[opendtv] Re: Whether collusion is necessary

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 1 Jul 2013 12:09:14 -0400

On Jun 30, 2013, at 8:19 PM, "Manfredi, Albert E" 
<albert.e.manfredi@xxxxxxxxxx> wrote:

> Craig Birkmaier wrote:
> 
>> As you suggest, the same can be said about many industries, especially
>> those who have built monopolies and oligopolies via political/regulatory
>> gerrymandering.
> 
> I meant the opposite, though. I can drive my car on any public road or 
> private turnpike, without the car manufacturer having colluded with the road 
> owners. I can buy bathroom fixtures without the fixture manufacturer having 
> colluded with the builder or the water utility. Ditto with electrical 
> appliances. My home builder did not design in proprietary light fixtures that 
> require me to buy only his replacement bulbs, for instance. My kitchen range 
> manufacturer does not mandate that I buy (or better yet, rent) only their 
> brand of pots and pans. My toaster manufacturer does not mandate that I only 
> buy their brand of bread. People should never feel compelled to put up with 
> such shenanigans. I'm saying, in most industries, you DO NOT have to put up 
> with appliance makers in collusion with other associated industries. No 
> reason to think that TV should be any different.

Some of your analogies do not hold water. The government is HEAVILY involved in 
the design of your car and for the past fifty years has been adding layers of 
mandates  in the name of public safety or environmental concerns.

Water utilities are dumb; you are paying for a metered service and pay only for 
what you use. The fixtures are actually gaining some intelligence, especially 
in public restroom facilities to conserve water.

Electricity is another metered service that is usage based. But intelligence 
and government control are beginning to creep into their design as well. 
Requirements for energy efficiency on A/C, heating and refrigeration - many of 
these requirements are mandated at the local or state level. And in some state 
the ability to turn off major appliances to reduce peak demand is becoming an 
issue.

The pots and pans and toaster examples are priceless…LOL.

There are many reasons that the TV industry is different.

First, there is the issue of standards; there are many, and some are industry 
specific - cable and DBS are good examples. But DRM is the 800 pound gorilla, 
which has allowed the content producers to dictate device design. Manufacturers 
are free to design devices to support both industry and proprietary standards. 
I understand you are not a supporter of this approach - e.g. manufacturer 
specific DRM, proprietary apps, etc. But then you run to the defense of the 
proprietary FLASH standard. I guess it just depends on what feathers YOUR nest.

Next we have the minor issue of the value of content and how we pay for it:

http://atkinsbookshelf.wordpress.com/tag/how-much-do-americans-spend-on-entertainment/

"Spending on entertainment and media in 2012 will reach a whopping $490 billion 
and is expected to grow 5% over the next few years to reach $597 billion in 
2016. Global spending on entertainment and media will reach $2.1 trillion."

When a handful of oligopolies have control over this much of our "discretionary 
income," you can expect them to defend that control to the hilt. When a device 
manufacturer tries to create devices that deliver this entertainment product, 
or they go another step and design ecosystems that sell both the devices and 
the content that is consumed on them, you can bet that the content owners want 
two things:

1. To be paid for the content;
2. To protect their existing customers who may be disadvantaged, or worse, 
become extinct, through the innovation of new competitors.

And perhaps most important:

When an industry becomes a propaganda machine for the politicians, you can 
expect a quid pro quo. The politicians will protect that industry and look the 
other way when anti-trust issues arise.

For example, the politicians gave the NFL the right to block local broadcasts 
of their games when the game is not sold out, and to block access to 
out-of-market games when a local station broadcast that game to the local 
market. 

This IS the marketplace that exists today Bert. You do not like it, nor do I. 
But content distributors and manufacturers can either work with the content 
owners to license the content and build ecosystems around it, or they can risk 
having their innovations blocked. 

Google did EXACTLY what you want. They created the Google TV spec and a browser 
optimized for a TV, and licensed it to device manufacturers. Content OWNERS 
decide to block Google TV access to some of their content, and encourage 
Google, Apple, Microsoft, Amazon, Netflix, et al to license - AND PAY FOR - the 
content.

I wrote:

>> You play the game and keep pushing the envelope and building your
>> position of power.
> 
> You, the consumer, don't let them, Craig. Isolated TV walled gardens are a 
> thing of the past, in the Internet era. Simply because these walled gardens 
> cannot reasonably keep out standard computer appliances. Even the MVPDs, when 
> they offer broadband Internet and phone service, have figured out this much. 
> TV content is no different.

The only control the consumer has is the choice that you exercise - to simply 
say no. 

And by the way, these companies can block you PC any time they feel that too 
many of "you" are gaming the system. Fortunately for "them," you represent a 
tiny leak in the system. The number of people who are using Media Center is 
almost too small to measure, and many of the people who DO use it also 
subscribe to cable or paid OTT services. The media and distribution congloms 
have already conspired to extend access to new mobile devices IF you are a 
paying MVPD subscriber. This is a HUGE number of viewers and many of them feel 
that their subscriptions are more valuable because of the ability to access the 
same content on their second screens. 

So bottom line, consumers ARE letting them do this, and some even like it.

And finally I wrote:
>> Obviously these people are in business to make money. There is no
>> argument about the need to pay for our media fix. The argument is
>> who gets to sell the drugs, for how much, and a how to control
>> potential competitors.
> 
> As you sort of say, paying for the content, the existence of DRM, and a 
> service provider having to have a license to distribute other people's 
> content, is NOT the issue. But having to pay monthly ransoms for what should 
> be either useless additional boxes, or commodity products such as PVRs, IN 
> ADDITION TO paying the service provider for the content, is something that 
> makes no sense today.

I agree that consumers are starting to understand the issues and push back. But 
I think the MVPDs are smart enough to figure out how to maintain control over 
the important bits, while allowing some innovations in what they offer and what 
they charge. The fact that they have extended access to third party devices 
that they do not control, or make additional money off of, says a great deal.  
It should be obvious that Comcast is moving toward a platform that may run of 
many third party devices; the money they make from STB rentals is small 
compared to other income streams. And the PVR turned out to be a temporary 
replacement for the VTR; it is now easier to handle VOD from their own servers 
(cable) or via the Internet (cable and DBS). And it "only" costs about $8 a 
month to subscribe to Netflix and have access to a huge library of older 
content.

> To see that TV CE manufacturers don't get this, but rather they go on 
> assuming that they have to collude with someone even for Internet access, 
> bend over, and just provide access to a handful of pay-only sites, is pretty 
> freakin' astounding. I can't begin to understand why anyone should pretend, 
> or argue, that these practices are necessary.

Because the alternative is either to do without or to violate the DCMA.

Regards
Craig 
 
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