[opendtv] Re: Broadcasters, Cable Spar over Retrans

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 17 Jun 2011 17:29:28 -0500

Craig Birkmaier wrote:

> I suppose that broadcasters "could" negotiate a contract that only
> delivers their signal to certain paid tiers, but this makes little
> sense, since it would reduce the number of homes paying the subscriber
> fee.

That's the price the broadcaster who switches over from "must carry" to 
"retrans consent" should be ready to pay, is what I'm saying. It's up to the 
MVPD to make that threat stick, though, and they can do so entirely on their 

> I seriously doubt we will ever see the cable companies offer a local
> broadcaster tier like the DBS companies, as this could cause many
> subscribers to put up an antenna, rather than paying say $5 per month
> or more.

Exactly. But at the same time, the fees the MVPD charges would be under some 
sort of natural controls, and cord cutting would not become an issue. For this, 
you don't need to change anything else. The retrans consent and must carry 
rules can remain as they are. The government does not need to "break the 
oligopolies," as you claim. Nothing. That's my whole point.

> What you are suggesting is that the marketplace works here; that a
> specific network can use their popularity to get a higher fee. This
> is largely true, except for one minor detail. It only works because
> the fees are relatively small, and EVERYONE pays them, even if they
> don't want the channel.

Yup! The broadcaster/conglom may well discover that if he elected "must carry," 
and held on to all of the ad revenue, he would come out ahead. That's exactly 
how this is supposed to work! The tradeoff is more widespread distribution, 
which makes advertisers happier, vs possibly much less ad revenue and a 
kickback from the subscription fee.

> You have a choice in ISPs.

This may be the case in the future, not hardly today. For this to become a 
practical reality, you need more than just one or two players. You need a real 
wireless broadband alternative, for fixed service too. Today, many households 
don't even HAVE two options. Especially with this FCC, that allowed cable 
monopolies in apartment complexes again, after the previous FCC had stopped 
that practice.

> The key to all of this is the ability for content creators to bypass
> the oligopolies that now control access to the mass markets. The
> Internet is the disintermediating technology that is forcing the
> oligopolies to re-evaluate their future.

That's where our paths diverge. The one most important step, instead, is to 
remove the monopolistic nature of the distribution pipes ONLY. The problem 
hinges on the MVPD model, or potentially also on an ISP market with inadequate 
competition. As we have today. These models allow the content owners to make 
unreasonable demands. I think that harping on "oligopolies," for instance, is 
not the key to anything.

*After* households have a choice of multiple ISPs, then I see little reason for 
the congloms to have to rely on MVPDs *or* over-the-top Internet sites. With a 
truly neutral Internet available to them, the congloms **or other content 
owners** can simply deliver their own content as they please, charging whatever 
they please, and at most, the ISP fees may be graduated according to usage 

NOTE: no need for the government to change anything they are doing today.

The only problem left, then, will be the vertically integrated companies that 
use non-standard delivery formats only compatible with their players. But there 
is still plenty of competition in that arena.


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