Sunday, December 19, 2010
America's beloved television is getting an extreme Internet makeover, and questions over what shows viewers will see online and how much they pay for them could soon be resolved by the Federal Communications Commission.
Those deliberations would create first-time rules affecting how television series and movies reach consumers with Internet connections and how much companies can charge for the service. It's the government's strongest effort yet to lay out some boundaries in the headlong rush for online video.
The picture looks fuzzy for Internet users. As drafted, the policies under deliberation may slow the trend of consumers breaking free of their cable and satellite bundles to watch cheaper or free episodes of shows such as "Mad Men" and "Dancing With the Stars" online. The changes also may make it harder for new online start-ups to compete with television giants, some experts say.
Sources at the FCC say draft rules could open the door for Internet service providers to charge companies such as Apple TV and YouTube for faster delivery of videos, while potentially providing Internet videos of their own or from partners to subscribers for free.
The agency is also blessing pay-as-you-go billing plans, which could relieve Internet users who don't do a lot online. But it could make viewers think twice about watching enough streaming Netflix movies to blow past their monthly data limits.
Comcast's merger with NBC raises additional issues for the FCC - and fears among competitors and consumer groups. How those are resolved will also affect the future look of TV.
With about 23 million cable subscribers and 16.7 million Internet subscribers, Comcast controls a vast market. Some critics worry that if the cable giant owns NBC, it will have incentives to withhold its content from Web competitors. Those critics are pushing the government to set conditions on the merger to prevent such favoritism and send a signal to the rest of the industry.
"This is a big moment that could make or break online video companies and determine who are the next winners of the Internet video space," said Barbara Van Schewick, a professor of law and computer science at Stanford University.
Internet access providers say those concerns are overblown. They say any rules should be flexible for cable and telecom firms to experiment with new partnerships on the Web, and that wireless networks should be largely free of regulation because they get congested more easily. That idea that doesn't sit well with Web companies such as Skype and Google, which argue that consumers are increasingly getting entertainment and news over smartphones and tablets.
"I see consumers winning with video every day with all the options that are out there, and companies deserve the opportunity to figure out what best meets consumer needs or fail in trying," said Kyle McSlarrow, chief executive of the National Cable and Telecommunications Association, a trade group.
Those debates are taking center stage at a significantly weakened FCC, which is struggling to be the nation's Internet watchdog as more people use the Web as their main medium for communications and entertainment. The uncertain outcome casts a shadow over multibillion-dollar business plans as television networks, cable and telecom firms, and Web giants such as Google and Apple jockey to lead in the nascent Internet video industry.