Oct 28, 2014

The 800 Pound Monopoly In The Room

So today FCC Chairman Tom Wheeler came out with a widely praised announcement that for purposes of access to TV content, internet-based providers are now to be accorded the same respect as terrestrial and satellite based ones.

His blog post (yes, the FCC has a blog) starts out with a memorable call to arms "Consumers have long complained about how their cable service forces them to buy channels they never watch" and then continues to lay out all the reasons why internet based companies should be granted the same access to programming that cable, telco and satellite companies now have. Wheeler cites the 1992 Congressional ruling that forced networks to give access to satellite providers and correctly points out the correlation between satellite pay TV providers in the early 90s and OTT pay TV providers in the mid-10s.

Which is all well and good, but....

(And it's a really big but...)

While all the usual suspects are running around proclaiming the second coming of the New Era of Television (the first happened a few weeks ago with the HBO and CBS announcements)-- they, and Wheeler, are forgetting one crucial thing: the existing cable and telco companies own the internet. Or at least broadband access to it. What's more they pretty much have a monopoly, or at best, a duopoly, on it as their territories rarely, if ever, overlap.

This is actually as big a problem as it sounds. And it some point someone is going to have to (a) acknowledge it and (b) deal with it.

Right now, thanks to Chairman Wheeler, I can go out and buy up the rights to broadcast an array of network television programming over the internet. I can sell you packages as big or as small as I like. But in order to get them from my servers to your TV set, we've got to go through enemy territory.

Because there's nothing in any of these rulings preventing Comcast or Charter or FIOS or Uverse or Cox from  charging customers who don't use their pay TV service all sorts of exorbitant rates for data usage. It's a pretty easy package to put together: Get AcmeCo's Gold Package: 50 Mps Broadband plus 800 TV channels with no data cap! The flip side of which is: Get AcmeCo's internet only package, the one without pay TV and you'll be staring at giant sized data overages... especially if you sign up with one of those internet-only pay TV providers.

The scripts for the commercials to scare consumers away from those internet pay TV companies and their hidden fees sort of write themselves, as do the direct mail pieces and robocalls.

The solution, it would seem, is a fairly painful one: break up the broadband monopoly the way we broke up Ma Bell back in the '80s. It's a political football no one is going to want to get behind though, fraught as it is with images of tinpot dictators nationalizing large swaths of their economies and leaving the country bankrupt as they flee to Switzerland with their shoe-addicted mistresses.

Plan B would be much stricter regulation of the sort that's particularly hard to write without creating endless loopholes, but which would ensure that broadband providers could not penalize consumers for choosing an alternative pay TV provider.

Here again, it will be a while before that legislation is written, even longer till it's approved, which is why I am not holding my breath for a successful over the top TV service launch next year.

Until we address the fact that broadband access in the US is a monopoly-- and all that entails-- our pay TV options are going to remain more or less as limited as they are today.

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