OPASTCO Fears Exclusive Video Deals Will Spread Online
A group representing small telecom companies fears that exclusive online deals between programmers and large pay-TV companies for subscription programming could make it harder for its members to remain competitive as content continues moving to broadband. The worry was spelled out in a filing Wednesday by the Organization for the Promotion and Advancement of Small Telecommunications Companies in the FCC’s review of the video programming market. OPASTCO wants to make sure that new projects including Time Warner and Comcast’s TV Everywhere -- which has already draw concern that access will be restricted (CD June 25 p2) -- are “open and non-exclusive,” the filing said.
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The filing raised for perhaps the first time matters of online exclusivity and pricing usually discussed in the context of traditional cable, satellite and telco-TV, said the lawyer who helped write it. “We're hoping to really get the discussion of this issue started and let the FCC know this is a potential problem that they need to look out for,” said Brian Ford, a regulatory counsel at OPASTCO. “I don’t think that anybody has ever made that argument.”
The group fears the spread of exclusive deals by programmers in the online video subscription world, Ford said. “We don’t want to see them make the same mistakes in the new emerging market as they did in the old one and allow them to hold us over a barrel on price in the negotiations they engage in” as occurs with pay-TV programmers and OPASTCO’s members. “I don’t want to see it where only say Comcast’s broadband subscribers can get it but rural ILEC subscribers” can’t, he added. The NCTA and the USTA declined to comment.
Though “innovative deals” including TV Everywhere claim not to be exclusive, “these principles must be adopted in practice and the arrangements must not restrict rural” pay-TV companies and broadband providers “from offering web-based content to their customers,” OPASTCO said. “It is important that web-based video content be available to rural” pay-TV and broadband companies “on a ‘most favored nation’ basis” where small companies get the same terms as large ones.
There don’t seem to be any legal requirements for what OPASTCO seeks, and section 628 of the 1992 Cable Act applies only to satellite-distributed programming, said cable lawyer Dan Brenner of Hogan & Hartson. “The online world I think was not really addressed by the ‘92 Act,” he said. “Putting aside vertically-integrated programming, the commission hasn’t really expressed its views on what Section 628 means in the online world, either.” OPASTCO isn’t proposing changes to that section, Ford said.
Groups like the American Cable Association have been making arguments like OPASTCO’s in recent weeks, mainly in the media and in speeches, and not yet at the commission, said an industry executive. But the cable association has criticized mainly ESPN360.com (CD July 29 p11), saying owner Disney requires cable companies that want to give subscribers access to the site to pay for all of them, not just those who want it, the executive added. ACA President Matt Polka said his group supports OPASTCO’s filing and shares its position that the commission should look at the practice. “The last thing the commission wants to happen to broadband and content on the Internet is what is happening on the television today with tying and bundling of content,” Polka said. That could raise prices for consumers, he said.
“Contrary to ACA’s comments, ESPN does not force distributors -- large or small -- to carry any of our products,” said a company spokesman. “ESPN360.com is available to any and all ISPs” and the programmer offers more sports news and short-form video on its free Web site, ESPN.com, than anyone else, he said.