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Fortunately the FCC did not apply The Big Bang Theory to Time Warner and CBS

Well, if you’re a “Person of Interest” who enjoys watching “The NFL Today” with “Two Broke Girls” in Los Angeles, New York City, or Phoenix, then Tuesday morning’s settlement over re-transmission fees that Time Warner Cable will pay to CBS brought a smile to your face.

According to The New York Times, “Time Warner Cable pressed throughout the month-long impasse after it removed CBS’s stations from its systems for some form of government intervention, from either the Federal Communications Commission or Congress, but none materialized.

While the acting F.C.C. chairwoman, Mignon L. Clyburn, said on Aug. 9 that she was distressed at the standoff and was ‘ready to consider appropriate action if this dispute continues,’ it continued for another three weeks without her intervening. Several media analysts said early in the dispute that the commission’s options were limited because the right of a station owner to seek re-transmission compensation was granted in a law passed by Congress in 1992.

Monday evening, Ms. Clyburn issued a statement saying: ‘I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming. At the end of the day, media companies should accept shared responsibility for putting their audience’s interests above other interests and do all they can to avoid these kinds of disputes in the future.’ ”

I was caught off guard by Chairman Clyburn’s statement about a consideration of appropriate action should the negotiations continued to wallow. In my opinion the FCC’s rules did not give Ms. Clyburn much room to maneuver in. Section 76.64 of the FCC’s rules requires the consent of a local commercial broadcaster be given to the cable operator before the station is carried on a cable operator’s system. That requirement puts any appropriate action on the part of the FCC in a very narrow box, maybe limiting them to exercise their expertise in mediation and that’s about it.

The FCC’s must carry rules (See Section 76.56) would not have been available to the FCC for use since CBS yanked permission for Time Warner to carry the broadcaster’s signal in the first place. There was never much their for Ms. Clyburn to drag the parties down to The Portals to negotiate anyway.

Oh well, at least Time Warner subscribers will get some NFL and college football and the U.S. Open tennis this weekend.

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Maybe it’s time for cable companies to say good-bye to cable

Today Verizon’s vice-president for public policy and general counsel Randall Milch had a little fun with the Federal Communications Commission’s net neutrality rule, calling out its apparent double standard of allowing CBS to get away with blocking Time Warner subscriber access to its website. Under the FCC’s net neutrality rules, a broadband provider could not get away with blocking access to a content provider like CBS, but apparently blocking the other way around is just fine under the rules.

Earlier today The Wall Street Journal posted an article by Gordon Crovitz where Mr. Crovitz opined on the current standoff between Time Warner Cable and CBS as a result of the FCC’s regulatory policies. Mr. Crovitz said that, “The absurdity of the current laws is clear: A regulatory system designed to keep local broadcasts available to viewers is causing disputes between cable companies and broadcasters, leading to the very blackouts the regulations were supposed to prevent. It’s past time to deregulate video distribution.”

I think broadband providers like Time Warner and Comcast should push the FCC and their local government cohorts toward that direction by disrupting the current video distribution business model. First, it should take itself out of the cable operator box by declaring itself a provider of on-demand services. While ensuring consumers access to Hulu and Netflix, cable operators should also promote access to their own streaming services. This would put pressure on content providers to go the route of a “House of Cards” and make programming available for binge viewing.

Second, knowing that its programming would now have to be offered in a format comparable to “House of Cards”, CBS and other providers would have to license its programming at a lower bulk rate since there would be no guaranteed channel slot to occupy.

Thirds, consumers would have the capacity to compare programming side by side and get to the least appealing programming at some later time. “On-demand” providers would be able to better gauge the demand for specific shows and set the license purchase prices accordingly.

Consumers would also see their bills decrease because the additional franchise, I-net, and public access channel fees would go away. On-demand providers are not cable operators under current FCC rules and local franchising authorities would be hard pressed to extort franchise fees from a non-cable operator.

Even if content providers did not want to provide their content to an on-demand provider’s data base for streaming, the content provider could go the ABC television network route and make its programming available from its own website.

Anyway, it’s time for a little business model disruption. Cable operators have been to stodgy for too long.

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No we are not yet Borg

I admit that while not being a die-hard science fiction fan, I am a fan of Battlestar Gallactica and Star Trek. Last spring I binged on BSG sometimes watching three or four episodes a day. The series is great. While I’m more a fan of a Star Trek: The Original Series, I always found the Borg the more interesting of antagonists on Star Trek: The Next Generation. Their single-minded focus on assimilating all species of the known universe into one collective was intriguing and downright scary.

BSG also dealt with the collected in a way. The series depicted survivors of the Twelve Colonies (twelve planets) wiped out by machines they had created. These machines, the Cylons, were also part of a collective although they were not out to assimilate any humans. They managed to defeat the Twelve Colonies by hacking their interconnected computers. The commander of one of the Colonies’ battlestars, Bill Adama, had a rule on his ship that may have been responsible for them staying alive: no interconnected computers on his ship. Interconnection has its downside.

I’ve touched on being interconnected before, addressing the downside of social media, but an article in The Wall Street Journal by Holman Jenkins provided some additional fodder for the notion of being socially connected via computer. Mr. Jenkins argues in the latter part of his piece that the current tit-for-ta that we are seeing between CBS and Time Warner Cable is a side show, a distraction from the real goal of telecommunications and cable companies: facilitating the meld of mind and machine.

It makes sense. From a consumer view, cell phone users may as well implant their devices as much as we are seen clutching them to our ears. I have to get used to people apparently mumbling to themselves when they are actually talking to someone else.

From a business view the fight for advertisement dollars comes from the traffic we can accumulate at some point. The cable and telecommunications companies, the broadband providers, want their sites to be the points of accumulation. They want the advertising traffic that Facebook and Google are combating for. Anticipating our consumer needs by tracking and documenting our thoughts, feelings, and buying habits would be aided by a technology that makes it easier to meld devices collecting this data with the behavior of the consumer.

My question is, will government promote this type of innovation? How regulated will this new frontier of technology and consumer thought be?

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CBS experiencing reverse net neutrality?

According to Bloomberg News, CBS has lost 4.7% of its viewership as a result of its spat with Time Warner Cable over retransmission fees. These are fees paid by cable companies to network broadcasters for carrying a broadcaster’s signals over a cable company’s networks.

Raising the heat in the spat, CBS.com has apparently blocked Time Warner Cable subscribers from accessing its content. The content provider is blocking the broadband provider from accessing content. Sounds like net neutrality in reverse, where under Federal Communications Commission rules, broadband providers, such as Time Warner Cable, are not supposed to discriminate among content providers nor enter into arrangements to throttle speeds or provide special treatment for a content provider’s data traffic.

But the rules don’t say anything about what should happen should the opposite occur, as Bret Swanson points out in a piece for Forbes.com. Mr. Swanson and other analysts argued during the time the FCC was developing its net neutrality rules the probability of this “twist” occurring. According to Mr. Swanson:

“Either (1) net neutrality was not a neutral policy, not a basic, unbiased standard of web behavior, but instead a scale-tipping special interest provision favoring particular companies and business models over rivals. Or (2) if it were interpreted as applying to the entire Internet ecosystem, ‘This regulation could expand bureaucratic oversight to every bit, switch and business plan on the Internet.’”

I don’t see a rule violation here, but I see a policy imbalance that goes right to the heart of the FCC’s intent that consumers have reasonable access to the Internet content of their choosing. The imbalance is not surprising given that most attempts at market regulation tend to be imbalanced, where too much emphasis is placed on the provider versus the consumer, or in this case where the FCC and net neutrality advocates failed to treat the broadband-content provider relationship as a market.

Failing to view the exchange of traffic between content provider and broadband carrier as a market for data separate from the consumer-broadband provider market is where the FCC made its mistake, opening the door for the conflict in policy we are seeing today.

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The Public Interest Raises its Head … Again

The New America Foundation today held a two panel discussion on the public interest standard as it applies to broadband and spectrum. Larry Irving defined the public interest as including universal service, diversity, and localism. From what I gathered, the premise was transitioning these broadcast public interest components to broadband.

In other words, society has as a social policy goal ensuring universal access to broadband services; making sure a diverse array of voices can receive and send messages via broadband; and ensuring content sent and received via broadband includes homegrown content about things going on next door, including news about Mrs. Wilson’s cat being caught in a tree …

Okay, I digressed a little on the cat in the tree.

Is this really in the public’s interest in broadband services or the use of spectrum for that matter? The problem with the public interest standard at the Federal Communications Commission is that it looks at the airwaves as something primarily for consumer consumption. Big mistake. As guardian and gatekeeper of a public resource, it should look at the airwaves as a national resource that we use to produce output. As a creature of the Congress, the FCC should analyze the public interest in terms as a regulator of commerce.

Spectrum is a conduit in the flow of commercial activity; the movement of goods and services. The primary good or service carried through this conduit is information. The conduit is indifferent to the information. It’s indifferent to whoever is selling and buying it. This is why burdening access to and use of spectrum with consumer concerns is pointless.

The only public interest standard that should matter is whether access to the air waves is being put in the hands of the carriers that will use it best, and that these carriers do indeed put spectrum to use.