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

  • From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 05 Oct 2015 09:35:31 -0400

On Oct 4, 2015, at 9:10 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:


Craig Birkmaier wrote:

Prior to the 1992 Cable Act the broadcast networks "could" have
cut the cord with cable. In a true marketplace they could have
refused to support cable, promoted the use of antennas, and
created a new DTV standard that would have offered vastly
improved reception and the capacity for more "channels."

They "could" have done any number of suicidal things, Craig, but it wouldn't
have made economic sense. The broadcasters took the correct route, which was
to make their content available on all of the TV distribution media that
people were using. This has nothing to do with politicians, Craig. Or at
least, you don't need mention of "politicians" to explain why it made sense
for broadcasters to want their signal on all TV media. That's where your
arguments fall apart.

Pardon my French, but bullshit.

Yes it made economic sense to take over a superior medium by leveraging the
political advantage they enjoyed with their oligopoly. That is not the
marketplace at work...

It is pure crony capitalism.

I'm made no sense to create a new broadcast standard that limited the service,
other than as a means to drive viewers to the MVPDs.

The series of NYTimes articles that Monty posted provide a good
overview, and solid support for most of the positions I have
taken that you disagree with.

Fact is, Craig, aside from the first article in the series, that I commented
on, the others I can fully agree with.

Progress.

You cannot agree with anything I say, but if someone else says it you are all
in.

First example. One of the articles talks about the growing number of high
quality TV series available now. Which totally undermines your idea that we
have this content "oligopoly" you insist on. The only reason we have the
growing number of competing options is that we have the open and
mandated-neutral Internet, over which "anyone" can create and distribute
content.

More bull.

All of these new options are filled with the same library content from the
oligopoly, just as the proliferation of MVPD channels were filled by the same
old programs. We no longer need rerun channels, as technology makes it
practical to access these programs on demand.

But we still need reasons to pay for this access other than convenience.
Audiences are built with new original content, not reruns.

Ironically, the new players like Netflix and Amazon are driving up the cost of
high quality content, because the pool of talent and services that the congloms
have used to create content is not growing.

The reality is that we just have more "optimized" options for different target
groups, just as we have more grocery chains focusing on various demographic
groups with different food preferences.

And conversely, were the Internet NOT mandated to be neutral, the cable
companies could simply re-create the old MVPD model over the Internet. Oh
yeah, even *that* last point was explicitly mentioned in one of the articles.

This has nothing to do with any perceived neutrality mandate. That already
existed in practice, and what the FCC is trying to do with Title II is likely
to make things worse, not better. At a minimum, consumers will pay more for
Internet service in the U.S. Than equivalent services in most other countries.

There is no reason to recreate the existing MVPD model via the Internet, as
this model is being replaced thanks to technical evolution. But there are many
reasons to create an improved MVPD model using the Internet to distribute the
bits and to enable the ability to search vast content libraries, and enjoy
content on demand.

And there are VERY important reasons to move MVPD services to the Internet, to
deliver this content to the new mobile screens that are no longer connected to
a cable, fiber, or DBS dish.

And guess what?

That is EXACTLY what is happening.

Dish now offers a slim MVPD bundle with access to library content via the
Internet. And ALL MVPDs are offering TV Everywhere to their subscribers - a
service that delivers both live linear streams and library content via the
Internet. I spent many hours this weekend using the Watch ESPN App on my
iPhone, iPad, and Apple TV; I accessed the Internet via hotel WiFi, my cellular
data service and my wired broadband.

Another article talks about how even after the neutrality mandate, the cable
companies are doing well. And why shouldn't they be?

FOTFL

The FCC just assured their future by moving to Title II. Their local monopoly
is now assured, as investment by competitors has already decreased, as the
article you mention pointed out. Our best hope for a less expensive broadband
future now depends on the courts overturning the Title II decision.

They have a critical role to play. And it even debunks your notion that their
capital investments have gone down. Or rather, yes, they have gone down, but
only because those capital dollars were previously being wasted on
proprietary STBs. The article debunks the notion that the cablecos are not
investing in broadband.

Sorry, the article noted that capital dollars have gone down for potential
competitors, not the cable monopoly. But the Title II decision DOES mean that
the cable companies can relax and improve their networks more slowly, milking
the TV side of the business for another decade, before everything moves over
broadband.

You really need to get off this old saw, Craig. It's sounding more and more
like adults talking in Peanuts cartoons. Netflix, the service, and Netflix,
the creator of new original content, have absolutely NOTHING to do with
"politicians." Ditto Amazon, and all the rest. They don't air political ads,
nor debates. Whatever they might do with politics is because they figure it
would make
money.

Just more stores Bert. Filled mostly with the products created by the content
oligopoly. They replaced Blockbuster, not the MVPDs.

If you want to access the most popular live linear content, you are still
beholden to the oligopoly, which is propped up by the politicians.

But the cabled MVPDs do have franchise agreements, contracts
with content owners, and local, State and FCC regulations they
must obey.

And yet, didn't we see that at least one small rural cable system dropped all
"TV channels" completely?

Why not. They were not making enough money with TV to justify the effort and
decided to focus on the future of the wired infrastructure - broadband. No
doubt in another decade the big cable MSOs will do the same, after they move
their TV services to the Internet, or just let Apple, Amazon, Sony and others
fight over the less profitable TV distribution business. The big bucks will
continue to flow to the content and new broadband oligopolies.

And went broadband only? So the reason cable systems continue to provide the
legacy MVPD model of service is because it's still lucrative for them, even
if on the wane (as one of the articles mentions). Because many people are,
literally, afraid to cut the cord. I know, it seems pathetic, right?

No. Because, as the articles state, the big bundles are still a reasonable deal
for many consumers:

Do you want to lose 90 percent of your content and save the equivalent of
three glasses of wine?” said David Bank, a media analyst at RBC Capital
Markets. “It’s a solution looking for a problem, from a pure economic
perspective.”
The bundle offers choice and is a “really good system we have going,” Mr.
Bank said. And he is not convinced that the majority of Americans are going
to opt out in the next five years.

“I don’t think the revolution is about to hit us,” he said. “It’s much harder
to call outside of the next 10 years.”


Bert again:
False. On the contrary, this is how that point was made:

http://www.bloombergview.com/articles/2015-09-17/it-s-still-pretty-great-to-be-a-cable-company

"The cable channels' lucrative revenue mix of subscriber fees and advertising
is showing the first signs of erosion as viewers cut the cord and get their
TV through streaming services. The sudden realization of this occasioned a
stock rout."

Which has already recovered, as the Times article pointed out. That tout also
occurred during the biggest market correction since 2008.

"A likelier explanation seems to be that providing broadband connections
remains a good business with potential for growth -->**even if you don't get
to pick and choose who delivers TV, movies, games and other content over your
pipes**<-- (which is what the FCC was trying to prevent with its net
neutrality order)."

"Fast connections to the Internet are likely to keep growing in value. Which
is why, even if the cable era is ending, cable operators still have a future."

They have a great future, since the FCC just entrenched their monopoly with
Title II.

And it is absurd to believe that the MVPDs will not defend their TV turf. They
have tons of room to drop prices to compete, as they have been doing for years
with their unpublished price lists for would be cord cutters.

We have witnessed the broadcast industry extend their useful life by several
decades with a poorly conceived DTV standard that drove almost everyone to the
MVPDs, where they could feast on subscriber fees. What makes you think the
MVPDs cannot do the same with their oligopoly?

Gee, I could have written that, eh? This, coupled with the other article
about the growing number of TV series, thanks to multiple new Internet-based
sources, exactly contradict your notions of "oligopoly" and that MVPDs aren't
changing in major ways. You got stuck on the fact that "cable is still good
business" without reading the fine print.

Sorry, but most of the new TV series have nothing to do with internet based
sources. They are being created by the content congloms to keep their second
tier MVPD networks viable. You saw the comments from the President of WGN. Most
of the hot new shows are being created for the channels in the MVPD bundle,
like AMC, FX, ABC Family, TNT, WGN, and all of the special interest channels
like Discovery, Food Network, HGTV et al.

You can be forgiven for not understanding this, as you a e a steadfast MVPD
Never.

The only significant change noted in this article is that the
MVPDs may lose control of the lucrative STB franchise as Apple,
Sony, Google and Amazon reinvent the front end to the TV.

Maybe Craig is just starting to get it?

How do you think Sony and Apple can drop the price by 50%?

It is by eliminating the need for this absurdly expensive hardware, and
avoiding the layers of taxes and fees imposed by governments who piggyback on
the distribution oligopoly.

And once again I will point out that Congress gave the authority (and mandate)
to the FCC the unbundle the hardware two decades ago. This is how oligopolies
slow walk evolutionary change.

Regards
Craig

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