WHY CABLE COMPANIES DON'T LIKE IT
The cable giants aren't yet launching an all-out blitz against the FCC's proposal, but they don't like what they've seen so far. Earlier this month, top lawyers from the National Cable & Telecommunications Association, which represents Comcast and other cable providers, met with FCC officials to urge them to drop the proposal.
Expanding the definition of a video provider to include online services would misinterpret the law and "raise a host of practical and regulatory concerns," the cable lawyers said, according to a public filing disclosing the meeting.
If the FCC does decide to give online companies the same regulatory advantages as cable providers, then the agency should also impose the slew of regulatory burdens that come with that classification, the lawyers argued. That would mean the online services would have to air emergency alerts, offer closed captioning, carry certain local stations, and comply with equal hiring rules.
The FCC will have to make a number of other decisions, such as whether a service has to be available 24/7 to qualify and whether to include services based in other countries.
BUT WHY CABLE WILL PROBABLY BE FINE
Paul Gallant, a telecom policy analyst for Guggenheim Partners, said the FCC's proposal poses "at least some risk" to the existing pay-TV providers. But Comcast isn't going out of business anytime soon. All of these new online services depend on customers subscribing to high-speed Internet—which is usually provided by a cable company.
Online video is sometimes referred to as an "over-the-top" service because its data goes over another company's broadband network. That gives the cable providers a lot of power over their new competitors.
The FCC is also crafting net-neutrality rules to prevent Internet providers from blocking or slowing down any online services. The cable companies aren't likely to cut off access to online video, but Gallant said he expects they will impose higher fees on customers who use large amounts of data. Streaming a few hours of high-definition video every day could cause a consumer to blow past monthly data limits.
So while the cable companies would prefer to protect their current business model, they might be able to make up for any loss in their pay-TV units by charging more for Internet service.
Consumer groups fear that cable providers will use data caps to punish consumers who choose online video competitors. The FCC doesn't currently have any strict rules on usage-based Internet pricing, but a battle over the issue could loom in the future.
WHAT IS THE FCC'S PLAN?
The FCC's proposal, which is still in its initial stages, would classify certain online video services in the same category as cable and satellite TV providers ("multichannel video programming distributors," in the legal terminology). The change would make it easier for the online companies to offer popular channels.