The FCC labels AT&T’s OTT Video Competition to Cable
The FCC has voted to treat over-the-top Local exchange carrier (LEC) provided video distributor AT&T TV Now, and by extension any similar OTT, as effective competition to video cable service, triggering basic rate deregulation.
The FCC already considers DirecTV such a competitor and now is adding its rebranded, broadband-delivered video business. In granting the petition, the FCC is effectively ending basic rate deregulation of cable as well as signaling that if traditional satellite delivery sunsets in favor of streaming, cable rates won’t be returning.
FCC chair Ajit Pai said that given the rise of Netflix, Hulu, and Amazon, and the addition next month of Disney Plus and Apple TV, it strained credulity to argue that cable was not now subject to effective competition “across the nation.”
“Over the next 10 years, many streaming services will grow viewing as streaming replaces linear TV,” Reed Hastings wrote in its recent Q3 earnings letter to investors.
Whether or not Apple TV+ (launching Friday), Disney+ (launching in 2 weeks), or WarnerMedia (launching April 2020) will be detrimental to Netflix, Reed Hastings and FCC chairman Ajit Pai agree that cable TV could end up the biggest loser in the “streaming wars”.
Historically, the FCC has said the presence of a direct-broadcast satellite service (DirecTV or DISH) in a particular market can trigger an effective competition finding, but this is the first time a streaming service has been deemed a competitor.
While the ruling took aim at AT&T Now, the decision could spark up a debate on the regulatory status of OTT video in the future given Pai’s reference to Netflix, Hulu, Amazon, Disney+, and Apple TV+.
We’d love to hear from you. Should vMVPDs such as AT&T TV be seen as competition to cable?