SkyAngel Files Program Access Complaint — Has Media Bureau Really Changed, Or Will They Again Sit On Sidelines?

Some people wonder why I remain so down on the Media Bureau. “Harold,” they say. “Why do you keep saying the Media Bureau are in the pocket of the cable industry? Aren’t they just all fired up and rarin’ to go on the upcoming cable set top box proceedings?”

Perhaps I am allowing the experiences of the past to cloud my vision of a hopeful tomorrow. Perhaps, despite an utterly abysmal track record on cable matters, the cable folks in the Media Bureau have now turned over a new leaf. Perhaps now they will at least process complaints in less than three years, so that companies other than cable operators might feel they get some due process — if not actual justice — at the FCC. Who knows?

Which is why I shall watch the developments around the Sky Angel program access complaint with considerable interest. Sky Angel used to distribute programming by satellite, making it eligible for the “program access” rules that require cable operators with affiliated programming to make that programming available to rivals. (I’ve written about these rules at length before here.)

From what I can tell from the limited data available, Sky Angel is now a “Christian IPTV distributor.” It resembles a cable/satellite-like service (or “MVPD” for “multichannel video programming distributor”) in every way except for the fact that it does not own its own facilities. It distributes its programming online. We generally call these things “over the top” video distributors. According to the Broadcasting and Cable story (since I haven’t been able to find a copy of the complaint), the Discovery Channel has decided to terminate its distribution contract with Sky Angel four years early — apparently because Sky Angel has switched its distribution model to become a pure over-the-top distributor.

My problem is, that this looks very similar to a complaint a company called VDC (“Virtual Digital Cable”) filed three years ago. The Media Bureau has yet to process that complaint, but there’s no rush — since the company went bankrupt and shut down while waiting for Media Bureau action.

More below . . . .

As I and others have written some cable operators and cable programmers feel threatened by over the top video services. The issue has emerged as one of the flashpoints in the Comcast/NBCU merger. Companies with established business models — whether they are MVPDs like Comcast or programmers like NBC (or Discovery) — do not like wild cards like over-the-top distributors. Some folks, like Time Warner’s COO Steve Donohue, have gone so far as to urge programmers to refuse to make any deals at all with over-the-top distributors. These programmers and distributors fear cable subscribers will “cut the chord,” i.e. cancel their cable subscriptions and rely exclusively on broadband for video content. While only a fraction of the potential viewing public has actually “cut the chord” and turned to such alternatives as Boxee or Roku, cable operators and programmers continue to resist any disruptive change.

Against this backdrop, Discovery Channel apparently seeks to terminate its distribution contract with Sky Angel four years early. Without seeing the complaint, it is not clear what triggered this since the article describes Sky Angel as migrating from satellite distribution to internet distribution “some years back.” It is also not clear whether Sky Angel is alleging a violation of the specific rules and claiming the status of an MVPD, or if it is making a general complaint against “unfair methods of competition or unfair or deceptive acts and practices” prohibited by Section 628(b) (47 U.S.C. 548(b)).

Discovery Channel will no doubt defend on the merits and deny any wrongdoing. But I also expect them to raise the legal objection many of us want to see resolved — whether a pure IPTV distributor that does not own its own facilities (as opposed to a facilities based IPTV provider like AT&T) counts as an “MVPD” for purposes of Section 628 (or any of the other potentially relevant statutes). As some of us at Public Knowledge have argued since September, ensuring that the rules that protect MVPD competitors apply to over-the-top distributors and online programming services is critical to developing online video as a real service able to compete with existing cable and satellite providers.

So I’m planning on following this very carefully at the Media Bureau. If they have turned over a new leaf and are finally putting the focus on consumers and on promoting competition, we should see them decide in a relatively short period of time whether to deny the complaint, grant the complaint, or designate the complaint for a hearing. At a minimum, they should not take long to make a determination (one way or the other) on the core legal question of whether the program access rules even apply to over-the-top distributors. OTOH, if the Media Bureau still sees itself as cable’s happy little lap dog, Sky Angel will wait a heck of a long time before it sees any action on its complaint.

Stay tuned . . . .

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2 Comments

  1. Mike Doughney says:

    This is certainly rather peculiar, because when the Sky Angel service was discontinued via satellite because of the impending demise of Echostar 3, on March 31, 2008, no Discovery channels were part of the satellite package.

    The only delivery system Sky Angel could have used to deliver any Discovery networks was IPTV, and they of course contracted for that facility. So why Discovery waited till now to pull the plug, or even dealt with SA in the first place, is a bit of a mystery.

  2. Harold says:

    Indeed. It is possible that Discovery contracted with Sky Angel before March 31, 2008 but that for some reason Sky Angel had not yet begun distribution. But even so, it does not explain why Discovery waited so long. I look forward to seeing Sky Angel’s complaint and Discovery’s reply, which will hopefully offer explanations from both sides for this.

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