Cable, Broadcast Professionals See Differing FCC Implications of CBS, HBO OTT Options

A move to add stand-alone services streaming content from CBS and HBO could add a new layer to FCC proceedings, including the retransmission consent and net neutrality dockets, said some cable industry professionals in interviews Monday. The announcements have raised questions about how the video market is changing and whether it's on a path to an a la carte model. The announcements are examples of programmers reacting to consumer demand, which must be kept free of more regulations, some broadcast industry professionals said. CBS is providing its CBS All Access digital subscription product (see 1410160058), and HBO plans to launch a service next year (see 1410150095).

Any effort by dominant broadcast and cable giants to migrate the “broken cable programming model to broadband can be an issue for the FCC as well as for Congress,” said Matt Polka, president of American Cable Association. By providing CBS All Access, CBS is offering broadband consumers local choice, he said. “I find it difficult for broadcasters to continue to oppose local choice for cable.”

Polka again supported Mediacom's petition for a rulemaking on video programming rules. The FCC should move forward with the request and explore suggestions, like the a la carte option that gives multichannel video programming distributors the right to offer any video programming not previously carried or based on pricing thresholds,he said. There's a concern that CBS will withhold retrans consent in an effort to coerce cable companies into paying additional fees to allow their broadband customers to subscribe to CBS All Access, he said. If a cable operator doesn’t agree to a retrans deal, CBS could deny and block access to All Access, he said. CBS declined to comment, as did HBO and the FCC.

The CBS offering “gives ammunition” to the retrans consent arguments by cable operators, said a cable attorney. It also raises implications on the net neutrality issue from the cable operators’ point of view, he said, referring to their complaints of online content being blocked during retrans or cable-channel carriage disputes. “That could come back to bite the broadcasters given the bent of the FCC recently,” and the commission's stance on edge providers, he said.

The changes in the video market likely make it tougher for regulation, said Scott Flick, a broadcast attorney at Pillsbury Winthrop. The migration of content away from venues regulated by the FCC continues, he said. “It’s going to be that much harder for the FCC to attempt to have influence and control of the programming market as the parts that it regulates become a smaller portion of that market.” Flick said he sees no direct connection between the new services and the discussion about whether to change retrans rules. They’re relatively independent, directly speaking, "but a long-term trend towards more and more content becoming available on the Web is going to have an impact on viewership in traditional media," he said. Over time, the market is going to have to adapt to that, "and the FCC will need to give traditional media the ability to adapt to that,” he said. The FCC can’t expect older forms to compete against newer types of video delivery systems "if broadcasters are limited in their ability as to how they structure deals to meet current market conditions,” Flick added.

Competitors are offering more choices and opportunities to consumers on how they access video content on multiple platforms, while also protecting the copyright interests of content creators, said a TVfreedom.org spokesman. "It is the way the marketplace should work."

From the FCC perspective, Aereo’s application to be treated as an MVPD probably will have bigger implications than the proposed stand-alone services, said Howard Homonoff, consultant for media companies. Establishing the obligations that Aereo is willing to take on, and the obligations where the FCC would be lenient, would give more direction to others considering offering over-the-top services, he said. The services offered by CBS and HBO won’t immediately make it difficult for the FCC to assess current proceedings because those two programmers aren’t owned by companies that have cable systems, he said. If Comcast or other companies that own cable systems were to take on this type of content delivery, "that might have implications for whether, and to what extent you might restrict or impose obligations on companies that own content and control one form of distribution," he said. The FCC is likely to see what develops at first, but it will have to ultimately address that, he added.