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House Hearing Tackles Future of Video

All agree: Regs are outdated in age of Hulu, Netflix, YouTube
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If there’s one thing everyone can agree on about today’s communications laws, it's that they’re woefully out of date. Crafted years before Netflix, Google or Apple offered video programming on the Internet, the laws regulating cable and satellite TV and TV broadcasting say nothing about their new competitors.

Now, in addition to the dispute between pay TV providers and broadcasters over carriage deals, there are emerging issues for online video providers like Netflix that depend on Internet service providers like the cable systems for their distribution.

During the future of video hearing before a House subcommittee Wednesday, lawmakers heard from an all-star panel of execs representing the old and new in TV video services, touching on a broad range of issues.
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“The Federal Communications Commission regulates based on a bygone era,” said Rep. Greg Walden (R-Ore.), chairman of the House Subcommittee on Communications and Technology. Walden specifically referred to the 1992 Cable Act, when cable TV controlled 98 percent of the pay TV market. Today, that’s dropped to 53 percent. “It was meant to spur competition and it worked. But the act does not apply to YouTube, iTunes, Netflix, Amazon, Hulu, Roku and Sky Angel.”

The hearing comes amid reports that the Dept. of Justice has opened up an antitrust investigation into whether cable companies are using broadband data caps to steer consumers to their own Internet video services and discourage, by pricing, the usage of video services not controlled by the cable company. It’s been a pet issue of Netflix, which has accused Comcast of doing just that.

“When you couple limited broadband competition with a strong desire to protect a legacy video distribution business, you have both the means and motivation to engage in anti-competitive behavior,” David Hyman, Netflix’s general counsel, told lawmakers. “Add to this mix a regulatory and legislative framework largely crafted before the modern Internet era, and you have the makings for confusion and gamesmanship.”

Taking on the attacks, Michael Powell, former FCC commissioner and president and CEO of the National Cable and Telecommunications Association, called accusations that the cable industry is involved in any effort to stop Netflix and others is “flatly wrong and belied by the facts.”

“Netflix is the largest provider of subscription video in the country,” Powell said. “We sell broadband. Their services help stimulate the services we sell.”

Dish Network’s chairman Charlie Ergen has never been shy about his continuing dissatisfaction with rules that he says give broadcasters the edge in retransmission negotiations. He used the hearing to open those old rules and defend Auto Hop, a technology that has enraged broadcasters because it allows its subscribers to automatically skip all commercials during prime-time programming.

Sky Angel, which recently lost access to distribute CSPAN and Discovery over its Internet video service, argued for some of the protections regulations give cable operators but not others.

“Everybody wants a little better deal, the other guy’s deal,” noted Walden.

Lawmakers will need more than one hearing to figure out which rules should be tossed or if new ones should be written.

“I know it’s too late to do a bill in this Congress," said Rep. Joe Barton (R-Tex). “In general, I think we need less regulation than more. I look forward to big things happening in the next Congress, but it has to be done in a bipartisan basis.”