[opendtv] Re: TVE definition
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 5 Aug 2015 08:16:13 -0400
On Aug 3, 2015, at 10:34 PM, Manfredi, Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:
Well, in a sense, it is. The problem isn't that this is all that difficult.
The problem is that it turns upside down and sideways an old model that has
stood the MVPDs well for many decades now. They may become small fish in a
much bigger pond, as opposed to big fish in a small pond.
The pond is already huge. The MVPDs are generating more than $100 BILLION
annually from the TV side of the business. Take a look at the figures in this
report (2013):
http://www.tvnewscheck.com/assets/files/ExO-Winter2014-LoRes-pg6.pdf
Then consider how much they are making from broadband and telephone service.
The size of the pond is likely to remain about the same - consumers are now
looking for ways to trim their TV expenses, or to get more value for what they
are spending. I think we agree that OTT adds some perceived value in terms of
being able to see what you want on a range of devices, without being tethered
to that old monopoly cable.
What I don't think you are taking into consideration is the economic power that
the MVPDs have and their ability to use pricing to remain competitive. They
already pull out an unpublished price list if you threaten to cut the cord, and
they can easily reduce the size and cost of the bundles they sell. The chart I
linked to shows that the MVPDs are spending about $35-40 billion annually on
programming from the content conglomerates and broadcasters. If they reduce the
size of the bundles the cable network costs could decline, or at least remain
stable rather than increasing faster than inflation.
The larger change we are likely to see is the death of many linear cable
networks. This quote is interesting, although things are playing out a bit
different.
http://time.com/money/3658613/cable-tv-unbundle-downside-airlines-a-la-carte-fees/
Back in 2010, New Yorker business columnist James Surowiecki wrote that if
the bundle disappeared, the cost per customer for each channel would soar,
“perhaps on a customer-by-customer basis.” The likely result would be that
loads of channels would go out of business, and that the average customer
would pay roughly the same amount monthly he was paying for the big bundle,
only with far fewer channels.
The bundle is not disappearing, but it may be shrinking anyway. The reality is
that many cable networks - filled with library content - have no purpose in a
world where this content can be viewed on demand without commercials. Good
riddance!
This is what happens when technology changes, though. It was not possible
before, now it is. And the new approach is more competitive, giving the
consumer an advantage, compared with what the old technology allowed.
Not sure about "advantage," but consumers are certainly getting more value in
terms of accessibility and WYWIWYS What You Want Is What You See - a term I
created in the early '90s.
We have seen many technology changes over the decades this list has been
discussing the future of television. Consumers have had more choice, and more
options for consumption. And the amount consumers pay keeps rising faster than
inflation. We could just wind up paying more for less.
Yes, but it's more nuanced than what you say. You are painting with too
broad a brush. A national monopoly can force whatever it wants on customers.
And a handful of regional monopolies can and are doing exactly what you
suggest. So I'm not sure it makes much difference if they are regional or
national.
You mentioned Comcast. Comcast is a local monopoly in most places, because it
uses cable. If it gets a national footprint, it can force its solution on
everyone. If it wanted to retain the walled garden MVPD model, it could drag
its feet forever, and that would be outside any broadband neutrality mandate.
Obviously the regulator are not going to let that happen. But the foot dragging
is also obvious. Change will come slowly.
Whereas if multiple companies could compete everywhere, EVEN WITH a national
footprint, that's not such a big deal. The bad actor loses customers, and
would have to rethink.
We already have multiple companies "competing" everywhere. But they all protect
the business model that is making them money. We will see more national options
soon, but it it not clear that they will have a huge impact on consumer
behavior.
For instance, a bunch of competitive WISPs, each with national footprint,
isn't so bad. Just like, IMO, a bunch of OTA TV station groups, each with
national footprint, aren't so bad either. But it is not practical to offer
multiple competitive wired ISPs everywhere. (Unless you separate the
infrastructure cabling from the rest of the infrastructure, and heavily
regulate that monopoly cable plant.)
Infrastructure is expensive. Both the physical plant and the fees that
municipalities charge for access and pole attachments.that is not going to
change. Wireless could change that picture, but unmetered wireless at 25 Mbps
is nowhere in sight.
So the entrenched oligopolies have considerable resources to remain relevant.
Regards
Craig
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