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Senator Rockefeller’s Bulworth moment

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There is something almost subversive about the Consumer Choice in Online Video Act introduced by Sen. Jay Rockefeller this week.

Rockefeller (D-WV), has already announced he is not seeking reelection next year, making him something of a lame duck. Yet freed of the need for the usual legislative triangulation among competing industries and potential campaign contributors he seems to have found his inner Bulworth and has laid out his own vision of how the online video and pay-TV businesses ought to work, entrenched interests be damned.

“My legislation aims to enable the ultimate a la carte – to give consumers the ability to watch the programming they want to watch, when they want to watch it, how they want to watch it, and pay only for what they actually watch,” Rockefeller said in a statement accompanying the bill’s introduction. “Consumers must be able to benefit from online video’s promise of decreased costs, increased choice, and higher-quality video content. And I strongly believe that my legislation will help foster a consumer-centric revolution in the video marketplace.”

The bill is framed as an overhaul of the 1992 Cable Act, which set out the main regulatory framework under which the pay-TV business currently operates. As Rockefeller noted in a backgrounder on his bill, the ’92 Act was passed “in part to stop cable companies from leveraging their market power to block competition from satellite television providers. ”  At it’s core, the new bill is designed to bar facilities-based service providers (cable and telco) from leveraging their position as monopoly, or near-monopoly high-speed internet providers to thwart competition to their pay-TV business from new, online video services.

Among other things, the bill would prohibit pay-TV providers from including language in their carriage deals with programmers that have “the effect of causing the video programming vendor to face a substantial disincentive to sell its content to an online video distributor,” or that would “prevent an online video distributor from making [that content] available on any platform or device.” It also bars the use of most-favored nation clauses in carriage deals.

Those provisions are obviously a response to reports earlier this year that several cable MSOs, as well as Dish Network and DirecTV had included such limitations in their deals with the networks. But they’re certain to provoke a fight with the pay-TV providers. Time Warner Cable CEO Glenn Britt, for instance, bristled at the suggestion that such arrangements are anti-competitive.

“It is absurd to suggest that, in today’s highly competitive video marketplace, obtaining some level of exclusivity is anti-competitive. Exclusivities and windows are extremely common in the entertainment industry; that’s exactly how entertainment companies compete,” he said when the reports first surfaced.

An even bigger fight is probably in the offing, however, over provisions in Rockefeller’s bill regarding the management of broadband networks. The bill places limits on the use of usage-based broadband pricing and imposes “truth-in-billing” requirements on ISPs regarding subscribers’ monthly data use and bundled services.

The Federal Communications Commission, of course, has already blessed usage-based billing as a reasonable network management practice as part of its net neutrality review. Rockefeller’s bill stops short of banning the practice, but his attention to it is clearly aimed at reopening the whole discussion of network management practices.

In addition to the disclosure requirements, the bill also makes it illegal for ISPs to “engage in unfair methods of competition or unfair or deceptive acts or practices” that hinder online video services from providing content to their subscribers.It also directs the FCC to conduct a study on the potential anti-competitive use of interchange points between online video services and last-mile ISPs.

The biggest firestorm, however, is likely to erupt over Rockefeller’s bid to legitimize Aereo-like services by exempting antenna rental services from broadcast retransmission fees. The proposal would effectively moot the current litigation over Aereo for copyright infringement by declaring it exempt from the current retransmission consent rules, apparently irrespective of whether the courts ultimately find that Aereo is infringing broadcasters’ copyrights.

It’s unclear from the language of the bill whether a similar exemption would apply to a MVPD that tried to set up its own tiny antenna farms to try to evade retransmission fees — a potentially even more explosive idea — but broadcasters are certain to fight it tooth and nail anyway.

The bill is a long way from becoming law, of course. But as chairman of the Senate Commerce Committee Rockefeller is well-positioned to at least make sure it at least gets a vote. That alone ensures a major disruption to business as usual in the pay-TV business.