[opendtv] Re: FW: Re: Distribution outside the bundle
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 16 Dec 2014 11:57:41 -0500
On Dec 15, 2014, at 10:37 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
>
> Wrong, Craig. People who subscribed to cable wanted to get the broadcast
> channel on that same cable, so they could remove their antenna.
Of course they did Bert. That was the feature that got the CATV industry
started, AND a requirement imposed by the FCC. But it is a stretch to say that
this is why most homes subscribed to cable, if they had good reception via
their existing antenna.
> They demanded the broadcast channels, whether they could theoretically get
> the signal from an antenna or not. Plus, apartment dwellers often had no
> option, if the apartment faces in the wrong direction, because many
> apartments complexes stole the coax network for an MVPD.
"Demanded" is rather strong. I believe "expected" is more accurate. And most
apartments had master antenna systems before they upgraded to cable. But the
people living in those apartments wanted more than the broadcast channels.
>
> Hence, the broadcasters had leverage. Supply/demand.
No question about leverage, although supply and demand have little to do with
it. They had political leverage to force cable systems to pay for their
signals, and used that leverage to take over 90% of the content delivered by
the MVPDs.
> And the broadcasters were totally within their rights to subtract their
> signals from the MVPD net. And then, let the MVPD subscribers tell their
> provider what they thought. Which is exactly what happened, time and time
> again. Supply/demand.
Nope. The MVPDs refused to pay until the 1992 Cable Act gave broadcasters
retrans consent. There were no significant blackouts prior to 1992. After that
the broadcast networks started pulling their signals to force retrans consent
payments.
> The FCC responded to loud complaints, Craig. Of course, the low-power or
> shopping channels were most likely not on people's minds, but the TV network
> channels definitely were. When the government steps in, it has to be
> unbiased, so the FCC could not pick favorites.
The FCC was only involved in must carry, which allowed all stations to ask for
carriage, but NOT for compensation. Congress gave broadcasters retrans consent,
and the option to ask for must carry or retrans consent payments. It is worth
noting that only CBS asked for monetary compensation. The other networks asked
for preferred placement of new channels to compete with the new cable networks.
A decade later, with control of 90% of the content on the MVPD systems, they
started asking for monetary compensation.
>
> Similarly now, the FCC is trying to figure out how to ensure net neutrality.
> Because THE PEOPLE are demanding it. If you don't think so, just read the
> comments the FCC received.
The people? They have opinions, but little clout. The money comes from the
lobbyists for the regulated industries.
> I will agree only that, aside from local news and weather, the congloms
> primarily deserved the extra compensation, beyond the ads. Once the conglom
> signals got carried by cable or DBS, the OTA broadcaster role was mostly
> filled by someone else (except news and weather). But see, Craig, you won't
> even acknowledge that. You make a big deal about the local OTA broadcaster
> being compensated, without thinking about who really is being compensated.
> All to push a political agenda.
Broadcasters have never been viable on their own - just look at how LPTV
broadcasters struggle to survive. In the early years the networks compensated
the stations to carry their signals. Only after the business became financially
lucrative (from the mid '80s), did the stations start giving back compensation
to the networks. First it was a reduction in the lucrative local ad slots in
prime time and sports. With retrans consent, the networks claimed their share
from the beginning.
The primary benefit of broadcasters is that they form the basis for our market
based system, which is protected, by FCC rules. And the networks own the
stations in the most lucrative markets. There is no reason for the broadcast
networks to keep broadcasting, except to serve the small market that does not
subscribe to a MVPD service AND the political clout they get by keeping the
politicians in front of their constituents. They could make more money by
shutting off the transmitters, and would be freed from the content restrictions
imposed on FOTA broadcasts. Perhaps this is why Moonves stated that CBS is
considering selling spectrum in the upcoming auction.
>
> Ditto with Internet distribution, btw, unless the broadcasters carve out a
> new role for themselves (e.g. as local CDNs, plus news and weather content).
Let's see where things stand after the auction. There are ongoing business
opportunities in broadcasting, but the huge profit margins are beginning to
evaporate.
>> Which wouldn't even come close to justifying the difference in price. And
>> that's exactly what we are dealing with here, Craig. Put some of highest
>> value content on the walled garden net, and that content will demand at
>> least as much subscription fee kickback as the much less popular niche
>> channels. And they weren't getting it.
It's all about perception Bert. But there are differences in quality and
materials, as well as better profit margins.
Not sure what you are saying about the walled garden net. Obviously the
popularity of any bundle, be it extended basic or Netflix, is derived from the
perception of what you get versus what you pay. Netflix carries a bunch of
niche content too. But the marketing of bundles is driven in large part by the
exclusive content offered.
>
> Here's a mind exercise for you, Craig. Imagine what MVPD nets would look
> like, **if** they had been mandated to be content and appliance neutral, back
> in the 1970s. Imagine if the FCC mandated standard interfaces and carriage of
> any and all content sources. That was not TECHNICALLY possible then, at least
> not the sources part, but it is now.
The FCC has been mandated to make MVPDs appliance neutral since 1995 - still
has not happened. As far as content neutral, the FCC has enabled new MVPD
competitors through equal access rules. First for DBS in the mid '90s, and now
for virtual MVPDs that will use the Internet.
>
> Imagine how your "the bundle" fascination would have been entirely different.
How do you make a system with finite capacity content neutral Bert?
Who would have invested the billions to cable the country if the FCC or some
other regulator determined what you must carry. Pipe dream!
Regards
Craig
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