FCC’s Plan to Regulate Online Streaming Faces Backlash

A key House Demo­crat urged the Fed­er­al Com­mu­nic­a­tions Com­mis­sion on Fri­day to aban­don its plan to reg­u­late cer­tain on­line TV ser­vices the same way it reg­u­lates cable com­pan­ies.

While the FCC is used to cri­ti­cism from Re­pub­lic­ans, the op­pos­i­tion from Rep. Frank Pal­lone, the top Demo­crat on the House En­ergy and Com­merce Com­mit­tee, is an un­usu­al and sig­ni­fic­ant blow to the com­mis­sion’s pro­pos­al. Amazon, Apple, and Mi­crosoft have pre­vi­ously cri­ti­cized the plan in fil­ings with the FCC.

“We should hit the pause but­ton on reg­u­lat­ing stream­ing video,” Pal­lone said at an event in Wash­ing­ton, D.C. hos­ted by Duke Uni­versity School of Law. “When it comes to ad­opt­ing new policies, we all must ask ourselves wheth­er new po­lices ac­tu­ally make people bet­ter off. In the case of de­fin­ing on­line video pro­viders as cable com­pan­ies, I do not think we can say yes. Un­til we all bet­ter un­der­stand the ul­ti­mate im­pact on con­sumers, the FCC should avoid ad­opt­ing sweep­ing new reg­u­la­tions.”

An FCC of­fi­cial de­clined to re­spond to Pal­lone’s speech but said the is­sue is still a pri­or­ity to FCC Chair­man Tom Wheel­er. The pur­pose of the pro­pos­al is to help stream­ing-video ser­vices com­pete on a level play­ing field with tra­di­tion­al cable TV bundles, but the FCC is fa­cing grow­ing con­cerns that it could un­in­ten­tion­ally stifle the very com­pan­ies it is try­ing to help.

Un­der the plan, cer­tain on­line ser­vices would have the same right as cable com­pan­ies to ne­go­ti­ate fairly for ac­cess to broad­cast net­works such as Fox and CBS. TV pro­viders that also own their own cable chan­nels (such as Com­cast) wouldn’t be al­lowed to block their on­line rivals from car­ry­ing those chan­nels.

The pro­pos­al would ap­ply only to com­pan­ies that of­fer mul­tiple streams of live or sched­uled pro­gram­ming. So the rules wouldn’t cov­er Net­flix and Hulu, which al­low sub­scribers to watch videos whenev­er they want. But it would ap­ply to Ve­r­i­zon’s new Go90 ser­vice, Dish Net­work’s Sling TV, and to pro­jects that are rumored to be in the works from Amazon and oth­er tech com­pan­ies.

The idea is that by mak­ing it easi­er for the on­line com­pan­ies to of­fer pop­u­lar chan­nels, it will make them a more en­ti­cing al­tern­at­ive to pricey cable bundles.

“Big-com­pany con­trol over ac­cess to pro­gram­ming should not keep pro­grams from be­ing avail­able on the In­ter­net,” Wheel­er wrote in a blog post last year, when he first an­nounced the pro­pos­al. “Today, we pro­pose to break that bot­tle­neck.”

But while Wheel­er’s pro­pos­al would grant on­line ser­vices some reg­u­lat­ory perks, it could also mean new bur­dens. The on­line ser­vices might have to air emer­gency alerts, of­fer closed cap­tion­ing, carry cer­tain loc­al sta­tions, and com­ply with equal-hir­ing rules. And tech com­pan­ies are wor­ried the FCC could even­tu­ally ex­pand the rules to cov­er even on-de­mand on­line TV ser­vices.

In Fri­day’s speech, Pal­lone said he knows plenty of con­sumers are frus­trated with their cable pro­viders. But, he said, new on­line TV com­pan­ies are find­ing ways to chal­lenge the old busi­ness mod­els without the FCC’s help.

“Reg­u­lat­ing cer­tain busi­ness mod­els does risk stifling in­nov­a­tion,” he said. “The on­line video mar­ket is still bur­geon­ing. Right now, we can­not know what busi­ness mod­els con­sumers will prefer. And we can­not know yet how to craft the prop­er con­sumer pro­tec­tions.”

The FCC voted to seek com­ment on the pro­pos­al last Decem­ber, and Wheel­er has said he wants to ap­prove fi­nal rules this fall.