If lawmakers want to help ensure consumers can watch what they want where they want, Congress needs to remove rules that currently favor traditional providers of video programming, industry officials told a Senate panel on Tuesday.
“I think you need to rewrite the [Telecommunications] Act of '96. It’s overdue given the Internet. And it needs revision,” said Barry Diller, a former broadcasting executive who is now chairman and CEO of IAC, which runs several online sites including Match.com and is a big investor in Aereo, which provides Internet access to local broadcast stations. Aereo is being sued by a group of broadcasters that claim the online site is infringing their copyrights.
Diller, who testified at a Senate Commerce Committee hearing looking at the future of online video, said the current rules protect traditional communications providers including the broadcasters, cable firms, and telecommunications providers. “The rules now need to reflect that [there] is a potential positive competitor to what has become a very closed system of program content makers,” he said. Paul Misener, vice president of public policy for Amazon.com, agreed with Diller that revisions need to be made to the 1996 Telecommunications Act to reflect market changes.
While most Americans still watch most video programs on a traditional television, they are increasingly turning to the Internet to view those same programs. Consumers want to be able to watch video programs on devices from iPads and mobile phones, said Nielsen Vice Chair Susan Whiting. The use of video on computers has increased 80 percent in the last four years, while video watching on mobile phones has increased 35 percent in the last year alone, she said.
Senate Commerce Chairman Jay Rockefeller, D-W.Va., said he expects Congress will eventually have to legislate. However, he noted that rewriting such a complex law as the 1996 Telecommunications Act is not “a simple business.” He said the hearing raised “a lot of questions which we’re not able to legislatively answer at this point. So the question is when is the best time to do it. Should you let things evolve?”
Sen. Jim DeMint of South Carolina, who is in line to become the top Republican on the committee next year, said that legislation he introduced in December would repeal media ownership rules as well as rules requiring cable firms to carry broadcaster signals and to negotiate fees to pay for more popular broadcaster programming. Broadcasters strongly oppose the measure, which so far has gone nowhere.
The current rules “were written for a time and a market that no longer exists and they need to be repealed,” DeMint said. “Our video laws simply do not reflect the current realities of the marketplace and I’m afraid they actually foreclose innovative service offerings and consumer benefits."
Meanwhile, both Diller and Misener, whose firm has launched its own online video service, stressed the need for network neutrality, which bars broadband providers from favoring some content over others. The FCC approved net neutrality rules in late 2010. “Net neutrality is mandatory because there is no question that without it you will see the absolute crushing of any competitive force,” Diller said in response to a question from Commerce Communications Subcommittee Chairman John Kerry, D-Mass.