Sen. Jay D. Rockefeller IV (D-W.Va.), chairman of the powerful Commerce Committee, is introducing a bill aimed at giving a boost to new digital video services that are trying to compete against established pay-television distributors.
The Consumer Choice in Online Video Act looks to do for online video services -- known in the media industry as over the top, or OTT -- what the 1992 Cable Act did for the satellite television industry by making sure it has access to programming.
"Evidence is growing that some traditional media and broadband companies are attempting to discourage the growth of online video platforms through various anti-competitive practices," said an announcement detailing Rockefeller's bill.
The 1992 bill made it harder for programmers to not sell to satellite companies and cleared the way for DirecTV and Dish Network to become viable competitors to cable TV.
Rockefeller's bill specifically seeks to prohibit big media companies from refusing to sell content to OTT services. It would attempt to do this by putting "reasonable limits on the use of contractual provisions in video programming carriage contracts that harm the growth of online video competition," according to a summary of the bill making its way around Capitol Hill and within media circles.
There have been rumblings in the media industry that some pay-TV distributors negotiate contracts with programmers that make selling to an OTT service less appealing. Intel recently backed away from launching an OTT service in part because it had difficulty securing programming agreements. Sony Corp. is said to be working on its own service, but it too has yet to announce any deals with programmers.
In a statement, Rockefeller said he hopes that the Consumer Choice in Online Video Act will give consumers more choices in both distribution services and the channels they receive.
"My legislation aims to enable the ultimate a la carte -- to give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch," he said in a statement unveiling the bill.
That may prove to be a difficult task. The major media companies, including Time Warner, 21st Century Fox, Viacom and Walt Disney Co., prefer to bundle their channels rather than sell them to consumers on an individual basis. The pay-TV industry argues that bundling ultimately saves the consumer money because if channels were sold individually, the fees for each channel would rise because their distribution might decrease.
In other words, if CNN or ESPN went from being in just about every pay-TV home to only half of all homes with a pay-TV provider, they would likely have to raise the carriage fees they charge in order to afford to maintain their current levels of programming.
How OTTs should be regulated has been a subject of much discussion in Washington over the past few years. The Federal Communications Commission sought comment on the matter, and there is little consensus among incumbent pay-TV providers nor new digital upstarts.
With Rockefeller set to retire after 2014 and no Republicans on board to co-sponsor the bill, the odds of it gaining any traction seem long. The cable and satellite industries also will lobby hard to make sure no legislation gives OTT services special treatment.
Rockefeller has long been a critic of big media for both their content and business practices. In 2011, he said TV news is too "dumbed down" and entertainment programming is too "obscene" and "promiscuous." He also has been critical of media consolidation and the constant fighting between distributors and programmers over carriage deals that often result in consumers losing channels.
"I strongly believe that my legislation will help foster a consumer-centric revolution in the video marketplace," he said Tuesday.
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