March 2009 Archives

March 30, 2009 7:48 PM

A La Carte Programming . . . Is the Toothpaste Out of the "Tubes"?

It's rare that I actually notice a policy issue at the same time as everyone else (or at least one other person--but from a very credible newspaper), so I wanted to toot my own horn and note that the New York Times had an article yesterday, and a blog entry by Saul Hansell of the Times around the same time I posted my blog entry last week on the consumer backlash against traditional, high-priced, subscription TV programming.  The Times article notes that, despite the big programmers desire to use the Internet as yet another subscription-bundling opportunity, the Internet has a way of creating unpredictable consequences.  Well, the Cable Show is in DC this week (for the first time in 40 years), and--thanks to the kind invitation of the ever-classy NCTA CEO, Kyle McSlarrow --I am planning to attend (for the first time in more than 40 years).  I've always heard great things about the Cable Show, and I'm really looking forward to it. 

As you might guess, I'm especially interested in whether the topic of Internet-based subscription TV is discussed and how the industry leaders view this issue.  This will probably be the one panel discussion I miss--if it comes up at all!  If the issue comes up, though, I can't promise an up-to-the-minute report, but I might be able to beat my 16 day lapse from when Julius Genachowski was nominated to be FCC Chairman, and when I posted something about it;-)

March 26, 2009 8:02 PM

How Content Integration Has Produced Consumer Welfare Disintegration . . . or How Come Prices Keep Going Up Even with Telco Video Entry?

OK, yesterday's post was all about the relatively-recent propagation of companies with applications, features, or hardware designed to allow the consumer to bypass traditional subscription TV.  Why the effort?  Do I have to throw out the purported Willie Sutton quote? Of course, because--at least to many entrepreneurs and large businesses--this is where the money is.  But why is the money here?  In yesterday's post, I referred to an unsustainable program/programmer-distribution "price spiral."  What I was referring to was the "clubby" kind of way in which large programmers, and large distributors of subscription programming (sometimes the same firms), have reinforced a certain mutually-beneficial co-dependence to the detriment of the consumer.  It's gotten to the point that even new entry--by a Verizon, an AT&T, or other competitor--doesn't reduce prices as much as you'd think.  Why?  Because the programming is so darned expensive!  Why?  Because that's the way the status quo wants it!

The anti-consumer symbiosis goes something like this:  programmers insist on price increases--either outright, or through tying more popular to less popular channels.  This happens on both the "programmer-to-distributor" level (distributor has to take ESPN Classic if it wants ESPN), and on the "distributor-to-consumer" level (MSOs agree to put each other's programming into "expanded basic tier" regardless of its popularity).  Content distributors, led by the regionally-dominant cable MSOs, have been only too happy to oblige with their own price increases, either by reducing the number of channels available on the "basic" tier, or simply by eliminating the basic tier altogether.  No doubt, large programmers and distributors would be happy to continue this happy state of economic hegemony indefinitely. 

Consumers, on the other hand, have not been so happy.  The benefits to the large content providers extend beyond the immediate benefits of higher prices (which are always appreciated), but also have the effect of foreclosing other content competitors, because these same companies--by requiring distributors to carry both the "regular" digital versions of their channels AND the high definition versions, can use the same content to take up at least twice as much bandwidth on the distribution networks.  Thus, large programmers protect themselves from competition from small, independent, programming by effectively "crowding out" valuable bandwidth "shelf space."  This is yet another reason why the firms mentioned yesterday are trying so hard to bypass subscription TV, and deliver video content over the Internet.

For a really enlightening dialogue on the issue of Internet-distributed television/video content, it's really worth it to take a look at the dialogue between Avner Ronen, Boxee CEO, Mark Cuban of HDNet, a subscription TV channel. 

Continue reading How Content Integration Has Produced Consumer Welfare Disintegration . . . or How Come Prices Keep Going Up Even with Telco Video Entry?
March 24, 2009 3:09 PM

Let's See . . . Boxee, Sony, Roku . . . High Priced Content Won't Do

A poor man's Dr Seuss, sure, but Harold Feld already took the best content-related blog title, with "The Fragmentation Games Continue: Cable Has a Plan So Cunning Even THEY Can't Figure It Out".  BTW, Congratulations to Harold on his new position as Legal Director for Public Knowledge. 

The point of this post, though, as the title indicates, is that right now subscription television (with vertically-integrated cable as the price leader) and many large programmers are complicit partners in a vicious, and unsustainable, price spiral that appears to take no notice of, or concern for, the economic plight of average Americans.   According to the FCC, the price of "expanded basic" cable--the package most people buy--has risen by 122% over the past 13 years, compared with the average consumer price index ("CPI") increase of 38% during the same period. (see paragraph 2, Chart 1)  Nevertheless, Emily Dickinson sagely observed, "[p]eople need hard times and oppression to develop psychic muscles."

Why am I going into all this, though?  I'm not really a "media bureau" guy, and I'm by no means an expert on video market regulation.  That said, I think that--in terms of TV viewing tastes--and probably every other type of taste as well--I'm an average-to-below-average kind of guy.  For example, I think "The Ultimate Fighter" on Spike TV is THE best show on television . . . period.  And, despite their disappointing performance against Memphis last weekend, don't take my Comcast-owned Terps away!  Maybe this is why I think that, if even I'm noticing this issue, then other average guys (and gals) are also.  Moreover, if I'm noticing this problem enough to whine about it, then so are lots of other consumers, and lots of other big companies are seeing an opportunity.  Why do I think this is such a big consumer issue for the next FCC?  Because a lot of really big, really smart, businesses are investing a lot of money into devices and software designed to bypass subscription TV.

Continue reading Let's See . . . Boxee, Sony, Roku . . . High Priced Content Won't Do
March 19, 2009 7:26 PM

Julius Genachowski: Congratulations! If You're Going To Be A Bear, Be A Kodiak! (Pt. 2 of 2)

OK, in the previous post, I said I had an idea of some simple steps, and a simple agenda that could put FCC Chair Nominee Julius Genachowski on the path to being a great FCC Chairman.  First, though, I noted that you have to go in knowing what you want to get out, and to resist the temptations to "go big or go home" on some issue that just arrives on your doorstep.  In other words, minimize distractions and stay focused.  So, if you want to be a Kodiak, here's the whole game plan: make your imprint on the agency with your management style and procedures, focus on a couple really hard things (this will also keep the dilettantes out of your hair), and either ignore the noise, or let it take care of itself.


Continue reading Julius Genachowski: Congratulations! If You're Going To Be A Bear, Be A Kodiak! (Pt. 2 of 2)
March 19, 2009 6:53 PM

Congratulations, Julius Genachowski! And now for some unsolicited advice . . . (Pt. 1 of 2)

OK, OK, I'm a little late on the bandwagon-jumping to congratulate Julius Genachowski.  Business Week seemed to know in January that President Obama had selected Mr. Genechowski as the next FCC Chairman.  The other FCC Commissioners issued their statements on the day Mr. Genachowski was nominated, March 3rd; but hey, it isn't official until the last person finds out--and that's usually me.  So, Congratulations! Mr. Chairman-to-be (is that even a term?)! 

For those who don't know, President Obama's nominee for FCC Chairman has an incredibly impressive resume.  Future-Chairman Genachowski is  clearly an expert on telecom law (Supreme Court clerk and high ranking legal advisor to former Chairman Reed Hundt), plus, he understands the business side of a lot of telecom-related companies (venture investor and senior advisor to Barry Diller of Interactive Corp), and he can walk the walk.  Anyone that can demonstrate that they are capable enough to make an impression on a lot of really impressive people (former Chairman Hundt, media mogul Barry Diller, and, of course, President Obama) is obviously the real thing.  Enough said.

Notwithstanding Mr. Genachowski's superlative credentials, I think having a blog compels me to act like kind of like my friend from Brooklyn, who whenever we were watching a James Bond movie on TV, would feel compelled to tell everyone what HE would do in James Bond's situation (e.g., "if dis was me heeya, and da helicoptas was shooting at me, I would just roll back the moon roof in my Monte and start whackin' guys").  So, Mr. Chairman-to-be, I'm gonna tell you what I would do if dis was me.


Continue reading Congratulations, Julius Genachowski! And now for some unsolicited advice . . . (Pt. 1 of 2)