[opendtv] Re: Digital Trends: ESPN may pull its finger out of the Internet-TV dam, unleash a flood of change

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Thu, 6 Feb 2014 09:18:09 -0500

On Feb 5, 2014, at 9:37 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx> 
wrote:
> 
> Problem is, these broad-brush generalizations are unconvincing. DTV is a 
> perfect example of why they are unconvincing.
> 
> In the analog days, before UHF, OTA spectrum was particularly scarce. So only 
> a few TV content sources could CREDIBLY compete throughout the country. You 
> claim this was an oligopoly supported by "the government." In fact, the 
> government not only allowed, but MANDATED, that receivers be compatible with 
> UHF. That was to promote, not reduce, competition. And it did.

It is your argument that is unconvincing. Yes, in the early days analog 
television was limited in voices because of spectrum constraints. But some of 
these were self imposed limitations. The white spaces gobbled up nearly half 
the available spectrum to protect the other half. We could have chosen a 
national broadcast footprint like many European nations, and would likely have 
been able to have more voices. We could have chosen a low power approach in 
each market, and offered many more voices using much of the wasted white space 
spectrum.

When we did open up the UHF spectrum not much happened, even after the FCC 
created the all channel receiver act. Simply stated, the cost to build and 
operate a TV station was too expensive, without the programming and revenue 
sharing from the three commercial networks. In larger markets a few 
independents did turn a profit. Perhaps Bert can tell us what content they used 
to compete with the Broadcast Networks?

I'll save him the trouble...

These independent stations bought movie packages from the big studios, and 
syndicated off network shows. In essence they were to the Broadcast Big Three, 
what OTT services are to the congloms today - an opportunity to make more money 
from content that had already run its course in the most profitable first run 
markets.

> Same happened with DTV. Again, amid your objections, the government mandated 
> digital receivers (*including* their hope that the MVPD industry would play 
> along), which spurred that much more competition. There are any number of 
> other TV content networks now available, over MVPDs and OTA, throughout the 
> country. And local LP stations too, for that matter. The government was NOT 
> trying to prevent this increased competition.

Neither the FCC nor the DTV standard had ANYTHING to do with the proliferation 
of channels we enjoy today. The broadcast industry exploded in the '80s growing 
from less than 1000 stations to about 1775 full power stations today. This 
growth was made possible primarily by the dramatic lowering of cost associated 
with operating a TV station. A U-matic tape machine and time base corrector 
cost thousands not the hundreds of thousands needed to buy a 2" quad machine. 
Ditto for cameras.

But the real transformation started in the mid '70s with super stations, HBO, 
Showtime, and later with CNN and other cable only networks, which used wires to 
deliver dozens of analog channels. Digital did little to help broadcasters, 
which have seen continuous ratings declines since the late '80s. Digital DID 
enable a competitor to cable with DBS, and enabled both cable and DBS to 
deliver hundreds of channels. Meanwhile, the vast majority of integrated ATSC 
tuners have never been used.

> Now comes the Internet. Once again, the government is not playing any role in 
> preventing its use for TV, Craig. If anyone *is* trying to keep that from 
> happening, that would be the entrenched MVPDs, not the government. And the 
> big TV networks really don't have that much say. If they don't figure out how 
> to compete over the Internet, they lose. And they know it.

The mold was firmly cast during the golden age of TV, when everyone watched 
three or four channels. As an aside, many successful national brands were built 
atop the advertising carried by these networks, as TV re shaped society. 

For example, the number of American Breweries dipped to an all time low of 44 
in the late '70s, based on the marketing muscle of just a handful of brands 
that were incessantly advertised on TV. We are now back to nearly 3000 
breweries, nearly matching the peak of 3200, prior to prohibition. But much 
like the >80% dominance of the MVPDs, this handful of brands still control over 
90% of the U.S. Beer market.

The problem is not that the government caused this to happen, although they 
clearly played a role. The problem is that the government is doing nothing to 
break up these oligopolies, when it is clear that technology is no longer an is 
due with respect to bypassing the content and distribution oligopolies. The 
most notable change is that another government enabled oligopoly, the telcos, 
are starting to compete with cable and DBS for TV services, and are part of the 
ISP oligopoly along with cable. Meanwhile, with "all this new competition," the 
cost of watching TV continues to rise. Millions of U.S. Homes now pay for an 
MVPD service, an ISP service and OTT services.

> Organizations (companies, universities) which create the IP embedded in 
> standards will of course expect to be compensated for their work. You call 
> that "barrier to competition," but honestly, that too is unconvincing.

Nobody is saying that IP should be free. But most of these standards 
organizations require participants to pledge to FRAND terms when they 
contribute IP to a standard. Unfortunately many courts have allowed major 
abuses of the FRAND system, and Patent Trolls are driving up costs for everyone.

The MPEG-2 and ATSC patent costs have produced huge revenue streams for the 
participating IP holders. But they are very low, compared to the revenues 
generated by broadcasters and the MVPDs. What is more important is that other 
industries had to work around the barriers to competition that these standards 
created, thus slowing down competitors and delaying the benefits of "being 
digital," to tens of millions who are still watching crappy interlaced TV.

I wrote:
> 
>> It is perhaps a bit ironic that Bert continues to champion the
>> proprietary Flash video standards, rather than arguing for the h.264
>> standard. But this apparent dichotomy illustrates another important
>> "feature" of what happens in a digital medium where the transport is
>> standardized, but companies are free to innovate with new
>> technologies. The IETF typically seeks to codify industry practices
>> into standards, rather than trying to invent technologies.
> 
> This paragraph is full of misunderstandings. There is no "dichotomy" on my 
> part, Craig.

Which Bert am I talking to at this moment?
> 
> 1. Flash uses H.264 too. It's not the compression algorithm at issue here. It 
> is instead all the rest that has to go with that compression algorithm, to 
> create a viable and controllable synchronized media stream. You continue to 
> misunderstand this, Craig. Flash came out as a solution, to support media 
> streams over HTTP. There is NO DOUBT in my mind that plug-ins, just like 
> Flash, will emerge after we have transitioned to HTML5. No one can predict 
> what new features will be required in the future, that HTML5 does not support.

Thanks for agreeing with me. The Internet allows products like Flash to fulfill 
a real need, WITHOUT formal standardization. When that need becomes something 
everyone does, the IETF often codifies industry practice into web standards. At 
other time they create similar standards that allow many companies to benefit. 
The important takeaway us that multiple standards and proprietary technologies 
can peacefully coexist when we allow devices to be flexible enough to support 
multiple standards, including those that are yet to be invented.

Compare this to the ATSC standard, which was already outdated by the time most 
consumers bought a HDTV. I would note that Bert rightfully pointed out the 
critical role that standards play in enabling the Internet transport of bits. 
We asked the FCC to do the same with DTV - i.e. just standardize the modulation 
and transport layers. The rest of the ATSC standards could still have been 
implemented, AND the technologies and applications could then have evolved as 
they have with the Internet.

> 2. What is important, for a mass medium, is **discipline**. That's something 
> you seem to either downplay or totally ignore. Flash might be proprietary, 
> but it is a de-facto standard. Plus, I'm not opposed to its replacement at 
> all. I'm opposed to heavy-handed companies like Apple overnight stopping to 
> support the standard, only to bolster use of their in-house iTunes store. 
> Apple, not "the government," created that mess. (And even used lies to 
> justify this to the clueless faithful.)

Rubbish. Apple and Google had good technical reasons not to support Flash on 
the mobile devices these companies have enabled. Get over it Bert, this WAS NOT 
a move by Apple to force people into the iTunes "walled garden." That walled 
garden is freely accessible by PCs. iTunes is built on industry standards for 
both audio and video. In reality, the iTunes Store is just that, a store that 
is no different than similar offerings from Amazon, Google and Wallmart. iOS 
devices can access almost everything you can view via the PC attached yo your 
TV, except for the proprietary codecs used in some Flash websites. Most OTT 
services now support h.264.
> 
> 3. The IETF is made up of individuals from many companies and academia. They 
> aren't IETF employees, Craig. With enlightened self-interest, these companies 
> collaborate to develop new standards, to support THEIR OWN INNOVATIONS in an 
> interoperable way. Not all that different from the ATSC process, when it 
> comes down to it. You want your new innovation to work reliably on devices 
> from many hardware vendors? That's what you have to do.

The same could be said about the ISO and ITU. But history suggests that these 
organizations have often been used to feather their members nests, as they seek 
yo create technologies rather than codifying industry practice. As for the ATSC 
and the process that led to the standard, it was bought and paid for by its 
members, who all cached in on the royalty revenues - it is a terrible example 
of what a standards process should be.

Regards
Craig
 
 
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