Ajit Pai speaks on OTT at the Churchill Club
July 2015 – In an early morning event, FCC Commissioner Ajit Pai was in Silicon Valley to speak on OTT, Net Neutrality and the role of the FCC in the new technologies. The discussion started as a platform for understanding the role of the 104 year old FCC and how it is addressing the changing face of content distribution. You Tube is filled with both personal and business content some of whom have private channels. Companies likes Dreamworks have opted for this method, rather than the complexity and restrictive aspects of the cable and broadcast industry. Netflix, Hulu and Amazon all started as content re-distribution companies, now they are creating new content for the net only distribution. These are forming the base of the new subscription based OTT services.
Adding into this is new services like SlingTV which is providing ala-carte channel access via the web as an alternative to cable/full satellite packages. Mr, Pai explained the challenge is to determine is net based video distribution should be considered under the same rules and regulations as a traditional MDVP ( multichannel video programming distributor ) like a cable operator. The FCC has been focusing on managing and regulating broadcast and rebroadcast rules as well as checking for copyright issues. The challenge they are faced with is OTT was not part of most rebroadcast agreements and it is unclear if the existing regulations apply to the situation. The issues are increasing complicated in that most broadband service for viewing the streaming and VOD OTT content is managed and delivered by cable and satellite firms. This brings up the question of who should be regulated – the OTT provider for having file access to the content, the platform that allows the selection of the content or the infrastructure provider that enable the streaming of the content.
Other issues being addressed are should there be a tax on this internet content? Currently Chicago has a 9% video tax on PPV on demand content, where as CA has no taxes on internet sales for video. This is the preferred position by the FCC, but currently it is up to the individual states. The question being addressed is about the digital currency use and point of origin to determine a taxable base.
One of the key points that is behind the widespread use of OTT as a medium, was the state of the US broadband infrastructure. Currently, the FCC oversees cable, satellite, and telephone companies and the wires/transmission that are sent to the homes. As these firms add broadband services on the same infrastructure, but a lot of the content delivery is by third parties, who collect the revenue for the content, the issue is how to insure the people building, supplying and maintaining the infrastructure, keep it operational when they are not necessarily receiving value for their activities.
Other issues being addressed are the use of user generated content from an event. These may appear as un-licensed broadcast content on a mobile network and the issues of ownership vs right to use and experience an event are being brought to question. The net neutrality ruling and the title 2 classification did not adequately address this level of granularity of application of the current rules, and the political nature of the Washington DC environment, has made a number of these issues ideological rather than technical classifications.
The open Q&A to the Commissioner and the local internet business leaders, included – Is there a future for Broadcast? The response was mixed – the belief was that broadcast as we currently know it will cease but new formats such as Twitch and Periscope will replace it in the landscape. The scope and type of regulation for these businesses is yet to be determined.
