[opendtv] Re: News: Apple, Google Asked to Pay Up as Operators Face Data

From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
Date: Thu, 9 Dec 2010 16:26:42 -0600

Craig Birkmaier wrote:

>> As I said, Comcast vs Netflix is merely the beginning of this trend.
>
> So Bert.
>
> Who should pay for what?
>
> Our broadband services are among the most expensive on the planet.

I don't know if that's even true, but there is nothing chiseled on any stone 
that should lead you to believe that getting TV over an umbillical system 
should be any cheaper with "IP" on the label, than it was with "MVPD" on the 
label.

Who pays for the TV content ends up being the subscriber. Who demands 
compensation is always the content owner and the various middlemen that the 
system allows to infiltrate the distribution chain. The more the middlemen, the 
more hassle it is to change the umbillical you're using at the time, the more 
the consumer should expect to pay.

> It costs companies like Apple and Google and Netflix a small fortune
> to host and deliver the bits.

These are the extra middlemen who get involved within the IP delivery system, 
then demand compensation. For example, the congloms and the movie studios could 
instead opt to create their own web sites, making the system more similar to 
the same old MVPDs we are used to now. The congloms would get their revenues by 
charging the ISP, and the ISP would get that money back from the subscribers.

In the end, you should not assume any major difference, then and now.

> Would you expect Blockbuster or Red Box to pay for your gas when you
> drive somewhere to rent a movie?

Blockbuster does have to pay lots of money to make themselves easily available 
to drivers, though, including keeping clean and well lit stores, paying rent 
for the strip mall locations with plenty of parking, paying for employees to 
handle all the manual functions involved in dealing directly with the public. 
These are the analogous functions that such brick store middlemen pay for, then 
demand back from the subscribers in the form of fees.

> The telcos here are already moving to tiered pricing for wireless
> broadband. Should they be able to collect revenues from the sources
> of all of those bits as well?

Different models are possible. It's obvious that streaming media places a 
bigger strain on the nets. They can pay for that in different ways. Either only 
from the consumer, or from the consumer and the various middlemen, or from the 
content sources, or a combination. It's the inherently anti-competitive aspects 
of having to depend on umbillicals that incrase costs to consumers.

> Looks like Verizon is going to pay Apple too. And most of the European
> telcos that are complaining are also subsidizing the popular smart phones.
>
> From here it looks like they are behaving like the monopolies that they
> are.

The telcos are behaving just like the MVPDs have done. The Apples are also 
behaving like the monoplies they have become, although with Android that's 
changing.

Bert

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[opendtv] Re: News: Apple, Google Asked to Pay Up as Operators Face Data

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