Going Over The Top Without Cutting The Cord

Trying to figure out what the stealthy startup Layer3 TV is planning to unleash later this year has become something of a parlor game among pay-TV industry watchers. The VC-backed company, founded in Boston by two cable-industry veterans but now headquartered in Denver, has said little about its plans beyond its goal to become “a next generation cable provider spearheading a new era of home media, combining the best of television, social, and digital life.” How it plans to do that, though, remains a closely guarded secret.

The company’s name — Layer3 — refers to the 7-layer TCP/IP stack, specifically the packet routing layer, which may be a hint. And its two co-founders, Jeff Binder and Layer3 TVDave Fellows, are a couple of confirmed gear-heads. Binder was the founder of VOD systems provider Broadbus Technologies, which was sold to Motorola in 2006, while Fellows is a former CTO at Comcast and AT&T Broadband. So it’s reasonable to assume that whatever Layer3 is planning will leverage existing cable-cum-broadband plant.

The announcement of a second-round of funding in June that raised $51 million offered further hints.

“Cable television may have dominated the business press this year but consumers continue to crave a simple, yet elegant, solution for managing the newest innovations in video, social and digital,” Binder said in a statement. “Layer3 TV is the new cable — putting subscribers at the center of the universe by giving them seamless control of their entertainment relationships.” Read More »

OTT Retransmission: The Next Net Neutrality

Come the fall, the Federal Communications Commssion’s consideration of its proposal to reclassify some over-the-top video services as multichannel video programming providers (MVPDs) is likely to become the agency’s next highly divisive issue, reprising the same ideological and partisan differences that marked the debate over net neutrality.

Last month, FCC chairman Tom Wheeler confirmed that the commission will take up the proposal in the fall, and indicated that he favored making the switch, which would grant online video distributors (OVDs) the same program access rights as cable and satellite providers while also imposing some of the same restrictions and FCC sealrequirements. But in a speech to the Churchill Club in Palo Alto, Calif., last week, Republican commissioner Ajit Pai, who had dissented at great length from the FCC’s net neutrality rules, laid down the gauntlet again.

“This morning, I would like to make clear that I strongly oppose this proposal,” Pai said. “Given the remarkable success of the over-the-top video industry, the burden should be on those who favor new regulations to prove what’s wrong and explain why we should change. That case just hasn’t been made.”

As with his opposition to net neutrality rules, Pai’s analysis of OVD reclassification leans heavily on standard conservative “free market: good; regulation: bad” framing. Beyond the boilerplate, though, he raises an issue that I also noted in a previous post here on OVD reclassification: Changing the FCC’s definition of who qualifies as a MVPD, by itself, will not guarantee OVDs will be able to retransmit broadcast signals on the same terms as cable and satellite providers because the FCC has no authority to convey a license to the copyrighted programming contained in those signals. Traditional cable TV systems operate under a compulsory license, created by Congress and administered by the U.S. Copyright Office, that gives them automatic permission to rebroadcast copyrighted programming in exchange for paying statutory royalties. Read More »

DSTAC-ing The Pay-TV Deck

While over-the-top video services may soon need to ponder whether to become MVPD’s in the eye of the FCC, traditional MVPDs are wondering how far the FCC might go to force them to behave more like OTT services.

The FCC’s Media Bureau convened the penultimate meeting of the Downloadable Security Technical Advisory Committee (DSTAC) this week, ahead of a September Cable_Guy4th deadline to come up with technical recommendations for a successor to the CableCARD. The report, and the deadline, were mandated by Congress as part of the STELA Reauthorization Act it passed in December in an effort to spur the market for third-party retail devices that can be used to control pay-TV services without relying on service providers’ proprietary set-top boxes.

Bringing more competition to the set-top has been an official goal of Congress and the FCC since 1996, when Congress directed the agency to come up with a solution as part of the Telecommunications Act — a provision knows as Section 629. Since then, however, the best the agency and the industry have come up with is the CableCARD, a hardware dongle for cable conditional access that does not support many interactive features, such as video-on-demand and which is not compatible with direct-broadcast satellite services or with IPTV systems like AT&T’s U-Verse. Read More »

Who Wants To Be An MVPD?

FCC chairman Tom Wheeler dropped a pretty broad hint last month that the commission is gearing up to reclassify at least some over-the-top video services as multichannel video programming distributors (MVPDs) as described in the Communications Act, putting them on roughly the same regulatory footing as cable and satellite providers.

In theory, the change could make it easier for services like Sling TV and Apple’s long-rumored subscription video service to add local broadcast channels to their Federal Communications Commission (FCC) Chairman Tom Wheeler gestures at the FCC Net Neutrality hearinglineups because it would extend the same retransmission consent rules to online video distributors as apply to cable and satellite providers.

Under the current retrans rules, broadcasters are required to enter “good faith” negotiations with any qualified MVPD for carriage of their signals. Similar rules, which presumably would also be extended to OTT services, require that cable networks owned by or affiliated with cable operators, such as the NBC Universal cable networks now owned by Comcast, must make their programming available to all other MVPDs.

Whether any OTT services actually want to be classified as MVPDs, however could be another matter. Read More »