[opendtv] Re: FW: Re: Distribution outside the bundle
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 17 Dec 2014 11:44:17 -0500
Regards
Craig
> On Dec 16, 2014, at 10:32 PM, Manfredi, Albert E
> <albert.e.manfredi@xxxxxxxxxx> wrote:
>
> There you go, changing the subject. I said that consumers were insisting that
> those TV network channels be on the cable pipe, and that's what the FCC was
> responding to.
Not really. The consumers were primarily interested in the content from the
networks (and some syndicated shows), not where it came from. It was the
broadcasters who went to the FCC to demand rules to protect their signals,
after some cable systems started importing signals from out of market stations,
often with compensation FROM these stations. The FCC rules guaranteed carriage
and protection from out-of-market competition.
> Poppycock. Once again, when the TV networks drop out, during any of those
> spats, consumers complain very loudly. You cannot pretend this isn't so, and
> you cannot pretend that the only reason the TV networks are on MVPDs is
> "politicians." I'm surprised you've been able to repeat that for so many
> years, without insistent pushback.
The reason the networks (and affiliates) are on the MVPD systems is that is
where the viewers are, and the systems have the business infrastructure to
collect billions in subscriber fees for them. The reason they can demand these
fees is the politicians, who gave them retrans consent.
Consumers tend to complain when ANY content they value and pay for is withheld
to blackmail the MVPDs (in reality the subscribers) to increase these fees.
This is a classic case of the law of "intended" consequences. The MVPDs get to
pretend that they are protecting their subscribers, and the content congloms
get more money.
> Fairly early days for cable, still. That's about when TVs started being sold
> with their tuners set to cable frequencies by default. So it's understandable
> that right about then, the broadcasters would wonder how niche channels like
> Scripps were getting subscription fees, and
Wrong.
http://www.nytimes.com/1984/05/19/style/cable-ready-tv-is-it-worth-the-price.html
More than 15 million cable-ready sets have been sold since they were introduced
in the late 1970's, according to the Electronic Industries Association, a
television manufacturers' trade group. Most cable- ready sets are equipped with
electronic tuning and many also come with remote controls that will not work
with standard cable converters without add-ons.
I'm not certain when these tuners became standard on NTSC TVs, but it was well
before 1990.
As for just getting started...
> http://www.calcable.org/learn/history-of-cable/
> Satellite delivery, combined with the federal government’s relaxation of
> cable’s restrictive regulatory structure, allowed the cable industry to
> become a major force in providing high quality video entertainment and
> information to consumers. By the end of the decade, nearly 53 million
> households subscribed to cable, and cable program networks had increased from
> 28 in 1980 to 79 by 1989.
According to TVB there were 93.7 million TV homes in 1990. That means more
than 56% were cable subscribers, hardly "just getting started."
By the way, Scripps Interactive was not created until the early '90s - HGTV was
announced in 1994; Food Network started in 1997. What is more interesting is
that (from the Scripps website):
"In the early 1980s, in an effort to develop a source of revenue that wasn't
dependent upon advertising, Scripps Networks began buying and building cable
television systems, eventually becoming one of America's largest cable
operators. The cable TV systems were later sold to Comcast."
The networks fully understood the concept of subscriber fees collected by the
cable systems. These fees started with CNN and other Turner networks to operate
when they could not generate enough ad revenue to cover operating costs. I am
aware of efforts by broadcasters to get compensation from cable systems as
early as 1980.
Bottom line, the networks were losing their audience and wanted in on the
second revenue stream.
> Okay, noted, it was Congress and not the FCC. And this all makes sense.
Just saw something about the 1992 cable act on Wiki that I had forgotten.
The United States House of Representatives passed the bill on September 17,
1992 (voting 280–128), and the United States Senate passed it on September 22,
1992 (voting 74–25). It was vetoed by the President George H.W. Bush on October
3, 1992. After the veto of the President, it again passed Senate over veto on
October 5, 1992 (voting 74–25) and on the same day, it passed House as well
(voting 308–114).
Talk about political clout!
> Once again, the price is set according to what the consumer is willing to
> pay. When perhaps 90 percent of TV households was safely walled up behind
> MVPD walls, the congloms/broadcasters would be expected to ask for more. That
> 90 percent shows a certain inelasticity in demand, wouldn't you say?
They continue to ask for more, even as some homes cut the cord. THAT shows
inelasticity in demand. The 90% simply was the peak, before monopolistic
pricing and the economy began the current erosion in subscribers. And to be
fair, before new OTT services began to provide viable alternatives to the
bundle.
Virtually every analyst believes that subscriber fees will continue to
increase, especially for broadcast stations. Apparently your heroes like
Skipper and Moonves are not too concerned about this trend.
> If that were true, you wouldn't be seeing Tom Wheeler having to consider
> Title II, Craig.
Really?
The courts are forcing Wheeler to consider alternatives, as earlier attempts
were ruled illegal. It is the natural tendency of government systems to move
toward regulation.
Things are not always as they appear Bert. The cable guys say they oppose Title
II, but they will be the major beneficiary of this form of regulation.
The MVPDs say they are on the side of their subscribers when it comes to
blackouts and subscriber fee increases. But they always cave.
> Explain, then, why they also have their content FOTI? The politicians don't
> get air time on this VOD content.
Obviously because this is a viable, future looking move, designed to recapture
a lost audience, to use your mantra. And politicians can buy ads in network
programming, whether it is FOTA or FOTI. They get their free air time on the
news and political talk shows, which have largely moved to cable, aside from
the Sunday morning shows.
> Check out the Internet, Craig. Nothing is "infinite capacity," but the number
> of content sources available to any Internet user is gymongous.
Now answer the question Bert. We were not talking about the Internet. We WERE
Talking about access to cable systems, which in the early years had only 30
channels.
> Because it's not all transmitted all the time. This makes any need for
> monopolistic "the bundles" vanish. And it doesn't take an FCC to order this.
> It just happens. When technology permits something, people will demand it.
> Yet, you go on insisting that we should all obediently be doing what the MVPD
> model tells us to do.
The Internet does not make any need for monopolistic "the bundles" vanish.
There is no NEED for monopolistic bundles Bert. Under normal circumstances U.S.
Anti-trust regulations would break up this oligopoly. But for some reason the
ant-trust laws are not applied. There is pure political cronyism - the kind of
political clout that allowed Congress to override a Presidential veto to pas
the 1992 Cable Act, which is the foundation of the bundle.
The bundle is moving to the Internet Bert, despite the infinite capacity to
deliver alternatives. Why?
Because technology only enables alternatives; it does not require them,
especially in the face of powerful, politically connected monopolists.
Regards
Craig
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