‘AllVid’ proposal deserves thumbs-down from FCC

As consumers and television fans, we're blessed to be living in a golden age of TV. Established programmers such as HBO and AMC are pumping out one critically acclaimed hit after another. New streaming services such as Netflix and Amazon have launched their own award-winning original content.

New "over-the-top" services such as SlingTV let cord-cutters watch huge libraries of programming via apps through a growing variety of devices — from smart TVs and tablets to video game consoles and Roku or Apple TV streaming boxes. Even traditional pay TV providers have launched apps that let subscribers watch their favorite shows on hundreds of millions of connected devices.

This sea change shows no sign of slowing. In September, Apple CEO Tim Cook declared "the future of TV is apps." Weeks later, Google unveiled its app-enabled Chromecast device. Consumers today have more choices for programming, services and devices than at any time in the history of television.

But in Washington, D.C., special interests and their lobbyists are always lurking just beneath the surface, ready to snatch defeat from the jaws of victory. It's often easier to limit rivalry by using the government to regulate, rather than competing in the marketplace. And sure enough, a coalition of Big Tech giants is pushing for sweeping new rules that would turn the Federal Communications Commission into a federal Department of TV, with the power to regulate how television programs are delivered to consumers.

This is a TV show no consumer would want to watch.

This "AllVid" proposal would require cable, satellite and telecom TV providers to "unbundle" their video streams for any third-party device or app-maker to repackage. It would put the power of the FCC behind Big Tech companies laying claim to video programming that they did not create and haven't paid to license. This free riding would allow Big Tech to annex a portion of whatever screen you use for video, selling their own advertising and skimming profits from the actual creators.

Producing quality television programs is not cheap. Studios rely on the revenue from licensing agreements — and from the advertising sold against their content — to fund production. But AllVid would stripmine these shows as the tech giants claim the profits and leave little behind for everyone else.

This new rule would destroy carefully negotiated agreements on vital terms such as channel placement, advertising and anti-piracy, devaluing existing programming and drying up funds needed to produce quality new shows. The new rules would cripple programmers' ability to forge new revenue streams and create new security vulnerabilities for hackers and pirates to exploit.

And as is usually the case, consumers would bear the brunt of this regulatory overreach. No one makes a product for free. Audiences would soon see this golden age turn to rust as the torrent of high-quality shows dries up. Smaller, more diverse content producers would be the first to fall.

Re-architecting delivery networks and developing the new in-home devices required by AllVid would be enormously expensive, and these costs would inevitably drive up monthly bills. And consumers would also lose the strict consumer privacy protections that prevent cable and satellite providers from selling information about their viewing habits to third parties — protections that don't apply to the tech companies pushing AllVid.

AllVid's supporters claim that the new rules are needed to create competition for set-top boxes. But given the pace of innovation in the video device marketplace, the cable set-top box already looks to be destined for history's scrap heap. Companies such as TiVo already are competing directly with provider-supplied set-top boxes, and app-enabled streaming devices from Roku, Apple, Google and Amazon give consumers even more options — all without requiring a destructive government mandate.

This is not the first time that Big Tech has pushed the AllVid idea. Five years ago, the same coalition of special interests made the same case to the FCC, which thankfully had the foresight to reject the idea.

At the time, nearly all video subscription programming was viewed on TV screens, piped in through leased set-top boxes. Netflix didn't yet offer a streaming-only service. The first generation iPad tablet had just hit shelves.

Flash forward five years, and it's clear that the FCC's hands-off approach has worked. By rejecting AllVid five years ago and giving new business models and services a chance to evolve on their own, the FCC helped usher in the revolution in consumer video technology that we're witnessing today. With the proposal's big-money backers now demanding a do-over, the commission would be wise to once again reject this ill-advised proposal.

— David Balto served as policy director at the Federal Trade Commission and as an attorney in the Justice Department's antitrust division.