'Conditions and Enforceable Commitments": FCC Hearts the Web

by Steve Smith, Jan 19, 2011, 10:30 AM

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Whatever you think of the FCC approval of the Comcast-NBC merger, it seems to be giving a big wet kiss to the online video industry. In approving the marriage, the FCC defined "conditions and enforceable commitments" that Comcast/NBC universal had to abide, and the Commission went out of its way to acknowledge and include digital distribution and emerging online video business models.

Chief among these commitments was ensuring "reasonable access to Comcast-NBCU programming for multichannel distribution," which ensures NBCU brands will not become proprietary to Comcast cable. But more to the point, the FCC made a special provision aimed at helping online video business models thrive.

The sub-provisions are worth quoting verbatim since they will affect a number of players in the video ecosystem. These items may also signal the FCC's general perspective that could inform subsequent decisions involving online content. Hulu is singled out by name, but notice how provisions put Online Video Distributors (OVDs) on an equal footing with Multichannel Video Programming Distributors (MVPDs). The big boys of traditional media and the upstarts of digital-only media have to get an equal and fair crack at the content. The FCC is requiring that Comcast-NBCU:

• Provides to all MVPDs, at fair market value and non-discriminatory prices, terms, and conditions, any affiliated content that Comcast makes available online to its own subscribers or to other MVPD subscribers.
• Offers its video programming to legitimate OVDs on the same terms and conditions that would be available to an MVPD.
• Makes comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU's peers.
• Offers standalone broadband Internet access services at reasonable prices and of sufficient bandwidth so that customers can access online video services without the need to purchase a cable television subscription from Comcast.
• Does not enter into agreements to unreasonably restrict online distribution of its own video programming or programming of other providers.
• Does not disadvantage rival online video distribution through its broadband Internet access services and/or set-top boxes.
• Does not exercise corporate control over or unreasonably withhold programming from Hulu.

That last piece on Hulu addresses (although it doesn't fully solve) at least one major concern about Hulu's future stability - the reliability of its main partners to keep supplying content.

In a settlement with the Department of Justice over terms of the deal, Comcast also agreed to relinquish its voting rights and presence on the board of Hulu. On the Comcast blog yesterday, the company states that it can retain its financial stake in the joint venture and agrees that "provide content to Hulu in a manner consistent with Hulu's other broadcast network partners. So NBCU must maintain its content participation but without control.

And while the FCC is requiring Comcast-NBCU to make its content available on a reasonable basis to OVDs, that requirement is contingent on the OVD having comparable deals with Comcast-NBCU "peers." NBCU can still say 'no' to deals for streaming its content online, at least until a competitor says 'yes.' But how the plan of equal content distribution is implemented sounds like it may be a bone of contention in the future. Or at least, the Comcast/NBCU lawyers have devised a suitably vague interpretation of the meaning. "As part of this transaction, Comcast has agreed to a focused mechanism for online video providers to obtain access to certain NBC Universal content. The process has been carefully crafted to be fair to all players. There is no general extension of the program access rules to online video."

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