Comments Off

Would shifting to an internet-pipe only service get broadband providers out of the FCC’s cross-hairs?

Recently The Wall Street Journal reported on Viacom’s CBS and Time Warner’s HBO’s intent to establish a stand-alone streaming service for their content.  For cord cutters that dream of putting together their own portfolio of video content, this may seem like the a la carte approach that consumers and policymakers have been asking for.  While these moves are not indicative of a tsunami of movement by programmers from traditional cable, I have to wonder what the media world would look like if all content providers took the Netflix, over the top approach to getting programming to the consumer.  What would be the new consumer behavior?  Would net neutrality become a non-issue?

Regarding consumer behavior, consumers may feel emboldened by this increase in consumer choice, especially given the cost of cable service.  According to data from the Federal Communications Commission, as of January 1, 2013, the average price for cable service in all communities is $64.41.  Where there is effective completion, average price for cable service is $63.03, but where effective competition is non-existent, average price is $66.14.

I can see consumers combining Netflix programming at $8 per month with ESPN at $30 per month; CBS at $6 per month; and AMC at $10 per month.  I can’t pass up on “The Walking Dead.”  I agree with The Journal article’s conclusion that cord cutting may become more expensive than traditional bundling packages.  This becomes apparent when you look at the stand alone prices for internet access.

Again, according to data from the FCC, the price for stand-alone, 1-5 Mbps, internet access service is $35.  Consumers that want faster service ranging from 5-15 Mbps pay on average $44, while consumers feeling the need for more speed ranging from 15-25 Mbps pay on average $56.50.

If consumers make the decision solely on price, I don’t see much migration from current bundling options for cable.  According to an article in ArsTechnica.com, American cable subscribers receive an average of 189 cable channels but only watch 17 of them.  Assuming consumers could subscribe to 17 stand alone streaming internet channels at a price of $6 per channel, plus the broadband capacity sufficient for streaming video, consumers would still pay over $100 for service while given up 170 channels.  That may be okay for some subscribers if exercising consumer choice through a la carte service is that important to them.

If I’m paying that much to stream “Game of Thrones” strictly via the internet, I don’t want my service slowed down because my video bits have the same priority as a cat video on YouTube.  I would be willing to designate which content traffic should get higher priority to ensure that I see whether the Lannisters win the Iron Throne.  Netflix, HBO, or Viacom may not want the quality of their services degraded either due to equal treatment of their traffic and the traffic from a website showing the best way to apply lipstick.  This emerging on-demand/streaming model for video may see consumers driving the demand for paid prioritization.

Seeing how the FCC would manage the political fallout from telling consumers that consumer prioritization is a no-no would be very interesting.  Telling Viacom that it cannot meet consumer demand by entering prioritization agreements with backbone or last-mile broadband operators on the premise that such arrangements would put a cat video at a disadvantage would have content providers thinking twice about innovation in online video distribution.

As Hal Singer shared with me in a tweet, net neutrality is a Trojan Horse and Title II regulation is the end game.  I don’t see either approach advancing CBS or HBO’s new services.

Comments Off

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.

Comments Off

Verizon, CBS strike deal

Posted August 22nd, 2013 in Broadband, cable company, cable television and tagged , , , by Alton Drew

It seems like Verizon and CBS have come to terms on CBS’ programming being distributed via Verizon’s FiOS network, according to a post by the good people over at The Hillicon Valley. Here are comments I left on The Hillicon Valley website.

CBS can do what it wants with its intellectual property. The FCC or any other agency should not tell them to who they can license their intellectual property. This is not a network or infrastructure issue that falls under the FCC’s net neutrality rules.

It does go to how other participants in the video distribution market will see the value of Time Warner Cable’s network, but maintaining or improving the value of its network is Time Warner’s problem, not the government and not the consumer.

Comments Off

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.

Comments Off

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?