CBS Wants Dish To Make Their Ad-Skipping Hopper DVR Even Less Useful If They Want Streaming Video Rights

from the just-get-the-hell-out-of-the-way dept

As we recently noted, Dish has announced a new content distribution deal with CBS that's quite the double-edged sword. On one hand, Dish has agreed to cripple the ad-skipping feature on their Hopper DVR for ABC and Disney content for the first three days after a new episode airs. In exchange for Dish making their service less useful, ABC has agreed to drop their absurd lawsuit claiming that ad-skipping violates copyright. ABC has also agreed to loosen up restrictions on streaming content, allowing Dish to potentially offer an "over the top" Internet video streaming service sometime down the road.

This has, of course, resulted in the usual press hype from reporters who don't understand how difficult broadcasters make getting these types of services off the ground (just ask Intel, Sony, Microsoft, Apple, Google, and countless startups). Bloomberg, for example, right after telling readers it's too early to speculate on price for such a service, immediately proceeds to speculate on price for such a service -- claiming a new Dish Internet TV service would only cost users between "$20 and $30 a month."

There's still a lot of things standing in Dish's way -- assuming Dish is competent enough to craft a decent service in the first place. We can't read the contract, so we have no idea what restrictions Disney, ABC and ESPN are going to layer on this new licensing agreement to cripple it to the point of uselessness (oh hi Hulu, didn't see you standing there). Dish also needs to sign on a lot more broadcasters to flesh out a service catalog, something that's not going to be easy. Quickly proving that point, CBS CEO Les Moonves stated at an investor conference he's going to expect Dish to cripple Hopper much more severely if Dish expects a similar deal from CBS:

"Mr. Moonves, speaking at a Morgan Stanley investor conference, said the arrangement is "not quite enough for us." Several broadcasters, including CBS, say increasing numbers of viewers are watching TV shows more than three days after they air, via DVRs or on-demand services. Mr. Moonves has been among the executives pushing for the industry to shift to a model where advertisers pay for seven days of viewing instead of three. He said CBS's carriage deal with Dish expires this year, and he expects to take a different approach than Disney in the negotiations with Dish Chairman Charlie Ergen. "We are going to want to do some different things," he said, noting that Disney has different assets and priorities."

Who knows what kind of demands CBS is going to make, but it's pretty clear the demands will include making the Hopper DVR even less useful, while saddling any streaming agreement with just enough restrictions to prevent it from actually being disruptive. On one hand it could make sense for Dish to tell CBS to go to hell, as the broadcasters losing in court would set precedent that protects ad skipping from copyright claims. On the other hand, doing that would mean yet another over the top disruptive Internet TV service would die in the cradle thanks to myopic, terrified broadcasters.

Filed Under: dvr, hopper, television
Companies: abc, cbs, dish, disney

Dish Cripples Hopper For ABC In Exchange For Internet Streaming Rights

from the tit-for-tat dept

Not long ago, Dish Networks introduced a new DVR called Hopper that tries something rather unique: it actually offers features that make users happy, such as the ability to automatically skip ads (something users were doing anyway). Once again claiming that giving consumers what they want would destroy the TV universe as we know it, broadcasters quickly responded by suing Dish and claiming that Hopper's ad-skipping technology violated copyright. The cases haven't been particularly successful for broadcasters, who've found themselves swatted back by the courts on several key issues.

Now Dish has struck a new long-term programming deal with ABC that will lock down Hopper's ad-skipping technology so it can't be used on new episodes until three days after they air. In exchange, ABC will immediately agree to drop their lawsuit against Dish. It's unfortunate that Dish chose to buckle and make Hopper less useful to consumers, and restricting functionality only acts to make the TV viewing experience even more fractured and confusing than it already is. Which content will ad-skipping work on? Which online streaming service has locked down the exclusive contract for content I enjoy?

On the other hand, a statement by Dish indicates that the company didn't walk away empty handed; they appear to have used ad-skipping as leverage to get broader licensing for an online TV service that may or may not ever launch:

"The extensive and expanded distribution agreement grants DISH rights to stream cleared linear and video-on-demand content from the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of an Internet delivered, IP-based multichannel offering."

As we've covered at length, the highway of Internet TV innovation is littered with countless corpses of failed Internet TV efforts, none of which could secure the licensing rights to make their ambitions work. While it's important that Dish has secured some Disney licensing rights, it's ridiculous that the company had to make useful hardware less useful in order to do so. Still, in a statement Dish CEO Joe Clayton slathered ABC with a heaping helping of platitudes:

"The creation of this agreement has really been about predicting the future of television with a visionary and forward-leaning partner. Not only will the exceptional Disney, ABC, ESPN entertainment portfolio continue to delight our customers today, but we also have a model from which to deliver exciting new services tomorrow."

Yes, nothing quite says visionary like suing over a feature that simply helps consumers by automating something they were already doing. If Dish strikes similar deals with their new "forward-leaning" broadcast friends we'll never see the lame broadcast argument that ad-skipping violates copyright truly tested in court, preventing useful precedent for future cases. In that sense, Dish struck a short term deal they find useful, while potentially harming innovation long term.

As for this all being worth it because of Dish getting online streaming rights, we can't see the deal specifics, so it's unclear what kind of obnoxious restrictions ABC placed on the streaming content to prevent Dish's over the top service from being truly disruptive (like broadcasters have done repeatedly with Hulu). There's also nothing that guarantees other broadcasters are willing to follow suit with similar deals, since most of them remain utterly terrified of over the top (OTA) TV. A Disney-only online streaming service would be highly limited, and all consumers got in exchange was a DVR that does less than it did before. Visionary, indeed.

Filed Under: dvr, hopper, television
Companies: abc, dish networks

US Solicitor General's Office, Run By Former Top MPAA Lawyer, Shockingly Sides With Broadcasters Over Aereo

from the it's-the-little-things dept

As the Aereo case is set to be heard by the Supreme Court in April, there have been a flurry of amicus briefs filed on both sides. It's disappointing, but not too surprising, to see that the official position of the administration is to side with the broadcasters over Aereo, arguing effectively that the length of a cord changes the copyright calculation. This position goes against every Aereo court ruling to date, except for one odd ruling in Utah. That the US government would take this position isn't too surprising. After all, the Solicitor General of the US (whose office prepared this brief) is Donald Verrilli -- who probably would have been representing the broadcasters in this case if it had happened a few years ago. For years, he was Hollywood's go to litigator for their big copyright cases, including the infamous Grokster case, in which he convinced the Supreme Court to create a new "inducement" standard for infringement. Technically, Verrilli "recused" himself from this filing, but what were the chances that the folks who report to him were going to file a brief that sided against the organization most likely to employ Verrilli once he leaves government service?

The key issue in the case is whether or not Aereo is retransmitting to the public. As we've explained multiple times, Aereo's setup is technologically insane, but legally sensible, given just how stupid copyright law is today. Because it's recognized as legal that you can place shift legally accessible TV (a la a Slingbox) and that you can watch over-the-air TV via a personal antenna (duh), Aereo has set up "individual antennas" for each customer, connected to the equivalent of a Slingbox, such that you can "subscribe" and get access to over-the-air channels. It's technically no different than you setting up an antenna and Slingbox in your home, except that the distance of the cable between the antenna/Slingbox combo and your TV is much longer with Aereo (across the internet) than in your home. However, broadcasters and other supporters of them (now including the US government) argue that this longer cable somehow, magically, turns this individual antenna into a public broadcast for which Aereo should be expected to pay ridiculously steep retransmission fees.

The arguments put forth by the US government are basically a carbon copy of what the broadcasters are saying. They completely reject the length of the cable argument by basically saying that, what really matters, is how this might undermine the retransmission fees broadcasters get. Specifically, they say that it doesn't matter that people at home can create their own Aereo legally, what matters more is that Aereo looks too much like cable retransmission:

Respondent observes that, from the subscriber's perspective, respondent's service provides substantially the same functionality that consumers could obtain by purchasing equipment for their homes. In enacting the 1976 Copyright Act amendments, however, Congress overrode decisions of this Court that drew on the same analogy. In applying the Copyright Act in its current form, the more important functional equivalence is between respondent and the cable systems that the 1976 Congress brought within the Copyright Act's purview.

But that totally and completely ignores some pretty significant differences, especially around how Aereo has an individual antenna for each user, as well as making sure that there's an individual copy made. That was not the case at all with cable systems.

While this filing is careful to state that it is not trying to undermine the important precedent set in the Cablevision case (which said a remote DVR controlled by a cable company is legal), which was a key reason why the lower courts sided with Aereo, it's important to note that back when the Cablevision case was up for appeal to the Supreme Court, Verrilli's predecessor sided with innovation over claiming infringement. It's just now that the Solicitor General who has a long history of representing Hollywood is in control, that the administration seems to be happy to side with copyright maximalism, over innovation. The one potential saving grace: the prior solicitor general who sided with Cablevision and against the broadcasters? Elena Kagan... is now a Justice on the Supreme Court.

Filed Under: broadcast, solicitor general, streaming, television
Companies: aereo, mpaa

Australian Broadcasters, Netflix Competitors Pout Because Netflix Hasn't Banned VPN Users Yet

from the give-the-people-what-they-want dept

Australia has a long and proud history of seeing higher copyright infringement rates, thanks in large part to the country's failure to offer up legitimate, affordable streaming video options. With Netflix officially unavailable Down Under, many viewers there have taken things into their own hands and have started using VPNs to mask their location and subscribe to the service anyway. Cue the rising hysteria from both broadcasters and Australian Netflix competitors, who insist that something has to be done about this flagrant outrage. They're helped by regional paper The Australian, which suggests that these paying users are "pirates":

"Highlighting how the TV networks view these people, an article this morning in News Corp-owned The Australian went as far as labeling subscribers as “pirates”, even though they are paying for the service..."There is concern at local networks about the growing impact of the US company flouting international regulations by accepting payments from Australian credit cards, despite maintaining a geo-block that is easily bypassed by VPN manipulation or spoof IP addresses,” the paper said."

Granted, if companies were delivering what users wanted, this wouldn't even be an issue. In fact, that would seem to be a much easier solution to this "problem." Instead, broadcasters and Australian streaming provider Quickflix (HBO is an 8% owner) seem to think it would make more sense to force Netflix to ban the use of a very common technology that has innumerable uses well outside of just skirting regional limitations. Some users, for example, are finding that VPNs are one (albeit sometimes inefficient) way to bypass some of the annoying new peering feuds erupting here in the States. Still, Quickfix thinks somebody really should force Netflix to start blocking VPNs before the country starts falling apart:

"Quickflix chief executive Stephen Langsford has accused US online streaming service Netflix of turning a blind eye to copyright infringement in order to get a free ride in Australia, as competition heats up in the TV and movie streaming market..."The studios have licensed Netflix to distribute content on particular terms in the US and other larger markets, they haven’t licensed Netflix for Australia. I have no doubt that the studios are in discussions with Netflix about VPNs because it is blatantly in breach of terms and Netflix is essentially getting a free ride into Australia."

It seems like only a matter of time before proxies and VPNs see a renewed focus as public enemy number one by the entertainment industry. Most of the world's graduated response programs, including ours here in the States, can't detect users who are using proxies and VPNs at all. With Australia now contemplating a graduated response program of their own, you can expect the vilification of VPNs to ramp up quickly, even though any laws restricting their use would be met with swift and steep opposition.

Netflix hasn't stated why they've yet to head to Australia yet, but it's either because they want to prioritize larger international markets, or they're having a hard time securing content licensing from Australian broadcasters. Until Netflix does show up Down Under, Australian cable operators like Foxtel are engaged in the kind of brilliant anti-piracy maneuvers we've grown used to, such as locking down HBO's Game of Thrones in an exclusive streaming and download arrangement. Surely that will stop copyright infringement of what's become the most pirated show on the Internet, right?

Filed Under: australia, streaming, television, vpn
Companies: hbo, netflix, quickflix

Broadcasters Warn Supremes Of The Innumerable Non-Existent Horrors That Will Befall Everyone If Aereo Wins

from the your-threat-is-not-even-remotely-scary dept

As we've noted for some time, broadcasters have long argued that if they're not given what they want they're sure to go out of business, even if the evidence never actually supports that. Their latest incarnation of that has been in heavy rotation during their battle against live TV streaming service Aereo, with broadcasters arguing that if Aereo is allowed to survive, they'll pull all of their broadcast channels from over the air and move them to paid cable tiers. As we've stated previously they should go right ahead and do that, as the publicly-owned airwaves they're currently using can certainly be put to good use. Also, enjoy the wrath of sports fans (and the oodles of politicians who'll side with sports fans to earn political brownie points) when you attempt to do that.

Gearing up for their Supreme Court showdown with Aereo on April 22, broadcasters have once again gleefully pulled out this empty threat. Hoping to convince the court's eight Judges (Justice Alito recused himself, possibly due to stock holdings) an Aereo win would be disastrous, the petitioners proclaim that free "quality" programming will cease to exist:

"The TV broadcasters reject Aereo's conclusion that cloud computing and other novel technologies could be at stake, but they do raise dire warnings about what might happen should the Supreme Court rule in Aereo's favor. As the brief states, "Indeed, if that is the world in which broadcasters must live, then they may be forced to reconsider whether they can afford to continue making the same quantity and quality of programming available to the public for free in the first place."

The debate over the word "quality" aside, note the pretense again that they they would struggle with finances, ignoring the fact that CBS posted record earnings last year and even CBS's CEO recently admitting that an Aereo win would have no serious impact on earnings. Perhaps scarier is this dire warning included in the brief by the petitioners:

"If the transmit clause could be circumvented through the simple expedient of simultaneously supplying each user with a distinct transmission generated from a distinct copy, then cable and satellite companies could potentially devise Aereo-like workarounds of their own, and in the process render the transmit clause a dead letter."

Wow, that would be rough, huh? Cable and satellite operators giving subscribers more flexible options for content that might in the process make a customer or two happy? Could even Lovecraft or Dante forge a more horrifying hellscape? Is there any point in living?

Filed Under: broadcast, retransmission, streaming, supreme court, television
Companies: aereo

Comcast Paying Minority Rights Groups To Parrot Merger Support

from the repeat-after-me-if-you'd-like-to-keep-your-funding dept

I've already talked a little bit about the media sound wall Comcast will construct to try and convince the press, public and regulators that their planned $42 billion merger with Time Warner Cable is a wonderful idea for everyone involved. Like any company with a healthy lobbyist budget, Comcast pays think tanks, consultants, PR reps, editorial writers, various front groups and a myriad of other policy tendrils to all repeat the same mantra: whatever it is we want will be great and you have nothing to worry about. As we saw with AT&T's attempted takeover of T-Mobile, anybody and everybody who wants their Comcast money to keep flowing will come out in support of the deal, whether it's rural Texas school associations, the U.S. Cattlemen's Associations or even "balloonists."

One specifically important cornerstone of these lobbying efforts involves paying minority advocacy groups to parrot your positions, given lobbyists appear to believe that these groups in particular provide an important additional layer of artificial, grass roots legitimacy to your entirely-artificial support base. AT&T's T-Mobile deal, for example, received ample praise from groups like the The Hispanic Institute, the Latino Coalition, and the Minority Media and Telecommunications Council, all of which took funding from AT&T while insisting that less competition would bring great things to American consumers.

Comcast's lobbying approach for the Time Warner Cable merger isn't all that different. The New York Times notes that the company is paying groups like The United States Hispanic Chamber of Commerce to sing the praises of Comcast's latest effort to get more powerful:

"...what the Hispanic Chamber of Commerce did not mention in its statement praising the transaction was that it had collected at least $320,000 over the last five years from Comcast's charitable foundation, which is run in part by David L. Cohen, the Comcast executive who oversees the corporation's government affairs operations...And (top Comcast lobbyist David) Cohen adamantly rejected any suggestion that the corporation's history of supporting nonprofit groups and charities, particularly groups that serve African-Americans, Latinos and Asians, was motivated by a desire to build political allies."

The usual defense from companies is that this is just us being altruistic, even though the company involved usually sends these organizations an e-mail with a list of talking points they'd like to see parroted. Losing funding if you don't play along is usually strongly implied:

"But even one of Comcast's own lobbyists said in an interview that the relationship with some groups had a transactional flavor. "If you have a company like Comcast that has been with them for a long time and continues to support them, they will go to bat for them," the contract lobbyist for Comcast said, asking that he not be named because he was not authorized to discuss the matter publicly, "even if it means they have become pawns."

The sad part is that these organizations obviously wind up rooting against their constituents' own best self-interests in the quest for continued funding. An AT&T acquisition of T-Mobile, for example, would have killed off T-Mobile and driven prices up, neither of which would have helped minorities (or anybody else). While the Comcast deal is different because Time Warner Cable and Comcast don't compete, the deal could still result in greater vertical integration, a tougher time for small and minority-owned media businesses, and the imposition of data caps and broadband overages across a broader overall market area (aka: higher prices).

Combine this sound wall of artificial support with the oodles of money Comcast is throwing at Congress, The President, and the FCC, and it starts to get easier and easier to buy approval for bad ideas. That's before you even point out that former FCC boss Michael Powell now runs the NCTA, the cable industry's biggest lobbying organization, Former FCC Commissioner Meredith Attwell Baker now lobbies for Comcast, or DOJ Antitrust Division director William J. Baer represented NBCUniversal during Comcast's acquisition. Did I mention Comcast's David Cohen is a big Obama fundraiser?

While this greasy wheeling might make the deal get approved, it doesn't change the truth that your argument or idea isn't very good if you have to pay people to support it.

Filed Under: advocacy, cable, lobbying, merger, television
Companies: comcast, time warner cable

Broadcasters Get Aereo Shut Down In Salt Lake City and Denver

from the you-can't-win-'em-all dept

A string of Aereo legal wins has come to an end, with US District Judge Dale Kimball of Utah imposing a preliminary injunction (pdf) on Aereo's existing operations in both Utah and Colorado. The injunction covers all of the 10th circuit, so it will technically prevent any future Aereo operations in all of Wyoming, New Mexico, and Oklahoma as well. Aereo currently operates in ten markets, but in recent weeks has bumped into some unspecified capacity issues in both New York and Atlanta (I've asked, they won't get specific about what kind of capacity issues they've faced).

Kimball wasn't particularly receptive to Aereo's claims that their tiny OTA antennas -- one rented to each Aereo subscriber -- allow the live streaming TV company to bypass the "Transmit Clause" of the 1976 Copyright Act:

"Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs’ programs. Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo’s device or process transmits Plaintiffs’ copyrighted programs to the public."

Similar legal assaults by the broadcast industry had proven unsuccessful in Boston and New York. Needless to say, broadcasters like Fox were pleased by the result, calling the ruling "a significant win for both broadcasters and content owners" that will "prohibit Aereo from stealing our broadcast signal." Riding on Aereo's New York win by using the Cablevision precedent, the battle now heads to the Supreme Court for the real showdown on April 22. Should Aereo win that, broadcasters could face a number of similar services offered by cable operators eager to bypass soaring retransmission fees.

Filed Under: broadcast, colorado, new mexico, oklahoma, retransmission, television, utah, wyoming
Companies: aereo

Retrans Fights Get More Annoying As Cable Hits Users With Sneaky Below-The-Line 'Broadcast TV' Fees

from the nickel-and-dime dept

If you hadn't noticed (read: are a cord cutter), the battle over higher retransmission fees between broadcasters and cable operators has grown immensely more annoying for consumers, with last year seeing a record amount of content blacked out as the two sides fought over rates. Consumers are usually put in the middle of the battle, with broadcasters blaming pay TV companies for the breakdown in negotiations and vice versa; both sides then bombarding consumers with calls or on-screen tickers insisting they act immediately and call the other guy to complain. We've seen these fights evolve over the years to include the blackout of online content as well, with the Time Warner Cable and CBS fight last year reaching entirely new levels of annoying.

After the smoke clears, confidential deals are struck, and the pretense of caring about how much consumers are paying fades away, the costs then get passed on to the consumer as the icing on an ugly process. Normally, cable companies include these hikes in the cost of doing business on your final bill. However, a growing number of cable companies are embedding a portion of these hikes in below the line fees, allowing them to jack up your cable bill, but still advertise the same price. Comcast, for example, recently started charging users a $1.50 Broadcast TV Fee that the company insists is part of improving your entertainment experience:

"At Comcast we are committed to constantly improving your entertainment and communications experience, and we continue to invest in making your services even better. As we make these and other investments, we periodically need to adjust prices due to increases we incur in programming and other business costs. Among these price changes, we have itemized a Broadcast TV Fee in order to identify some of the rising costs or retransmitting broadcast television signals. In recent years, the cost of retransmitting broadcast television signals has increased significantly, and going forward we want to address these increasing costs through a separate itemized charge."

While I know massive multi-billion-dollar new skyscrapers don't build themselves and the $45.2 billion needed for new mergers doesn't grow on trees, I was always under the impression that part of the primary cost of doing business in the cable industry was programming -- and as such, that should be included in the normal price of service (the same service broadcast and cable raises the price of sometimes as often as twice a year). Comcast certainly isn't alone in this practice; Charter has imposed this kind of charge for more than a year, and AT&T this week notified U-Verse customers they'll now be paying $3 per month instead of $2 for the fee. If you're on Time Warner Cable, you should be getting a notice soon that they're adding the fee as well.

Again, burying ordinary costs of this kind is a common tactic in the cable TV industry, and it's a form of false advertising regulators seem to believe is all in good fun. It's useful if you're a cable operator interested in jacking up prices while keeping advertised prices the same, bumping prices on people you've convinced have signed "price lock guarantees," or raising rates on users who are otherwise paying a fixed-rate under contract. It's also useful if you want to trot out statistics showing how cable rate hikes are slightly less than they actually are. Or, as Comcast phrases it, ensuring you have a really fantastic, compelling television "experience" and are getting the utmost "value" for your entertainment dollar. Enjoy!

Filed Under: broadcast, cable, retransmission, television
Companies: cbs, time warner

The Nation's Entirely Objective Think Tanks And Consultants Want You To Know Comcast Deal Is Secretly Awesome

from the my-wooden-unreasonable-arguments-are-entirely-my-own dept

Comcast faces obvious regulatory and public relation obstacles in getting its $45.2 billion acquisition of Time Warner Cable approved, given concerns about vertical integration and scale. Comcast last week got a running start on selling the deal to regulators by insisting that allowing them to get absurdly massive would somehow be "pro-consumer." Comcast's other big argument last week appeared to be the idea that the larger company couldn't possibly use its larger size as anti-competitive leverage, because Google Fiber (with all of its 1,000 or so users) and Hulu (which Comcast co-owns) would somehow keep Comcast honest.

If you watched AT&T's ham-fisted acquisition attempt of T-Mobile, you know that this is just about the time when Comcast's lobbyists, PR agencies, "non-partisan" think tanks, consultants and various other policy tendrils all work to create a massive media sound wall insisting that the deal will be really wonderful for consumers. Most reasonable people generally understand that an already universally-despised company with a history of anti-competitive behavior getting much more powerful isn't a great thing, regardless of their beliefs. But buried among the massive wash of complaints about the deal are some folks who'd like you to know the deal is secretly awesome. And not just kind of awesome, but a-benefit-to-humanity-the-likes-of-which-you-may-not-see-again awesome.

Enter Scott Cleland, a "consultant" who has built an entire career testifying as an objective telecom analyst in DC while taking money from ISPs and Microsoft to smear their competitors via incoherent arguments (usually directed at Google, as we've illustrated previously). Cleland offers his two cents on the amazing deal:

"Not only is the Comcast-Time Warner Cable merger pro-competitive, via the improvement of services and innovation for millions of Americans and many thousands of businesses, this merger also is occurring in the most competitive communications marketplace with the most consumer choices ever. It should be approved"...

"Since the last cable-to-cable mergers were approved about a decade ago, every single facet of the communications marketplace has become dramatically more competitive, dynamic, and innovative.”

Yes, when two of the worst-ranked companies for customer satisfaction -- from the worst ranked industry for customer satisfaction -- in one of the least competitive industries in the country get together -- magic happens. History has proven it. So has your incredibly inexpensive and "dynamic" cable and broadband service.

You'll note deal supporters are quick to (correctly) point out this isn't really about market share or competition (at least in telecom), since Time Warner Cable and Comcast don't directly compete. However, supporters-for-hire like Cleland intentionally ignore how a larger Comcast has even more leverage to use regulatory capture, content licensing deals, and ever-expanding broadband usage caps in a broadband market that's actually getting less competitive as AT&T and Verizon back away from it. It's also worth noting that Comcast's historically-low customer satisfaction rankings are thanks to growing too quickly for customer support to keep pace and a lack of competition, and another deal fixes neither. The deal's problems aren't really about competition (at least in telecom), but size and scale.

Yet the Information Technology and Innovation Foundation, a think tank whose donors include telecom companies and the MPAA (ITIF was a big pusher of SOPA/PIPA), wants you to know that you needn't worry, because a bigger Comcast will mean lower bills for you:

"...the economic benefits of the combined efficiencies and economies of scale will flow to consumers in the form of lower prices and/or higher quality service. Comcast expects to save about $1.5 billion in annual operating efficiencies through the deal. The combined company, which will have 30% of the pay TV market, will also be able to drive harder bargains with upstream content providers, resulting in savings that will be passed on to cable subscribers."

I'm not sure in what plane of reality the cable and broadcast industry ever passes on savings to you, but it's not the one most of us inhabit. Whether it's modem rental fees, below the line surcharges, soaring cable TV costs, or the ramping up in usage caps and overages, cable broadband is an industry that prides itself on not competing on price. I guess I should note here that Comcast's David Cohen, on a conference call defending the deal last week, stated "we're certainly not promising that customer bills are going to go down or even increase less rapidly." Apparently the ITIF has no problem making that promise for Comcast.

It's always hard to know where the for-hire astroturf ends and genuine-but-just-plain-wrong opinion begins (which is the entire point of astroturf). Enter TechFreedom, a non-profit think tank that, like most such groups, doesn't disclose its funding -- professing its insights are driven solely by its honest Libertarian leanings (perhaps that's even true, I'll give them the benefit of the doubt). The think tank believes the deal will be truly nifty, and consumers don't have to worry about Comcast bullying Internet video startups because Comcast has kindly agreed to keep adhering to the FCC's dead net neutrality protections:

"When Comcast bought NBC Universal in 2011, it agreed to a long list of conditions required by the FCC, including special protections for online video distributors and Net Neutrality rules. These remain in effect even though the D.C. Circuit Court has struck down the same rules in the FCC’s Open Internet Order. The deal will extend these protections to eight million Time Warner Cable subscribers."

Well, no. People crying over the FCC's freshly-deceased net neutrality protections fail to remember (or never knew) that the rules didn't do all that much. They don't really cover wireless whatsoever, and the language of the rules (because it was crafted predominately by industry) allows for all manner of discrimination -- just as long as the carrier uses faux-technical justifications to claim it's for the protection and safety of the network (don't worry, regulators won't check). The rules did restrict outright blocking of competing content and services on fixed-line networks, but generally no incumbent ISP is dumb enough to do that and incur heavier regulation prompted by public outcry. It's also worth noting that most of the conditions attached to the NBC acquisition were suggested by Comcast itself and, like the neutrality rules, don't do much of anything by design.

TechFreedom goes on to pretend the deal will make service better and lower consumer bills (again, as if rate reductions ever happen in the cable industry), before finishing its love letter to industry with the claim that it's not broadband carriers that are responsible for limited sector competition -- it's all the local governments' fault for being jerks:

"Those concerned about broadband competition should focus on the real problem: barriers to entry created by local governments and the pricing of rights of way and pole attachments,” added Szoka. “That’s what’s made it hard for companies like Google, Verizon and Centurylink to build fiber networks. Last summer, Szoka explained in Wired that it’s local governments, not cable companies, that are to blame for hampering broadband competition."

While I knew that towns and cities could occasionally be annoying in TV franchise and pole attachment negotiations, I was just as shocked as you to learn that awful protectionist bills write themselves, politicians bribe themselves, and you pay $70 for a 3 Mbps DSL line because your Mayor is mean. I'm equally amazed to learn that mediocre, over-priced broadband isn't the product of limited competition, regulatory capture or myopic investors too short-sighted to wait for investment returns, but entirely because of the villainous machinations of Billy and Janet Burbit on the Podunk town council. Nefarious, indeed.

For the record I do think the deal could bring a few small improvements to some users. Comcast might be an upgrade for users in markets where Time Warner Cable has historically been even worse at providing either faster speeds or improved television services and set top boxes (looking at you, New York City). It's again those Comcast usage-cap "trials" where my attention is fixated, as all the upgrades and promises in the world don't matter if Comcast insists on arbitrarily throttling the pipe to the detriment of smaller businesses and startups. Deal supporters like to insist regulators will crack down should this happen, but so far regulators have dumbly nodded in agreement that usage caps and per gigabyte overages are just "creative pricing innovation."

Over the next few months you'll start to notice a pattern of editorials popping up in papers and on websites around the country. They'll all cling to the same talking point insightful logic, with none of the outlets noting any author's financial ties to industry. Be aware that these individuals and groups, no matter how specious, wooden and incoherent their arguments might be, are simply looking out for your well being as consumers because they're good people. That said, Comcast might want to tread carefully. Part of the reason the AT&T/T-Mobile deal put a bad taste in regulators' mouths (aside from it being based entirely on lies, totally unnecessary and reducing competition) was AT&T's hubris in making pretty much any bizarre claim they wanted, from the idea that reducing competition increased competition, to the argument that the inability to acquire T-Mobile would harm children and make the Internet explode.

That's not to say the Time Warner Cable/Comast merger isn't still totally awesome. I'm just saying that those who want the deal to succeed (whether you're paid to take that position or not) might just want to dial back the bullshit just a tad this time around.

Filed Under: acquisition, cable, television
Companies: at&t, comcast, hulu, time warner