Bill would give Netflix, Hulu and Aero same access to programs that cable firms have

As consumers increasingly turn to the Internet for their television, members of Congress are looking for ways to support the trend and encourage industry competition.

Sen. John D. Rockefeller IV (D-W.Va.) introduced a bill Tuesday that could greatly expand the video libraries of online services such as Netflix, Hulu and Aereo, giving them the same access to programs that cable and satellite firms are guaranteed today.

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Netflix and YouTube dominate broadband traffic.
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Netflix and YouTube dominate broadband traffic.

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That means an Internet service such as YouTube would be able to negotiate deals to distribute live sports and network prime-time shows such as “Scandal” by paying the same sorts of licensing fees that cable and satellite operators give to local broadcasters.

Analysts say the proposal will face steep challenges from the power lobbying arms of cable firms, which hope to maintain the industry’s bundling model.

No vote has been scheduled, and industry observers doubt the bill will advance during a time of congressional gridlock. Some lawmakers will point to the surge in online video viewing as evidence of markets working well without new government rules.

“We don’t need another layer of regulation when we already have mountains of red tape covering the marketplace,” said Adam Thierer, a senior research fellow at the free-market think tank Mercatus Center.

The growing importance of these Web-based entertainment providers was highlighted this week in a new report showing that half of all broadband Internet traffic in North America comes from YouTube and Netflix. YouTube also dominates mobile Internet video traffic, according to the report from Sandvine, a broadband research firm.

Netflix alone has 30 million subscribers in the United States — almost 10 million more than the biggest cable television operator, Comcast.

But there are still many programs a consumer can get only through cable or satellite firms. Rockefeller said too many powerful cable and media firms are trying to edge out new online rivals through anticompetitive means.

His bill is the latest legislative effort by to wade into the complex marketplace for entertainment, which is pitting giant corporations from a variety of industries — cable, phone, Internet, media, retail — against one another to win viewers’ eyeballs. Sens. John McCain (R-Ariz.) and Richard Blumenthal (D-Conn.) co-sponsored a bill in July that would force cable and telecom television providers to offer subscribers the ability to pick and choose which channels they want.

The lawmakers criticize the tight partnerships between cable firms and media companies designed to force fat cable bundles on viewers. They say consumers should be able to just pay for the videos they want to watch.

“We have all heard the familiar complaint that we have five hundred channels, but there is nothing to watch,” Rockefeller said in a statement. “My legislation aims to enable the ultimate a la carte — to give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch.”

He said online video services need the same kind of help that satellite providers received from Congress in the 1990s. With laws that guaranteed satellite providers certain programs and access to markets, that industry was able to compete with cable firms.

The proposal sets ground rules for how media firms and online video services reach “carriage agreements,” which determine when and how online video companies can offer certain shows and movies in their catalogs. It would make the Federal Communications Commission a stronger watchdog over the practices of broadband and cable firms.

Broadband providers wouldn’t be able to restrict Internet access to online videos from competitors and couldn’t manipulate data traffic in a way that the quality of streaming videos is degraded, according to the bill.

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