The FCC has released a draft of the video blackout reimbursement proposal that commission chair Jessica Rosenworcel highlighted in a press release on January 17.
If adopted, the proposal would require cable and direct broadcast satellite (DBS) providers to give customers rebates when channels that are part of their lineup are blacked out. And as a close reading of the proposal reveals, telcos or other companies that offer linear video may not be exempt from the requirement.
The proposal came in the form of a notice of proposed rulemaking (NPRM) adopted on January 10, but released more recently. In the NPRM, the commission notes that it is focusing on cable and DBS providers because it believes it has the authority to impose the rebate requirement on those types of companies.
The NPRM goes on to say, though, that some rebate advocates have suggested that the blackout rebate requirement should apply to other types of providers as well.
“Commenters that suggest that we apply a blackout rebate requirement to non-cable or DBS entities should identify the statutory authority under which we could apply such a requirement,” the FCC said in a footnote in the NPRM.
Blackouts occur when a linear video provider is unable to reach a new agreement with the content provider before the previous agreement expires.
Consumers “should not be asked to shell out for programming that they were promised but are unable to watch,” said Rosenworcel in a prepared statement.
Commissioners Nathan Simington and Brendan Carr dissented, however – and Simington made some points in his comments about the NPRM that will resonate with providers that offer linear video.
Noting that the proposal would require video service providers exclusively to shoulder the burden of blackouts, he argued that “there are no innocents in the retransmission consent negotiation.”
Using an analogy involving a retailer and the manufacturer of a product that the retailer carries, he argued that the rebate requirement could give content providers added leverage in content negotiations.
“If I know that there will be a new rebate cost to you for every day my product is missing from your shelves that you cannot shift to me – well, why would I not hold out for just a bit more?” Simington asked. “You’re the one who has to pay back your customers for the days my item went missing.”
Simington also noted that determining an appropriate amount for a rebate could require parties to violate their nondisclosure agreements.
If indeed the blackout rebate requirement is imposed, it could further dampen service providers’ interest in offering linear video at a time when alternatives such as streaming video-on-demand are increasingly popular.
Interested parties have until 30 days after the NPRM is published in the Federal Register to file comments in response to the proposal.