I am old enough that I was in the room when the cable compulsory license deal was struck between cable, broadcasting and Hollywood. Cable got a compulsory license for one reason. Everyone thought it would be unduly burdensome for a cable operator to have to negotiate with the owners of each program on the broadcast channel’s schedule. No one thought of the possibility that the broadcast channel could act as a “rights aggregator” and offer the cable operator a single source for all of the program rights on the channel’s schedule. Then Time, Inc. created the first cable channel, HBO, and performed that exact rights aggregator role.

Today cable and satellite operators contract in the free market to license the carriage of hundreds of cable channels without any compulsory license – the channels act as rights aggregators. The carriage of broadcast channels could be handled in the same way. The problem is that because of the existence of the compulsory license, local channels typically do not seek the right to sub-license the network and syndicated programs they license for their schedule. The best policy would be to phase out ALL the compulsory licenses over a 12 or 18 month period. During that time the local channels could secure all the programming rights they need to act as rights aggregators – just like the cable channels do. Then, every TV distribution platform – cable, satellite, online, etc. (including ivi) would be free to contract in the marketplace to retransmit the local stations. And, the phase out of the compulsory licenses would enable us to repeal all the regulations that were adopted to compensate for the market distorting effects of the compulsory license including the FCC’s must carry, retransmission consent, network non-duplication and syndicated exclusivity rules.

Why should a cable company be forced to pay $0.50 or $1.00 per sub per local channel while IVI retransmits for free? If IVI were to win, does that mean the cable companies no longer have to pay the fee?

You are right that satellite companies faced the same issue of rights – but the Communications Act laid out the rules and they too had to comply. The relevance is not a “cable company” but an “MVPD” which connotes and conveys certain rights per the Act – the relevant portion in this case being adherence to the must carry / retransmission consent.

IVI sorely missed the boat, and quite frankly their arguments were immature. They had no chance, and have no chance on appeal unless the Communications Act is deemed to be unconstitutional. Unlikely.

You say ivi is trying to avoid paying fair compensation — I wonder if you feel the same way about cable companies? Because all ivi is asking to do here is pay the same rates that the cable companies pay.

I’d also draw your attention to numerous earlier claims by ivi that they are NOT a cable company, which adds more fuel to the speculative fire that they are claiming to be anything they can in order to avoid paying fair compensation to copyright holders. Its a shame actually as most, if not all, of the broadcast groups are open for business and interested in licensing their content to Internet based platforms provided certain legal and contractual issues are met.

I talk further about the ivi situation and their flawed legal position in a blog post I wrote last year. You can find it at http://www.anthonybontrager.com/2010/11/23/state-of-play/