The Federal Communications Commission, in a Notice of Proposed Rulemaking released this month, requested public input about whether it should classify certain Internet-based video programmers as “multichannel video programming distributor[s]” that have rights and obligations under the Communications Act. The decision could benefit Internet-based programmers, but also have unintended consequences for local governments.

The proceeding will examine not only new programmers’ rights and duties, but also traditional cable operators’ responsibilities as they shift programming to the Internet.

This shift to “over-the-top” delivery models could jeopardize local protections like franchise fees and requirements for public, educational and government programming. For example, the FCC tentatively concluded that “video programming services that a cable operator may offer over the Internet should not be regulated as cable services.” Because the Cable Act permits a cable franchise to include a franchise fee only on revenues derived from the operation of a cable system to provide cable service, a final order that endorsed that principle could directly affect local franchise-fee revenues. On the positive side, the FCC proposes that a cable operator does not become immune to regulatory obligations simply because it employs IP technology to deliver its services.

The proceeding could begin to set a framework for a future re-write of the Communications Act.

Local governments likely will want to participate in the proceeding by filing comments. Opening comments are due 30 days after the NPRM is published in the Federal Register, and reply comments are due 45 days after that date.