By a unanimous margin, the FCC voted last Friday to launch proceedings on proposed rules that would extend the definition of a multichannel video program distributor (MVPD) to online video distributors (OVDs). Under current FCC rules, facilities-based providers of video service, such as cable and satellite companies, are classified as MVPDs. The notice of proposed rulemaking (NPRM) would extend that classification to distributors of “multiple linear video programming streams, including Internet-based services.”

Describing the NPRM as “an important step in making sure the Commission’s regulations accommodate the technology transition in the video distribution industry,” the FCC said the NPRM’s proposals “would ensure that incumbent providers will continue to be subject to the pro-competitive regulations that apply to MPVDs as they transition their services to Internet protocol delivery.” More significantly, the FCC added that the NPRM “also would ensure that nascent, web-based video programming services will have access to the content they need to compete with established providers.”

In addition to requesting comment on the tentative conclusion that OVDs should be classified as MVPDs, the NPRM solicits input on “an alternative interpretation that would require an MVPD to have control over a transmission path and” and on how each interpretation “would impact MVPDs, consumers, and content owners.” Among other things, comment is also sought on (1) how the FCC should apply retransmission consent “good faith” negotiation rules to IP-based MVPDs, and (2) how the FCC’s proposals would impact the regulatory status of IP video services delivered over cable and satellite networks.

FCC Chairman Tom Wheeler’s explained that the proposed rules would provide “more alternatives for consumers beyond the traditional cable or satellite bundle, including giving consumers more options to buy the programming they want.” Commissioner Ajit Pai nevertheless voiced concern in a concurring statement that the NPRM may be “premature” and could “pave the way for more comprehensive regulation of Internet-based services.” Pai also highlighted the potential for conflict between the FCC’s actions and those “that will need to be made independently by the U.S. Copyright Office.” Earlier this year, in response to a request filed by Aereo, Inc., the Copyright Office concluded tentatively that OVDs are not eligible for compulsory licensing rights that would enable them to retransmit “must carry” programming. However, the Copyright Office held the Aereo petition in abeyance pending further pronouncements by the FCC and the courts on the subject of OVD classification.

Upon hearing of the FCC’s vote, Aereo CEO Chet Kanojia acknowledged that his company—which recently filed for Chapter 11 bankruptcy protection—“won’t have an opportunity to compete in this new world,” but nevertheless applauded the NPRM as “a bold and meaningful step forward.” A spokesman for the National Cable & Telecommunications Association told reporters that “we look forward to participating in this proceeding,” but stipulated: “we do not believe . . . the [NPRM]’s tentative conclusion can be squared with the plain language of the definition of a multichannel video distribution provider.”