Washington— Internet video-streaming company Virtual Digital Cable is trying to become the first Web-content provider to use a 1992 federal law to obtain mandatory access to programming that has financial ties to cable operators, such as Comcast and Time Warner Cable.
The 15-year-old program-access law — which expires in October, unless extended by the Federal Communications Commission — was designed to force the sale of popular cable-programming brands to help launch DirecTV and EchoStar Communications’ Dish Network into viable pay TV rivals to cable incumbents.
Programmers covered by the rule include satellite-delivered networks but not terrestrially delivered regional sports networks affiliated with a cable operator.
Northbrook, Ill.-based VDC said it filed a complaint Jan. 12 at the FCC in an effort to gain access to several Time Warner networks, including TNT, TBS, CNN and CNN Headline News.
Although it operates a Web site featuring click-to-view menus of free and pay services, VDC told the FCC that it considers itself an Internet-based cable operator, according to a person familiar with the complaint.
VDC streams linear programming channels over the Internet, charging $11.95 per month for a 20-channel package that includes QVC, Al Jazeera English, and a few lesser-known cable brands. With about 11,000 subscribers, VDC is aimed at computer users without pay TV programming at home or work, VDC vice president of program acquisition and consumer relations Jeff Rothschild said.
VDC has deals with Discovery Channel, Animal Planet, TLC, Travel Channel and BBC America, but only for distribution to smart phones and personal digital assistants. Some Web services, including the Pentagon Channel, ShopNBC and NASA TV, are free.
VDC’s coding technology limits Internet access to U.S.-based consumers.
Although the Time Warner networks are covered by the program-access rules, it’s unclear whether VDC meets the federal definition of a multichannel-video-programming distributor (MVPD) entitled to obtain relief from the FCC. In other words, is VDC correct that a Web page with cable programming has the same rights under the program-access law as DirecTV and Dish Network?
The law defines an MVPD as “a person such as, but not limited to, a cable operator, a multichannel-multipoint-distribution service, a direct-broadcast satellite service, or a television receive-only satellite-program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming.”
VDC’s complaint, which also seeks $25 million in damages from Turner Network Sales, is likely to raise novel regulatory questions, which could cause the FCC to take longer than normal to issue a ruling if the parties haven’t already settled.
For example, the agency took eight months to review a June 1999 petition by Internet Ventures Inc. (IVI) to rely on cable leased-access rules to obtain 6 Megahertz of bandwidth to offer high-speed-Internet in competition with cable-modem service. The FCC rejected the IVI petition, saying leased-access rules were intended for video programmers, not for third-party Internet-access providers.
VDC’s complaint could ignite a debate over whether cable operators intend to withhold content to shield their cable businesses from Internet competition, which, ironically, operators themselves have largely enabled by investing heavily in broadband-access facilities.
Jeannine Kenney, a senior policy analyst for Consumers Union in Washington, said although she couldn’t comment on the FCC complaint, VDC’s inability to obtain Time Warner content could strengthen the case for net neutrality regulations.
“Broadband remains the last best hope for competition, not just in voice but also in video as an alternative means to distribute content and that’s why it’s so important to make to ensure that the owners of the broadband networks can’t discriminate against content providers like this in favor of their own programming,” Kenney said.
