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Huge FCC rule change could make internet TV a reality

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Internet TV providers are just starting to emerge, but they might soon get the jumpstart they need in order to turn into real competitors for traditional cable TV. The US Federal Communications Commission is beginning to consider a rule change that would put internet TV providers on the same playing field as cable companies when it comes to select regulations. Critically, it would mean that broadcasters wouldn't be able to refuse to let an internet TV provider carry their content.

"Consumers shouldn’t be shackled to rules that only recognize 20th century technology"

Instead, internet TV providers would be able to negotiate to carry TV stations with the same ability that cable companies and satellite companies can. That should solve solve the recurring issue of internet TV hopefuls being unable to license the content they need to get off the ground. In fact, the FCC is actually just considering extending rules to cover internet TV providers that Congress once put in place to help the emergence of satellite companies — rules that, as you may have gathered, were successful in producing their desired goal. This rule change would cover companies that are broadly known as "multichannel video programming distributors (MVPD)."

As far as FCC chair Tom Wheeler is concerned, there should be no difference between cable, satellite, and internet TV providers, so long as they're all offering the same service. "The definition of an MVPD should turn on the services that a provider offers, not on how those services reach viewers," Wheeler writes in a blog post today. "Twenty-first century consumers shouldn’t be shackled to rules that only recognize 20th century technology." Likewise, the rule change would also mean that current cable providers remain regulated the same way should they move online.

The rule change will have to move through FCC proceedings before it's implemented, and plans to make similar changes have died before. But given the current lineup of commissioners, there's reason to believe that it could make it through this time. This proposal is also in part a reaction to the ongoing struggle of Aereo, which was effectively ruled to be a cable company by the Supreme Court but hasn't actually been able to negotiate for content like cable companies, thus leading to what may well be the company's end. Aereo actually filed a letter with the commission earlier this month urging it to take these very steps.

"The FCC is taking a real and meaningful step forward."

"The way people consume television is rapidly changing and our laws and regulations have not kept pace," Aereo CEO Chet Kanojia says in a statement today. "By clarifying these rules, the FCC is taking a real and meaningful step forward for competition in the video market. The FCC recognizes that when competition flourishes, consumers win."

Wheeler also views this change as a way to promote broadband access and innovation among TV providers. The Commission has heard that the ability to offer TV and internet bundles is a major factor in companies' decisions to build out high-speed internet networks. If internet providers can now begin to offer TV channels over the internet, they'll be able to create those bundles, theoretically making them more likely to build out broadband access so that they can find more customers.

Because the rule change should lead to the presence of more TV providers, Wheeler also believes that it might finally prompt companies to offer channels à la carte — the dream of everyone paying way too much for way too many TV channels. That's by far a less certain result of this proposed rule change, but it is more than fair to assume that we'd see increased competition as more companies enter the business.