WASHINGTON— The United States will be at a competitive disadvantage in the global online marketplace if federal laws and regulations aren’t changed to meet the demand for video streaming, top executives of Amazon Inc. and Microsoft Corp. told a Senate committee Tuesday.
Current law and Federal Communications Commission regulations are outdated and do not reflect the “new radical revolution” of the Internet and demand for online streaming, said Barry Diller, chairman of IAC/Interactive Corp., which owns Match.com and Vimeo.
Online video technology leads to better content and more consumer choice, Diller and other witnesses told the Senate Committee on Commerce, Science Transportation. And a more accessible Internet, they said, will drive competition that in turn will help to make good content available at fair prices.
Consumer choice and convenience should drive the marketplace, the experts said. And the Internet should be ready for increased demand.
“We do not have a first-rate broadband infrastructure in this country,” Diller said. With slower service and less deployment to all parts of the country, the capacity in the U.S. is already strained, Diller said.
Paul Misener, Amazon’s vice president for global public policy, criticized “immutable or unrealistically priced data caps” on broadband, saying they “could hinder or prevent competitive products and services made possible by video online.”
“Pre-eminence in the marketplace will largely be dictated by [broadband capacity and accessibility] and we’re not doing everything we can do by any sense of the imagination,” Sen. John Kerry, D-Mass., said at the hearing.
Diller said broadcast and cable companies have an unfair advantage.
The U.S. has a closed system of TV networks and cable companies, “but these players actually are in a system where there is no air,” he said. “There’s no air because it’s completely closed.”
Diller is a major investor in Aereo, a company that would provide consumers with live local broadcast television over the Internet for a fee. Several broadcast companies, including Fox, Univision and PBS have sued, claiming copyright infringement. Fox is owned by News Corp., which also owns MarketWatch, the publisher of this report.
“Broadcasters are migrating to online video,” Dennis Wharton, executive vice president at the National Association of Broadcasters said, but “protecting [copyrighted] content” is a priority.
Broadcast television is also free and local, whereas Internet distributors of online video are national pay services that cannot replace local news or have the ability to transmit information during emergencies, Wharton said. Internet and mobile technology be incapacitated by high demand such as when thousands of people try to make cell phone calls during an emergency, he said.
Cable and broadcast outlets have traditionally pushed content to consumers, but the Internet has shifted the paradigm to one of consumer choice. Consumers now expect content when and where they want it, Nielsen Co. Vice Chairman Susan Whiting said. “And as long as content is there it’s a matter of making access easy, simple and different.”
On Monday, Netflix, Inc., the media on-demand and streaming company, said it gained nearly 3 million more streaming subscribers in the first quarter this year. The number of viewers watching full-length TV shows online grew about 44 percent from 41.1 million in 2008 to 72.2 million in 2011, Diller said. And Whiting noted that online viewing has increased because more consumers are now media multi-taskers, using a smartphone or tablet while also watching television programming.
“Viewers watch their favorite content on the best screen available at that moment,” Whiting said.
According to the Nielsen Co., Americans watch an average of five hours of live television per day.