With the widespread adoption of streaming video services, it was inevitable that change would come in the area of video services regulation. The U.S. Federal Communications Commission now will consider whether the AT&T DirecTV Now service is effective competition for standard cable TV linear video service, according to the Telecom Act of 1996.
In the larger scheme of things, the decision is narrow, and means local franchise authorities in a few locales cannot regulate basic cable rates. That has been true generally, in most U.S. markets, for some time. As this chart by eMarketer shows, the linear streaming alternatives operate in a different segment of the market from the “on demand” streaming services.
Up to this point, the on-demand services have generated more revenue, but live streaming (linear streaming) is gaining share as well, and is an alternative to standard cable TV or satellite TV packages.
The proposed ruling by the FCC matters for cable TV companies in general and Charter Communications in particular because local franchise authority rate regulation is not imposed when such competition exists.
That likely ultimately also would be true of competition from other linear streaming services as well, which might offer scores of “live broadcast” video channels, although the specific finding in this instance is that DirecTV Now is relevant under clauses of the Telecommunications Act of 1996 that seek to promote video competition between telcos and cable TV companies.
Services focused on “on demand” video, such as Netflix or Amazon Prime, presumably would not qualify, for purposes of determining applicable rate regulation, as they do not offer scores of live TV channels.
Any determination by the FCC would not have wider implications, as effective competition has been deemed to exist in nearly all U.S. markets for decades.
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