From the Desk of… Dick Wiley

Communications Today, May 15, 2000

Webcasting Faces Legal Challenges

Webcasting -- the streaming of audio and video content onto the Internet -- is clearly a coming phenomenon. However, this futuristic service presents a unique challenge: that of applying existing laws to a new technology or, alternatively, developing new laws that will promote Internet innovations while also protecting the rights of content providers, end users and others. The legal issues with the potential to have the greatest impact on webcasting involve the application of copyright and of traditional communications regulation to this service.

Copyright Law - Audio

Two primary questions face those who intend to stream audio materials: 1) Are traditional radio broadcasters who simply transmit their regular programming over the Internet (as opposed to "Internet-only" broadcasters or "aggregators" such as broadcast.com) required to pay compulsory license fees for these "webcasts"; and 2) For webcasters who are required to pay such fees, what should the statutory rate be? Recently, the Copyright Office initiated proceedings to determine the answer to both questions. With respect to the latter question, webcasters predictably are arguing for low fees and the Recording Industry Association of America, which represents record labels, wants higher charges.

Copyright Law - Video

Unlike with audio material, no compulsory license exists for video programming over the Internet. Due to the absence of such a compulsory license, companies (like iCrave TV) that want to send video over the Internet must obtain permission from individual copyright holders. During the recent negotiations over the Satellite Home Improvement Viewing Act, the National Association of Broadcasters attempted to insert a provision that explicitly would have excluded video streaming from any compulsory license. While this effort ultimately was unsuccessful, the issue doubtless will be raised again in the future. Congress is likely to encourage the copyright holders and those wishing to stream copyrighted material to negotiate a mutually acceptable compromise agreement. If a compromise can't be reached, a legislated resolution will be required.

Regulatory Issues

Broadband access to the Internet is clearly essential to the provision of high-quality, streamed audio and video. Today, less than 2 million people have broadband Internet access. Fortunately, a variety of new technologies has arisen to provide such access, including cable modems, telephone digital subscriber lines (DSL), wireless spectrum, satellite, and ancillary digital television frequencies. No matter how it is transmitted, however, the end product (high-speed Internet access) will be very similar.

But the fact that each of these alternatives has developed under vastly different regulatory regimes could result in substantial market distortions. For example, when an incumbent local exchange telephone carrier offers broadband Internet access over DSL, the FCC has ruled that the service is a regulated "telecommunications" offering and not a deregulated "information" service. Thus, ILECs must offer Internet service providers access to their broadband facilities subject to stringent local competition rules like interconnection and unbundling.

When a cable operator provides broadband access to the Internet over its facilities, however, the FCC has taken a hands-off approach -- declining to mandate an analogous open-access requirement due to the nascent state of the access market. Moreover, congressional legislation to impose any such requirement does not seem likely in the near future. On the other hand, a few local franchising authorities have ordered open access as a condition to their approval of the merger of AT&T [T] and TCI. One such ruling, by the city of Portland, is under review by a federal appellate court -- with a decision expected very soon. In the meantime, and importantly, a number of major cable systems voluntarily have begun to open their facilities to some form of access.

It should be noted that the interrelationship of webcasting and FCC broadcast regulation is not currently at issue. As indicated, the commission is disinclined to get involved in what it sees as a developing marketplace. Thus, the agency likely will eschew any oversight when programming is being streamed via ancillary digital television spectrum.

The fact that so many different industries are providing essentially the same webcasting services under diverse regulatory models may lead the government someday to consider a greater parity in treatment. If so, my hope is that a future FCC will adopt a "lowest common denominator" of regulation -- or, should I say, deregulation.

Richard Wiley is senior partner in the Washington law firm Wiley, Rein & Fielding and former chairman of the FCC. Dorann Bunkin, an associate in the firm's communications practice, assisted him with this article.