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Bedeviled By Sky Angel Decision

12/20/2010 12:01 AM Eastern

Washington — The program-access dispute
between over-the-top distributor Sky
Angel and Discovery Communications
could loom large in the futures of both cable
operators and broadcasters.

At issue: the Federal Communications
Commission’s definition of a cable operator,
which has implications for retransmission-
consent, program-access and
carriage rules, and, according to Sanford
Bernstein analyst Craig Moffett, the core
of cable’s business model.

While some over-the-top video hopefuls
argue the issue is settled in their favor, that
does not appear to be the case.

Back in April, when the Federal Communications
Commission denied Sky Angel’s
request for a standstill order to keep
Discovery from taking its programming
off the service, the Media Bureau sent
something of a mixed message. The Media
Bureau said the FCC’s rules appeared
to require a transmission path for a distributor
to qualify as delivering channels
of programmimg, and that Sky Angel —
which delivers a
subscription package
of Christ ianthemed
linear and
on-demand programming
over the
Internet — had not
shown how it did
that . (Sky Angel
had been a directbroadcast
satellite service, but converted
to IPTV delivery in 2008.)

“The evidence put forth at this stage of
the proceeding indicates that Sky Angel
does not provide its subscribers with a
transmission path,” the bureau concluded,
and “has not shown that it is likely to
be able to demonstrate that it is an MVPD
entitled to seek relief under the programaccess
statute and rules.”

Discovery latched onto that phrase to
conclude that the Media Bureau shares its
view that Sky Angel is not subject to program-
access protections, saying in a Dec. 3
filing that it has demonstrated that fact and
the Media Bureau has concluded likewise.

The issue also has implications for
broadcasters and
retransmission-consent
payments.

Ivi TV, the controversial
TV-station
streaming site,
is counting on the
FCC not to treat it as
a multichannel distributor,
at least as far
as paying retransmission-
consent fees is
concerned.

Ivi TV, which is
now streaming 65
stations without paying
retransmissionconsent
fees, was
sued by broadcasters
for copyright infringement.
In its
response to that
suit, it referred to the
FCC’s April decision
as a definitive call.

“[The] FCC concluded
that Sky Angel
was not an MVPD
(and therefore not regulated
by the FCC), because
it provided no
transmission path,”
the company’s lawyers
said. “Ivi cannot
be an MVPD for exactly
the same reason.”

Had the FCC actually
reached that
conclusion, the door
would be opened to over-the-top video systems
that could deliver TV station signals
without having to pay the millions in retransmission-
consent fees operators are beginning
to have to pony up. That could cut
broadcasters out of their vaunted new revenue
stream, particularly as more video
moves online.

It would also undercut the traditional cable
distribution model, while piggybacking
on the transmission paths of such cable ISPs
as Comcast to do it.

Moffett made that point in a different
context last week in arguing for why he was
betting against the FCC applying access conditions
to online video as part of the Comcast-
NBC Universal merger.

“The lower costs associated with ‘freeriding’
on others’ infrastructure (including
Comcast’s) would allow these providers to
pay an ‘equal and non-discriminatory’ rate,
and yet still charge much less to consumers,”
Moffett said. “Such a condition could
therefore compromise the core of the cabledistribution
business model.”

STILL UNSETTLED

Before cable operators start switching over
to online distribution, though, take note
that the Media Bureau actually left the matter
unsettled.

It will be up to the Media Bureau’s final
determination of the merits of the complaint,
and perhaps a full commission
review after that, to determine whether
video-streaming sites are MVPDs — with
only the future of the business models of
both broadcasting and cable potentially at
stake.

SIZING UP THE STIMULUS

Congress allocated more than $4 billion in stimulus funding
for the Broadband Technology Opportunities Program (BTOP),
administered by the National Telecommunications & Information
Administrationt. (It eventually took back a few million to help pay
for teachers salaries.) The NTIA last week released an overview
of the program, which approved its final batch of projects last
fall. The following are some of the key figures, including how
much the government put out and what it expects in return.

TOTAL PROJECTS: 233

TOTAL FEDERAL FUNDS $3,936,114,246

TOTAL MATCHING FUNDS $1,424,224,182

TOTAL FEDERAL FUNDS (INFRASTRUCTURE) $3,484,410,151

MILES OF NETWORK TO BE BUILT 74,461

MILES OF NETWORK TO BE UPGRADED 48,997

TOTAL HOMES THAT COULD BE SERVED 40,315,506

TOTAL BUSINESSES THAT COULD BE SERVED 4,286,934

TOTAL FEDERAL FUNDING FOR COMPUTER CENTERS $200,966,535


TOTAL NEW/UPGRADED COMPUTER CENTERS
3,793

SOURCE: NTIA

 

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