FCC 'Probing' Whether Cable Companies Have Sabotaged Internet Video

from the well,-duh dept

Most people realize that the cable and broadcast industry has worked tirelessly to protect its legacy cash cow from disruption. Dish was forced to make its ad-skipping DVR less useful if it wanted streaming licensing rights. Fox, Disney and Comcast/NBC for years kept Hulu from being too disruptive. ESPN sued Verizon for trying to offer more flexible TV lineups. Apple keeps running face first into broadcasters terrified of real disruption with its own TV plans. That's before you even get to cable companies busy capping and metering usage to hurt streaming services, while zero rating their own services for competitive advantage.

Gosh, it's almost as if there's a broad, coordinated, decade-long effort to keep legacy television expensive, barely-competitive, and shitty.

Enter the FCC, which, according to a Wall Street Journal report (registration required), is "probing" whether there's a coordinated effort by the cable and broadcast industry to keep Internet video from truly taking off. Though there's a number of ways the industry does this, the FCC's latest inquiry is focused on cable companies demanding broadcasters not license content to competing streaming services:

"Some evidence suggests the restrictive clauses may have effectively kept many TV programs off the Internet. Several big tech companies have tried to start Internet TV services, but have found it hard to get programming because of the exclusivity provisions. One new online TV venture, Sling TV, a subsidiary of Dish Network, says it suffered months of delay because of challenges posed by the contract clauses.

“When we launched Sling, one of the toughest things [was that] many of the programmers…had conditions in their programming agreements with other distributors that did restrict them in how they could license content,” Roger Lynch, Sling’s CEO, said in an interview."

So yes, some cable operators have demanded broadcasters intentionally limit who they offer service to, and you'd assume that Dish has forwarded something vaguely-resembling evidence to the FCC.

But the Journal report is oddly myopic in its coverage of the issue, vaguely implying that broadcasters like Disney, Fox, et al aren't also part of the problem. Disney for example owns ESPN, which again sued Verizon for upsetting the status quo of bloated, expensive channel bundles. Comcast/NBC took steps to hinder Hulu's growth despite being theoretically prohibited (via NBC merger condition) from Hulu management. Fox, meanwhile, has sued the hell out of any company attempting to do anything to so much as jostle the traditional TV apple cart.

This all comes up now because the FCC is reviewing Charter's attempted merger of Bright House Networks and Time Warner Cable. The regulator is fielding concerns from numerous companies that the merger will create another Comcast with a vested interest in hurting streaming video. Comcast's attempt to acquire these same companies was blocked, you'll recall, because the combined power of a broadcaster, cable operator and broadband company worried regulators (well, that and Comcast was immeasurably full of shit during its sales pitch).

Charter, by contrast, doesn't have the broadcast power of Comcast. And while Charter's customer service rankings are almost as bad as Comcast's, for whatever reason the company doesn't generate the same negative public sentiment, meaning less political pressure on the FCC to block the deal. To try and seal the deal, Charter has even gone so far as to hire respected neutrality advocate Marvin Ammori to help craft a company promise to avoid usage caps and adhere to net neutrality for (an admittedly unimpressive) three years after the deal is signed.

As such you're likely to see the FCC approve the deal, and the "probe" the Journal references is the regulator feeling out just what the conditions should be. Prohibiting Charter from agreements intentionally designed to sabotage streaming video competition might be a start, but it's not going to hinder the broadband and cable industry's primary avenue attack against Internet video: usage caps and zero rating. And so far, the FCC has been utterly comatose in its response to how Comcast and Verizon are using caps to give their own content a distinct marketplace advantage.

It's all well and good if the FCC wants to aid streaming video competition by opening the set top box or thwarting anti-competitive deals, but if the agency doesn't seriously address broadband competition, usage caps and zero rating, streaming video's just going to find itself choked off on the other end of the line. If the FCC wants to help, it can start by "probing" whether usage caps are necessary, whether the meters being used are accurate, and whether it made a mistake when it decided on net neutrality rules that pussy foot around the obvious problems caused by zero rating.

Historically telecom and cable merger conditions imposed by the FCC are sad, mostly meaningless, restrictions volunteered by the companies themselves (which they still often fail to adhere to). The FCC's going to have to dramatically change this historical narrative if it seriously hopes to keep the cable and broadcast industry from waging all-out-war on disruptive streaming alternatives.

Filed Under: collusion, competition, fcc, internet, internet video
Companies: apple, comcast, disney, espn, fox, hulu, verizon