[opendtv] Re: Why aren't there more converter boxes?

At 2:12 PM -0800 1/26/07, Dale Kelly wrote:

And as it should be! The broadcasters purchase programming and cable
companies make significant income from carrying broadcast stations. The
broadcaster simply want a piece of that action in return. Now, if the cable
folks actually provided the broadcast stations for "free", it would be
different story.
How do you justify the notion that cable companies make significant income from the carriage of broadcast stations? 

Do they charge a fee for local stations as do the DBS companies?
I believe that the justification for this position is built around the notion that people would not subscribe to cable if they did not carry the broadcast stations. Perhaps, but I think this notion is outdated today. Yes people expect the broadcast stations, but they also expect the cable networks, cable modems, and now digital telephones.
The cable companies have also invested at least twice in building out their physical plants, and the cost of this infrastructure is an order of magnitude grater than what broadcasters have spent on their infrastructure (i.e. in excess of 150 billion in the past two decades). Much of what we pay for each month in our cable bills is to pay for this infrastructure.
IF the FCC and the politicians were really interested in controlling the rapid increase in rates for subscription services, they would demand a cost breakdown on our bills; 

- $XX for infrastructure amortization
- $YY for customer service operations
- $ZZ for subscriber fees
- $GG for franchise fees, taxes and other government imposed fees.
Unfortunately, this is all bundled together, so the consumer really has no idea where their money is going, and for what.
One thing will be clear moving forward - consumer will know that they are paying subscriber fees for broadcast signals. 


That Craig is a non sequitur. The UK Freeview system utilizes the national
TV transmission system constructed over the years, mostly at taxpayer
expense - and a model for your Utility plan above. Currently I believe that
system is now partially supported by the UK TV owner license fees. Had such
distribution network been constructed in U.S. and fees were in line,
broadcaster would certainly pay to utilize that service.\
Sorry Dale but this does not wash. The method of collecting money from consumers to pay for infrastructure in each case may be different, but the net result is similar. The reality is that consumers in the U.S. pay FAR MORE for their TV fix than do consumers in Europe.
Other than PBS, the U.S. broadcast TV infrastructure was paid for from operating revenues of the broadcasters. There is NOTHING to prevent broadcasters from forming a private corporation to operate the transmission infrastructure as is the case in the U.K. And broadcasters already pay a hefty price to operate that infrastructure - primarily via their electric bills.
In a some cases broadcasters are paying for the content they run, although much of it is operated via barter agreements today. The most important point however, is that programming is paid for via the ads that are run. Somehow, broadcasters managed to grow into the force that they have become WITHOUT subscriber fees. And somehow, Freeview operates without subscriber fees. 



In a perfect world your solution might be best but in this world, where
broadcasters have already paid billions to twice construct their private RF
systems - once for analog and a second for digital - your solution simply
won't gain any traction. Now, if the government wants to construct such a
utility using potential revenue from it's taking of additional spectrum,
that might actually work.
I agree that it will not gain traction today because broadcasters cannot work together to reinvent their business model. The networks and larger station groups will happily allow smaller groups and stations to become insolvent, as they ride the Titanic down.
This brings to mind the graphic of the life of man, starting out as a crawling baby, then growing upright, then becoming infirm and baby like again. The TV broadcast industry seems destined to go through a similar life cycle.
Perhaps the impetus to move to the spectrum utility model will eventually surface, when the book value for spectrum that most broadcasters carry is written down to $ZERO. 

Regards
Craig


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