Last Thursday, FCC Chairman Tom Wheeler began circulating a draft order among his fellow FCC Commissioners that he hopes will spur greater choice and innovation in the U.S. pay television market by requiring multichannel video program distributors (MVPDs) to offer free, downloadable apps that subscribers can use to watch MVPD content on the devices of their choice. The apps-based approach largely corresponds with the “ditch the box” plan which MVPDs offered as an alternative to the FCC’s previously-announced proposal to open MVPD set-top information streams to third-party device makers. MVPDs, however, took issue with provisions establishing a standard industry license that would be overseen by the FCC and through which video apps would be distributed. The FCC is expected to vote on the draft order on September 29.
Abandoning the “information flows” concept that the FCC outlined in its Notice of Proposed Rulemaking last February, the draft order would require MVPDs to develop proprietary apps that would enable subscribers to access MVPD programs on smart phones, tablet PCs, smart TVs, gaming systems and other devices. As stated in a fact sheet issued by the FCC, apps developed by the MVPDs must permit consumers “to search the content in their service, both linear and on-demand, alongside other video services.” Addressing concerns over copyrights and program license terms, the draft order would enable MVPDs to maintain full control of their content, which would be viewed exclusively through their proprietary apps. MVPDs, however, would be barred from requiring third-party devices to discriminate against other content.
Significantly, the draft order would also establish a new licensing body that would develop “a standard license governing the process for placing an app on a device or platform.” Explaining that such a license would “give device manufacturers the certainty required to bring innovative products to market,” the FCC assured programmers that they “would have a seat at the table to ensure that content remains protected.” While the new licensing body would be comprised of industry and other private sector parties, the FCC would “serve as a backstop to ensure that nothing in the standard license will harm the marketplace for competitive devices.”
Fearing that the FCC “will play a much more significant role in the licensing process than simply the ‘backstop’ as it was described,” the National Cable & Telecommunications Association warned that FCC involvement “will slow the deployment of video apps.” Similarly, a spokesman for Charter Communications cautioned that the FCC’s licensing mandate “threatens to bog down with regulations and bureaucracy the entire TV app market.” Nevertheless, John Bergmayer, the senior counsel at Public Knowledge, countered that the draft rules address “the legitimate concerns raised by [programmers and MVPDs] while preserving the benefits to the public.” Declaring, “consumers have been waiting twenty years for a truly competitive and robust set-top box marketplace that puts an end to exorbitant cable box rental fees,” Senator Ed Markey (D-MA) welcomed the draft order as “the dawn of a new era.”