[opendtv] Re: Whether collusion is necessary

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Wed, 3 Jul 2013 11:58:05 -0400

On Jul 1, 2013, at 8:29 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx> 

> Government regulations, for safety or efficiency, are hardly what we're 
> talking about here.

Agreed. Which confirms that there was no useful reason for you to cite the a 
list of industries that have nothing in common with the issues we face with the 
media and distribution oligopolies.

I  wrote:
>> But then you run to the defense of the proprietary FLASH standard.
And Bert once again plays the " open" card...
> A de-facto standard, that *any* device can (or could, anyway) install. No 
> problem at all. The reader is free, even. So this is not encroaching on 
> anything, or crippling my device. Again, off topic.

Very much ON topic. Like MANY new business models, the consumer component is 
free. But the back end tools are anything but free or open. 

I though you supported open industry standards? 

>> 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.
> #1 has been answered. On #2, BS. The "customers" you mention aren't the 
> consumers, rather the previous middleman. For DRM, no need to collude with a 
> service provider middleman. The ISPs and the CE companies don't need to 
> ASSUME that the only way congloms can handle DRM is by colluding with THEM. 
> It's simply false.

They are not "previous middlemen." They are the DOMINANT middlemen, and they 
pay the media owners billions every year for the right to have exclusive access 
to the content of the media conglomerates. 

And you are stretching the issue of DRM way beyond reality. The DRM issue is 
better discussed in terms of technologies like HDMI and cablecard. ISPs are not 
involved AT ALL. CE companies must license and implement HDMI , and possibly 
other DRM standards in order to sell their products and access some protected 
OTT sites.

The real issue here is whether the media conglomerates are going to make their 
content available to NEW middlemen, and at what price? Or if they will 
eliminate middlemen altogether, and sell directly to consumers.

>> 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.
> Again, not the same thing at all. Blocking content across the board, for 
> whatever reason, is fair game. You would only have a point if you said that 
> the NFL makes special underhanded deals with a handful of auto companies, so 
> the only people allowed into their stadiums must drive in with those approved 
> cars only. The NFL *has no reason* to collude that way, right? Their profits 
> do not need to be tied to the profits of Toyota. But any content owner is 
> within his rights to block content from wide distribution, across the board. 
> There's no collusion when they block all electronic distribution media.

This example was provided to illustrate just how much control the "content" 
industries have over politicians.  THis is not about collusion with certain 
sponsors. It is about protection from real competition.

You seem to believe that just because the Internet and OTT services CAN deliver 
the same content as the MVPDs, that they can change the existing business model 
based on the bundling of channels. That is not for the politicians to decide 
UNLESS they make this form of bundling illegal. If they do nothing, any move by 
the FCC to force the media congloms to make their content available to OTT 
services will simply result in yet another group of middlemen selling bundles, 
OR the ability to buy specific channels at prices that will NOT be competitive 
with the bundles.

>>  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.
> Sure it does, Craig. It says that the center of mass is no longer theirs. 
> Just as it was not in the early days of CATV, when everyone tied into their 
> isolated nets via NTSC analog receivers. The use of IP brings us back to 
> that. Where the center of mass is not something the MVPD can control. **So**, 
> the CE companies should have figured that out, instead of begging to collude.

How bizarre:

Just because the time has finally come that the MVPDs are willing to allow 
third party devices to connect to their networks, does not mean that "the 
center of the mass has shifted." If anything, the reality that the cable and 
telco TV systems have the best pipes into our homes strengthens their position. 

Sorry, Bert, but the Internet is not ready to scale up to take over delivery of 
TV to the masses. And as it does scale up, these same industries are still 
going to control the customers via the provisioning of broadband. The 
"important bits" that theMVPDs control are the content that you can only access 
via their bundles; delayed access via OTT services may be adequate for you, but 
you represent a very small minority of U.S. homes. >85% of U.S. homes still 
subscribe to an MVPD or a subscription OTT service (some subscribe to both).
>> 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).
> This the same Comcast that made a huge deal about this overdesigned new 
> proprietary STB/PVR combo, yes?

Did you see what it was running on?

Do you know what is inside that box? 

Their content is already available to subscribers via second scree devices, and 
the demo looked like it was a preview of the next generation of Apple TV.

> I already commented on that. If you're now saying that this is a short-term 
> stopgap measure, I might agree. That wasn't your argument before, though. 
> Comcast could instead be offering their own web site, with all those same 
> bells and whistles, with DRM, for their customers as well as others across 
> the Web.

I suspect that Comcast and others may continue to lease STBs for their systems. 
It remains to be seen, who is going to be manufacturing these boxes for them. 
But as we saw yesterday with the Time Warner Cable announcement, the MVPDs are 
warming up to the idea of opening up their networks to a range of competitive 

Just for the record, when the government broke up Ma Bell and mandated that 
they allow third party devices to attach to their networks, it did nothing to 
open up the market to competing telephone services. It simply made it possible 
for anyone to make and sell a phone. And history will note, that it only took a 
few decades to reassemble the regional telcos under the AT&T banner. The wired 
MVPDs now provide competitive wireline services, but wireline is dying, as 
everyone rightly wants a phone that they can use anywhere. And look MA…

We have a new wireless Telco oligopoly.

Totally predictable.


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