There is an interesting debate unfolding at the FCC surrounding the definition of video service provider, or as the FCC officially labels them, multichannel video programming distributors (MVPDs). The debate is being ignited over the FCC’s Allvid inquiry, which aims to stimulate competition between the growing stable of retail video set-top-boxes like Boxee and Roku, and traditional MVPDs, including cable, IPTV, and DBS.
Specifically the FCC wants to “…explore the potential for allowing any electronics manufacturer to offer smart video devices at retail that can be used with the services of any MVPD and without the need to coordinate or negotiate with MVPDs.” In other words, one goal of the Allvid vision is to allow consumers to buy set-top-boxes or home gateways at retail from any manufacturer and have that STB/gateway ‘plug and play’ compatible with any MVPD provider.
Interestingly enough, DirecTV is posing provocative questions as a result. In a letter to the FCC, DirecTV’s counsel specifically cites Roku, the OTT STB provider, and suggests that Roku might be considered a MVPD, subject to all of the regulations that MVPDs currently adhere to both now, and in any future Allvid ruling.
“If the Commission required MVPDs to make their content available to all AllVid devices on a disaggregated basis, would device manufacturers be given access to Roku’s content from Netflix, Hulu, and Amazon to present any way those manufacturers saw fit? If the Commission formulated an AllVid technology standard, would Roku be required to design a compliant AllVid gateway device capable of passing content through to third-party devices?,” the letter asks.
DirecTV’s stance is indeed interesting. As OTT providers like Netflix and Hulu, and the manufacturers whose equipment delivers their feeds like Roku and Boxee, continue to grow in programming access and popularity, the lines between OTT video and MVPD get blurrier and blurrier every day. Should they be regulated in the same way?
In conclusion, DirecTV asks the FCC to clearly define what an MVPD is before making any Allvid ruling. Such a decision could have significant implications on the competitive landscape as OTT providers and MVPDs are increasingly battling each other for the all important monthly subscription revenue prize.
6 thoughts on “Should OTT Providers be Classified as Cable Operators?”
Don't know if I would go this far, but it is an uneven playing field. These OTT guys get all the benefits, but little requirements or regulations. It's no wonder they are growing.
I think the last statement says it all i.e. 'the all important monthly subscription revenue prize' will become a thing of the past as what you describe above drives that model to a per/transactional model. It will take some time but it's inevitable based upon the evolution of the technology, the business and the expanding competitive landscape.
Rest assured that the FCC will mandate the most expensive and difficult requirements for OTT boxes while giving Comcast a pass.
The existing distribution rights contracts allow MVPDs little discretion as to what they will or won't offer the consumer without heavy financial penalty. Hence, you have the "I pay $80 for 200 channels I don't watch" syndrome. The OTT providers benefit the consumer in allowing the consumer real choice (limited as it is at this time). This issue underscore the bigger problem of the false economy between studios, MVPD's and advertisers created by these distribution contracts and their associated carriage fees. As long as the consumer can purchase unrestricted access to the Internet and the OTT providers, TV set, and STB manufacturers remain unregulated the economics of the situation will sort itself out in time. I am not sure the heavy (or light depending on individual perspective) hand of additional regulation is required.
Why not regulate breathing?
We need more choice, more innovation, less Cable and Telco monopolization, less FCC and State utilities commissions, and removal of corrupt local cable committees.
To wit: I read on telecompetitor that average broadband speed is now 5 Mbps. Maybe so if you average-in fiber connections. So why does my DSL limp along at under 1Mbps at night and maybe near 3 Mbps on rare occasions. It's been this way for seven years. So much for innovation in this industry. Regulatory costs, rights, and monopolies continue to strangle this industry. Might as well strangle the OTT players for trying something new.
Interesting article and discussion. This all avoids the investment and operation of the "last mile" that facilitates OTT delivery that is wrapped up in the Net Neutrality argument. That "last mile" currently belongs to a private business entity who invests in, manages, and maintains the resources to sell video, voice, and data. Why should the owner/operator of such infrastructure be required to allow free use of the infrastructure to a competitor? Does a "regulated" AllVid solution usher in unfettered government piracy on a grand scale? Will concessions to the last mile owner cost consumers more for their choice? Does OTT/Net Neutrality provide the 1 to 3 Mb/s John (above) gets and sputter out of existence? Using the Fed to mitigate this certainly means someone is going to lose and it will probably be consumers.