Sunday, December 6, 2015

Brand X

Does a pro-Title II decision hinge on Brand X?  It might!  In the 2005 case, NCTA et al. v. Brand X Internet Services et al., the Supreme Court ruled that the FCC has the authority, under the 1996 Telecom Act, to decide if broadband is an information or telecommunications service.  At the time, the FCC ruled that broadband was an information service.  Ten years later, in its February 2015 Open Internet Ruling, the FCC changed its position.
 
And, so, what a difference a year and a politically-influenced change of heart makes. 

In Verizon v. FCC (2014), the plaintiffs were victorious in shooting down efforts to impose the conduct rules against blocking and unreasonable discrimination because the Court determined that the Commission could not impose public-utility regulation on an information service. 

On Friday, the issue of net neutrality was once again front-and-center.  This time it was in Court of Appeals of the District of Columbia.  The three-judge panel heard arguments for and against the FCC’s decision to reclassify broadband internet service (fixed and mobile) as a common carrier under Title II of the Communications Act and therefore subject to utility-type regulation. 


It is likely that the Court will affirms the FCC’s authority to classify broadband as it sees fit.  Regulation will follow as the Commission believes that “broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.” (Verizon v. FCC, 2014)

Negotiating in good faith?

The media marketplace has changed significantly over the past decade, including more consumer choices for how, where, and when we watch video programs.  Content has always been king, but with alternative distribution channels available (e.g. internet, mobile), even more power has shifted to broadcasters in retransmission negotiations.  Without surprise, distributors are none too happy and are trying to wield their considerable influence with the FCC to get things changed….all under the guise of protecting the interests of consumers. 

So, while the number of program disruptions resulting from retransmission disputes have increased in recent years, without that threat and reality, we have to ask: who would be better off?  Maybe consumers would be in the short-run.  But, they have choices and could ultimately take their business elsewhere.  MVPDs, on the other hand….

Some background:
Section 325(b) of the 1934 Communications Act (as amended in 1992) requires cable systems and other pay television services to obtain a television station’s “retransmission consent” before carrying the station’s signal.  Broadcasters and MVPDs are required to negotiate these market-based agreements in good faith and minimize programming service disruptions (“blackouts”).  Violations of good faith negotiations can be determined as either per se breaches or in the totality of the circumstances.

And, now:
In March of 2011, the FCC released a Notice of Proposed Rulemaking (NPRM) to consider possible amendments to these rules, including providing guidance to the parties on good faith negotiation requirements.   With that NPRM still pending, Congress directed the FCC in the STELA Reauthorization Act of 2014 to begin a review of its totality of the circumstances test for good faith negotiations. Also included in the NPRM, released in September, was a request for comment on whether there are specific practices that constitute evidence of bad faith (i.e. preventing online access to programming, banning networks from negotiating on behalf of affiliate stations, and bundling broadcast and non-broadcast programming).


Saturday, November 7, 2015

What's in our best interest?

Included in arguments for regulatory approval of its merger with Time Warner Cable and Bright House, Charter stated that it will comply with net neutrality rules even if they are later found to be illegal on appeal, and will continue to significantly invest in its broadband network.*
   
So, what happens if this merger and future ones are approved?**   Should we believe that we will be better off with fewer providers who may have greater scale and scope to provide all of our communication needs?  Isn’t this what the phone company was decades ago (as a regulated public utility)? 

Let competition thrive!  Both regulatory overreact and further industry consolidation will impede this from happening.



*The National Cable and Telecommunications Association supports Net Neutrality but not Title II reclassification.  (A position I agreed with.)    


**Highly unlikely Charter/TWC/Bright House is the last merger.

Former merger partners have contrasting plans for the set-top box

Within a few weeks of each other, former merger partners, Comcast and Time Warner Cable (TWC), announced different plans for the cable box that subscribers pay hundreds of dollars in fees to rent each year.  Comcast wants to leverage the data captured in those boxes and license it to third parties who are interested in knowing what/how/when we watch video programs.  TWC, on the other hand, is experimenting with getting rid of the box all together and replacing it with an app that interacts with media streaming devices such as Roku.  While both cable providers are among the two most hated firms in America (according to the American Customer Satisfaction Index), if TWC is able to make this happen (and merge with Charter), Comcast may find itself alone at the bottom.  Let’s see what happens!  

wsj.com: comcast-seeks-to-harness-trove-of-tv-data

cbsnews.com: time-warner-cable-lets-lose-the-cable-box

Friday, October 23, 2015

Step 1 in Getting a Cable Merger Approved…Don’t Upset the Little “Guy”

Apparently, a necessary (and maybe sufficient) condition in getting regulators to approve a cable system merger is to have an agreement by the MVPD to carry RFD-TV.  Charter just renewed its agreement to carry RFD-TV.  The rural channel and its parent, Rural Media Group, now support the Charter-Time Warner-Brighthouse merger.   AT&T agreed to carry the channel on its U-verse systems after announcing its plans to merge with DirecTV.  The deal closed this summer. 


Comcast wasn’t so easy to “win over”.  Comcast dropped the channel in some of its urban/suburban markets because of low viewership numbers.  Because of its concerns that the industry’s consolidation trend ignored the interests (and viewing preferences) of rural Americans, RFD-TV asked the FCC to impose rural carriage conditions if it approved Comcast’s merger with Time Warner Cable.  Comcast didn’t acquiesce.  The merger didn’t happen.  

Sunday, October 18, 2015

Another Merger....Everyone Knows the Drill

A few months after regulators approved its $48.5M merger with DirecTV, AT&T, in an October 13th letter to the FCC, raise concerns that the Charter-Time Warner (and Bright House) merger would harm competitors and consumers.  They claim that cable firms, who choose not to compete head-to-head in local markets (see map), will find it easier to coordinate national activities, namely sharing affiliated programming with each other and raising costs to non-cable rivals.*  AT&T claims that:

“Cable companies share common, national rivals in broadband, video, and telecommunications services.   These geographically segregated cable companies therefore have incentives to coordinate their activities to fend off these common rivals and have demonstrated the ability to do so.”

Dish also petitioned the FCC on Tuesday to deny the merger claiming that similar to the Comcast-Time Warner merger, the larger operator could harm online video services (e.g. Sling).

Publicly opposing the merger is what the satellite providers have to do.  (In hindsight, Verizon should have been on record opposing the 2011 AT&T-T-Mobile.)  A more concentrated market helps the remaining competitors.  In the months/years ahead, expect more consolidated in the saturated pay TV/broadband market.  And, expect more weak statements of opposition from competitors.






*While AT&T is now the largest paid TV provider with 26M subscribers, its 5M broadband subscribers is much smaller than the 20M+ subscribers each for Comcast and a combined Charter-TW-Bright House.

Streaming Your Way: The Disutility of Too Many Choices

From the beginning of cable time, we have been “offered” a limited number of programming packages.  And, for most of us, regardless of what package we selected, we were getting channels we didn’t watch.  For decades, we clamored for the ability to select the channels we wanted to watch even when warned by the cable operators that it would cost us more money.  


Fast forward to 2015.  We now have an expanding array of skinny bundles from video distributors/program outlets.  (An incomplete list is below.)   If this is the transition to the new normal of selecting and paying for all channels on demand, I’m not sure we will be better off.  And, it’s not just about the money it’s going to cost us.  It’s about what Barry Schwartz calls the “paralysis of choice”.  (See link to his Ted talk below.)  With so much to choose from, will we become overwhelmed and increasingly dissatisfied?  What is the right number and variety of programming that would make us feel better off?  Does it exist?  Or, are we destined to be unhappy because we long for the good ole days when TV (with a handful of broadcast channels) was free.  


Firm
Genre
Monthly Price
NBC Comcast (Seeso)
Comedy
$3.99
CBS (All Access)
Multi
$5.99
Time Warner
HBO Programming
$14.99
Dish (Sling)
Multi
$20 (includes ESPN, CNN)
Hulu (ABC, NBC, the CW, FOX)
Multi
$7.99 (with ads) $11.99 (w/o ads)
Netflix
Multi
$9.99
Amazon Prime
Multi
$99 per year