of multichannel video packages designed for different tastes and preferences.  A better ability for a consumer to order the channels he or she wants to watch.

So-called linear channels, which offer the viewer a prescheduled lineup of programs, have been the largely exclusive purview of over-the-air broadcasting, cable, and satellite TV.  But these kinds of packages of programming are coming to the Web as well.  DISH has said that it intends to launch an online service that may include smaller programming bundles. And it has already begun offering foreign language channels online.  Sony, DIRECTV, and Verizon are also in the hunt.  Recently, CBS announced a streaming service that includes linear channels, separate from cable subscriptions; and the new HBO service may as well.

The mantra “Competition, Competition, Competition” fits perfectly with consumers’ desires for video choices.  That’s why I’m asking my fellow Commissioners to update video competition rules so our rules won’t act as a barrier to this kind of innovation.  Specifically, I am asking the Commission to start a rulemaking proceeding in which we would modernize our interpretation of the term “multichannel video programming distributor” (MVPD) so that it is technology-neutral.  The result of this technical adjustment will be to give MVPDs that use the Internet (or any other method of transmission) the same access to programming owned by cable operators and the same ability to negotiate to carry broadcast TV stations that Congress gave to satellite systems in order to ensure competitive video markets.

A key component of rules that spur competition is assuring the FCC’s rules are technology-neutral.  That’s why the definition of an MVPD should turn on the services that a provider offers, not on how those services reach viewers.  Twenty-first century consumers shouldn’t be shackled to rules that only recognize 20th century technology.

Much of the focus of discussion about technology transitions has been on telecommunications, but video is transitioning too.  Over-the-air TV has already moved from analog to digital transmission.  And cable systems – already the dominant providers of high speed broadband – are moving their traditional services to IP-based delivery.  This proposal recognizes that a cable system would continue to be regulated as a cable system, even if it migrates to IP delivery.

The Commission established in our January Tech Transitions Order that the best way to speed the adoption of new technologies is to assure consumers that enduring values will be protected, including competition.  That applies to video as well as telecommunications.  By making our rules technology neutral, we can encourage both new video providers and incumbent cable operators to take advantage of the benefits of IP transmission, boosting competition.

In our Open Internet proceeding, we seek to assure open access to broadband delivery.  In this proceeding, we will address access to programming for those taking advantage of that open access.  These new business models can bring new choices and advantages to consumers.

In Title VI of the Communications Act, Congress created rules to ensure that cable companies that own video content can’t raise artificial barriers to competition by refusing to let their video competitors have access to the programming they own.  That worked for satellite providers, and also helped telephone companies entering the video business.  I believe it makes just as much sense – and will have just as positive a consumer benefit – for an OTT.

Such benefits follow from innovation.  Taking advantage of this rule, new OTTs may offer smaller or specialized packages of video programming, so consumers will be able to mix-and-match to suit their tastes.  Aereo recently visited the Commission to make exactly this point – that updating the definition of an MVPD will provide consumers with new choices.  And perhaps consumers will not be forced to pay for channels they never watch.

Opening up program access will also stimulate the high-speed broadband buildout.  In September, I detailed how limited today’s competition for high-speed fixed broadband in the United States is – about 75 percent of American homes have either zero or only one broadband network delivering speeds of 25 Mbps downstream/3 Mbps upstream or better.  Those seeking to deploy new competitive broadband networks tell us that it’s hard to provide new high-speed Internet access without also being able to offer a competitive video package as well.  An updated definition of MVPD would permit a new broadband competitor to offer customers the ability to reach a variety of OTT video packages without necessarily having to enter the video business itself.

We have passed from an era where it was necessary to build a purpose-specific pathway to deliver video.  The innovation of Internet Protocol (IP) has freed video from these closed pathways and single-purpose devices.  The proposal put forth today will update FCC rules to recognize this new reality and, as a result, expand competition and consumer choice.