FCC’s Pai Says Streaming Video Competition Negates Need for Pay-TV Rate Regulation

Ongoing proliferation of over-the-top video services has created an effective argument against continuing basic rate regulation on pay-TV operators,  says FCC Chairman Ajit Pai.

In an Oct. 3 in blog post, Pai said increased availability of subscription streaming video services has established credible competition to pay-TV; and thereby negates the need to further regulate basic cable rates.

The Commission on Oct. 25 is set to address a request by Charter Communications seeking to recognize that AT&T’s bundled streaming video packages offered in Hawaii and Massachusetts are comparable to its cable TV packages.

FCC Chairman Ajit Pai

The 1992 Cable Act mandated basic rates in areas lacking effective competition in the video marketplace. Due to the evolving video landscape, rate regulation is now limited to certain parts of Hawaii and Massachusetts.

Pai would like to end that.

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“Charter is now subject to effective competition from AT&T’s streaming service,” he wrote. “Adopting this order would be a major step toward the Commission recognizing the realities of the modern video marketplace, and the increasingly important role that streaming services are playing in it.”

The move, which has been applauded by business groups, could redefine the way the government recognizes, taxes and regulates OTT video.

Federal attempts in 2015 to regulate streaming video were challenged by lawmakers eager to promote OTT investment and infrastructure in their districts.I

Indeed, Pai, who pushed the FCC to reverse its net-neutrality safeguards adopted under the Obama Administration, warned against regulating OTT video back in 2015.

“Some have proposed extending to over-the-top providers many of the rules that currently apply to cable operators and satellite providers, regulations that in many cases are over two decades old,” Pai told an industry group at the time.

“I strongly oppose this idea. Given the remarkable success of the over-the-top video industry — success driven in part by regulatory restraint — I don’t believe we should change our regulatory approach,” he said.

 

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