For those lucky enough to live outside the regulatory and political minutiae of Washington, the term "open video system" may sound more like a special at Blockbuster than a complex way for telcos to take on your favorite cable-TV company.
But for a small yet growing gaggle of pioneers, this largely untested regulatory experiment is no joke. And once a few details are resolved in the courts and elsewhere, you may be hearing a lot more about this weird Washington creature called OVS.
Cable companies now face competition only from direct broadcast satellite (DBS) companies like DirecTV and USSB. But with DBS, you have to buy a dish (they're still a couple hundred bucks), you can't get local broadcast channels, and it's a pain to watch different channels on different TVs.
But OVS offers an alternative pipeline to cable-hungry consumers that looks and feels like cable but is not subject to most franchise obligations.
When Congress was concocting the Telecommunications Act of 1996, its minions took an old and dying regulatory model called "video dial tone," added some cable-esque qualities, and created OVS. But after the FCC got done writing rules for OVS months later, representatives from just about every corner of the telecom world - a coalition of municipal groups, BellSouth, and the National Cable Television Association (NCTA) - took the FCC to court in protest.
Of course, each side has its own selfish motivations. Cities want compensation over use of public rights of way. BellSouth wants more flexibility. And the NCTA wants the FCC to let cable operators switch to OVS to escape local franchise obligations when city officials get nasty.
All these lawsuits have been consolidated in the US Court of Appeals for the 5th Circuit in New Orleans. No oral argument date has yet been set.
In addition, the FCC still hasn't told telcos how to divide costs between their telephony services and video services covered under OVS. You see, telcos can't use telephone revenues to cross-subsidize new businesses (although they'd love to). Anyway, there's a still-pending separate FCC proceeding for this.
But despite legal and regulatory uncertainty, OVS certifications have gone to well-known telecom players like Bell Atlantic, whose video subsidiary has deployed an OVS in Dover Township, New Jersey, and MFS Communications, a competitive access provider that's prepping to launch OVS in New York City and Boston. RCN Telecom Services, a subsidiary of established cable-TV player C-TEC, has applied for OVS approval for those two markets as well. The FCC approved the RCN applications Friday.
But the OVS model has also attracted less established newcomers, like Santa Ana, California-based Digital Broadcasting OVS, which has no facilities but wants to blanket Southern California using the infrastructure of other telcos. Other OVS no-names include Urban Communications Transport and Microwave Satellite Technologies. They have gotten OVS approvals for the New York City market.
So why haven't you heard of OVS? And why have only six companies expressed interest? Keith Townsend of the US Telephone Association says resolution of the court case and regulatory issues will "create the kind of certainty in the marketplace [that will allow more telcos] to consider OVS as an option."
Washington cable-TV lawyer John Seiver puts it more bluntly. "I don't think they know what they're doing," he says of some of the more obscure OVS applicants.
Seiver says many OVS players may soon find themselves involved in a much more complex game than they ever imagined. So don't go divorcing your friendly cable-TV company just yet. That is, unless you want to start saving up for DirecTV.
