[opendtv] Re: The rationale for retrans consent from local broadcasters

  • From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 08 Oct 2015 07:52:19 -0400




Regards
Craig

On Oct 7, 2015, at 8:42 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:

Craig wrote:

Did you read the next sentence?

You are repeating what I wrote.

Not quite. This is what your wrote, both paragraphs:

People bought cable because it was a superior medium. You did not
need tall outside antenna masts and antenna rotators, as I had to
use at the last two homes where I had no access to cable. And you
did not have to endure snow and noise.

No Bert. That's the same paragraph you quoted the first time. The next sentence
(in the next paragraph said:

As cable added more programming, people started to subscribe to move beyond
the limited content available from the broadcasters, and to access content
without the restrictions imposed by the FCC.

This is almost exactly what you wrote when you argued it was more than just
eliminating the issues with an antenna:

Once you were set up for OTA, for many people, this was not an issue anymore.
And yet, cable had a lot more spectrum available in each location, so it
offered a lot more content.

Which is why I said it was a superior medium. For most homes it provided equal
or better pictures and more content.

So, to expand my original reply, a cabled medium is not "superior" to a
wireless medium, rather it's a tradeoff. Cabled systems cost more, they
introduce a single gatekeeper, they charge for service an ever-increasing fee
(because they can), they are less reliable/survivable. So it's a tradeoff.
And you exaggerated what the vast majority of households had to do to get the
signal.

Thank you. Which is why I said that broadcasters punted with the ATSC standard.
They could have created a new standard that was easier to receive, and offered
more content. Instead they created a standard that caused more people to move
to the MVPDs.

You could argue that the improved modulation technology needed was still
immature, but it did not stop the Europeans. With DVB they were able to build
what eventually became Freeview in Great Britain.

Then you said:

As cable added more programming, people started to subscribe to
move beyond the limited content available from the broadcasters,
and to access content without the restrictions imposed by the FCC.

Which is sort of backwards. The majority bought cable FOR that extra
programming.

That's what I said. Why are you arguing?

That's why they chased after the cable trucks. The majority WERE NOT
previously connected to CATV, which then morphed into an MVPD. That's would
be a minority, in rural areas. The majority subscribed to MVPDs for the extra
channels. Or many times, because they were forced to, when building antenna
systems were usurped by the MVPD. This is when the distribution landscape
became non-competitive, and why people flocked to it anyway.

I guess we are saying the same thing. I would only argue that it was the
broadcasters who became non competitive. They offered the same 3-4 dumbed down,
lowest common denominator shows, while the MVPDs offered all kinds of special
interest content, news and weather 24/7, and shows that literally could show
more than a broadcasters could...

More nudity, more violence, and more banned speech. Did you ever watch the
Sapranos?

Cable was one of many options to OTA TV. People put up big
satellite dishes before DBS.

Let's not exaggerate. Aside from the video rental store, which did not carry
live sports, there were almost no options for the non-enthusiast or urban
dweller. But yes, expensive VCRs did become available right about the same
time as cable MVPDs. Late 1970s.

Yup, and you could buy or rent the same kinds of programs you can access
instantly via the Internet today.

No Bert. By YOUR definition they [Netflix] were 100% dependent
on programs they licensed from the congloms. Now they are only
98% dependent.

Netflix and Hulu, more similar to very big Blockbuster stores, carry all
manner of content.

Sorry, but this is not a good analogy. Both Netflix and Hulu are light on
movies. They license older titles like the ones on the MVPD rerun channels.
Blockbuster did have the old movie inventory, but people lined up for the new
releases; the Netflix DVD by mail service focused on the same new releases.

The new streaming Netflix service is also light on current TV shows, except for
their originals; same with Amazon Prime. The TV series they license are
typically several seasons old.

Hulu, which is owned by the broad at networks, offers current season shows the
day after they air - you can't get those from Netflix or Amazon. Actually you
can get them from Amazon and Apple, as pay per view downloads.

Yes, perhaps a large amount is from the major US movie studios, but hardly
all of it. You get small productions too, not to mention many foreign films.
Netflix and Hulu, just like Blockbuster, were never 100% dependent on
congloms' content. The content aspect of the TV equation is far more
competitive than the distribution aspect used to be, Craig.

Nothing has changed except that some new distributors with deep pockets are
creating original shows to attract subscribers to their services. This is just
HBO all over again; but HBO licenses current movies, which is why their service
costs twice as much as Netflix and Amazon Prime.

The reality is that the content congloms are licensing their older libraries to
these new upstarts, which in turn is devaluing the hundreds of rerun channels
they created to drive up the cost of MVPD service. We no longer need
appointment rerun channels in a world where you can access the library program
you want on demand.

What I said is that the cost of all shows keeps going up,
because the talent pool is limited and your "competitors"
keep bidding up the price of the most popular content.

How is the talent pool limited? This is not how our economy works, Craig.
With more competition, you get more people able to play. They won't make as
much money, at least not at first, but they will bid down the price of
productions, not up. When you have an unwalled 2-way medium, this competition
becomes viable. Before that, any meaningful competition could (and was)
easily be locked out.

Sorry Bert, but that is not the way the entertainment industry works. It is all
about POPULARITY. That's what makes shows like Entertainment Tonight, Access
Hollywood, and the parade of stars on the late night talk shows so popular AND
important. The live linear TV industry serves as the promotional engine to
drive up the value of the product.

Yes, it is possible to create content at lower price points. This is still the
staple of the special interest MVPD channels. Most of the shows that Discovery
Networks and the Scripps Howard Networks produce cost much less than $100,000
per episode. But these shows don't attract tens of millions of viewers and then
get sold into syndication or to Netflix.

Shows with star power cost more than $1,000,000 per episode, and the price
keeps going up. And the most important live content - sports - keeps getting
more expensive as the Broadcast and MVPD sports networks keep bidding the cost
up.

Here are a couple of links about how much the major SVOD players are spending -
the second link has a great graph of the major spenders:

http://www.fool.com/investing/general/2014/10/06/netflix-inc-is-paying-huge-sums-to-produce-origina.aspx

http://www.businessinsider.com/netflix-will-spend-5-billion-on-programming-in-2016-2015-2

I would also add that the broadcast networks moved to reality TV and news
magazines to hold down programming costs, because they could no longer afford
to fill their schedules with original scripted content.

There is always a lot of yelling by people who are pushing
causes. The reality is that most of the perceived "abuses"
we're just technical provisioning issues, and the marketplace
figuring out how to charge the very real cost of highly
asymmetrical interconnections.

That's only part of "the reality." I showed you articles that explained other
"realities." The more simple truth is that as soon as the Internet had become
a credibly viable competitive medium for the traditional TV distribution
pipes, that's when the non-neutral behavior started to occur. And it's
completely logical that it would. Without any meaningful local competition
for broadband service, this was BOUND TO HAPPEN. The only way you (and they)
can deny the obvious, Craig, is to say "trust me, we won't let non-neutral
behavior happen." Uuuuh, right.

Read what you just wrote Bert.

You suggest it was the competition with the legacy MVPD services that caused
the problem. But what really happened?

Most interconnection agreements were simple affairs. The assumption was that
the traffic levels and the symmetry of that traffic were reasonably balanced.
It does not take many bits to shop at Amazon, or to download an e-book. Even
music downloads and streaming are relatively low bandwidth.

But when people started streaming movies and TV shows things changed
dramatically. Very quickly the traffic loads increased and balance of
downstream versus upstream bits shifted dramatically. To make things worse most
of the traffic was moving across the WANs through the interconnection points.

To deal with this traffic new provisioning agreement were necessary, and we
started seeing CDNs building out edge servers to take the most popular traffic
off of the WANs. This all happened WITHOUT network neutrality, as each attempt
by the FCC to impose net neutrality was blocked by the courts.

Now we are waiting to see if the courts will block the Title II mandate. My
educated guess is that the courts will not overturn the Title II decision, as
it opens the door for long term, intrusive government regulation of the
Internet.

Sadly, this is how our political system works today.


Regards
Craig

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