Online Video Regulation: Scrambled

We're at the Video on the Net conference in Boston this week.  Lots of interesting talk about the business and future of Internet video.  We'll be peppering what we learned here in future posts.

But, let's get to what you, dear reader, are most interested in:  The prospects of online video regulation.

Kudos go to Jeff Pulver and the folks at VON for allowing the issue to be raised amidst all the happy talk.  They have reason to.  VON, to most, stands for Voice on the Net and Pulver and crew have been battling VOIP regulation since the technology first scared its first traditional telco. That experience taught them that regulation is not an ethereal concept.  It impacts real, live business models.

FCC Commisioner Deborah Tate was a surprise guest at a pre-conference communications policy session...

...We weren't there, but she apparently told the gathering that the FCC would likely consider regulations to ban online videos of child pornography.  As NetworkWold reports, Pulver noted this in his keynote speech yesterday and called the Commissioner's comments "a warning shot" and said that he "expects the FCC to be loud."

Yet, also yesterday, FCC Chairman Kevin Martin had a different take in his congressional reconfirmation hearings.  Or did he? 

According to Broadcasting & Cable, Martin said that it is ""not necessary to regulate [Internet video service] at this time."

Yet, then the brief goes on to report:

Martin said he didn't think the FCC had the authority to regulate online content, as it does with broadcast, but that doesn't mean he wouldn't like to. He told Senator Mark Pryor (D-Ark.) that he thought "all policymakers should try to make the Internet a more decent place," but said that was a challenge, pointing out that it had been challenging enough in the broadcast space, where the FCC does have authority to regulate decency.

Where there is a will, there is a way?

Martin's comments on regulatory authority bring us back to Commisioner Jonathan Adelstein's viewpoint on online video regulation made at the PFF Aspen Summit.  We asked him basically the same thing that was asked of Martin in yesterday's hearing, and he politely punted the issue because he claims that FCC didn't have the regulatory authority to regulate online video.  He then said that the FCC only maintains its authority over broadcast television because of it's ubquity and reach.  This is the same reasoning given on why the FCC's regulatory authority over cable and satellite broadcasts are more minimal than the broadcast model.  That, and you need to make an active choice to become a cable or satellite subscriber.

Still, this was a bit of a head scratcher.  On one hand, you can't question that broadcast TV is pretty much ubiquitous and available to anyone who can press the power button on a remote -- 99 percent of American homes have at least one TV.

But, on the other hand, at what point of penetration do you need to get to be broadcast TV-esque?  Way back in 2003, more than 60 percent of U.S. households had computers and the more recent OECD report said that the US has 49 million broadband subscribers.  Oh, and what about those little computers that people carry in the pockets?  That is, phones and soon-to-be a bevy of different mobile devices that merge video capabilities and old-school voice calling?   There are 180 million wireless subscribers in our country of 300 million.  All we're saying is that those are a lot of video platforms that are a lot easier to access than paid-for cable on a 40-inch screen that's attached to a cable box.

On top of this, it's not like there hasn't been any federal regulation of cable TV beyond infrastucture and competitive fights.  For example:

• The 1996 Telecom Act required the commission to work with industry to create the "voluntary" TV Parental Guidlines that provides ratings for nearly all television shows under the now familar TV-14, TV-MA, etc. rubric.  It also spawned the not-so-voluntary V-chip inclusion in all TVs bigger than 13-inches that allows content to be blocked based on the rating system.
• The Fairness Doctrine and related personal attack and political editorial rules hung around until 1987 and 2000, respectively.
• There are rules around amount of allowable advertising during childrens programming; rules on information broadcast related to non-state lotteries; and, rules in identifying sponsors.
• Closed-captioning capabilities for the hearing impaired is required on most TVs and nearly all shows.

Bottom line is that even in the closed environment of cable, the regulatory seal has been broken.

And, the Internet ain't closed.

This brings us back to Chairman Martin's aspiration:  "All policymakers should try to make the Internet a more decent place."

Who would be against that?

But, then you just quickly need to splash cold water on your face and remind yourself that, in the name of decency and protecting children, the Senate has on its long list of bills to review legislation that would essentially ban social networking, blogs and interactive chat in many schools and libraries.  It's called the Deleting Online Predators Act and it passed the house 410-15.  We have a in-depth review of the bill here.  Not so ironically, the House legislation names the FCC as the regulators in charge of defining the scope of what sites should be banned or not.

There is a lot of bad stuff on the Internet and the idea that kids will be able to access it on a school bus doesn't comfort.  Therefore, the urge to do right by children is a noble cause.  Sadly, so is the urge to fight change and put strict rules on nascent technologies that you don't fully understand.  This is why folks like Bob Pepper say that social regulation will shape communications policy in the coming years.  Pepper, btw, was a top adviser to six FCC chairmen over 19 years before he joined Cisco last year.

As we've noted, the US only needs to look to Europe and Australia for social regulatory cues. As we report, both continents are taking very close looks at regulating television, the Internet and content delivered over mobile devices consistently.

And, the movement toward regulation doesn't have to come in big shifts like those proposed overseas.  We just mentioned closed captioning regulations for TV shows.  Well, closed captioning regulations for Internet video are being fought for already.  Advocates want the Telecom Act of 1996 to open up the rules to online video.  If this is done, what next?

The Progress & Freedom Foundation is one of the very few American orginizations watching online video regulatory creep.  One Fellow recently published recommendations to regulators on how to treat Internet content.  The short list:

1. Do enforce existing child-protection laws. Most societies agree that child pornography is not a welcome aspect of their culture and have laws in place addressing that. If a new content delivery medium is making such material easier to traffic, there’s no need to regulate the new medium, which presumably has some salutary aspects as well; better if law enforcement uses the new technology to track down and arrest the perpetrators who are already engaging in illegal activity.

2. Don’t distinguish between types of content delivery. Is it linear or non-linear? It uses spectrum, but is it a broadcaster or a wireless provider? Such distinctions make no sense in a converged digital age, and in fact may cause investment to gravitate to some services over others. This will not be to the benefit of the consumer if the less regulated technologies receiving more investment are viewed by consumers as less user-friendly and robust.

3. Do harmonize by deregulating down. As #2 makes clear above, there is no justification to regulate content providers differently. Yet as we’ve seen, when regulators look to “harmonize” such regulations, it usually involves imposing regulations from old industries onto new ones. This will retard technological growth and impede the rollout of new content delivery services to consumers.

4. Don’t discourage migration of content. The consumer demand for content is growing daily. Increasingly we will be seeing content production from a wider range of players, but it’s natural to assume that some of the most popular content will remain that produced by professionals, such as TV and movie studios. That professional content should be able to migrate freely from traditional media to new distribution outlets. To the extent those producers remain under traditional regulations (if #3 above has yet to be implemented) then at a minimum their regulations shouldn’t carry over into any new media applications in which they participate.

5. Do support intellectual property rights. Content producers and distributors recognize the consumer demand for content. Intellectual property rights of those content producers should be respected under existing law as producers and distributors experiment with new distribution channels.

One caveat:  It is VERY important that point #2 is not ignored when considering point #3.

And feel free to quibble with all the points, but, at least, it's thoughtful consideration of the regulatory path we are headed down.

And, as we noted up top, Jeff Pulver feels strongly about this issue, too.  He also made the interesting point that he thinks that traditional media in its infinite lobbying power will be the ones doing the nudging in Congress to "harmonize" rules for online media content.

Pulver offered the fledgling online video industry the help of his VOIP focused VON Coalition.  We wish him and team good luck and would be happy to participate.  But, it won't be easy.  We mentioned the coming threat of regulations to one Internet video CEO here, and his response was that nothing bad will happen because Internet video is "too popular" and therefore any attempts to create rules around it will make voters mad. 

For every tasty bottle of Cabernet, there is the seemingly impossible threat of a Prohibition.

For every Lenny Bruce...

For every disruptive technology...

-S. Garrett

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