New challengers for Cable, Multichannel

Cable really started having trouble as it transitioned into its third stage - Cable as broadband (see Bates & Chambers, 2004).  A large consequence of this transition was the opportunities digital content and media provided for competition - first through DBS (satellite), then through telco-based broadband/video providers.  The last couple of years has continued the onslaught, with the spread of mobile devices and video streaming that's led to the growth of "cord-cutting", particularly among younger TV content consumers.

In addition to the explosion of competition, the cable/multichannel provider market (which includes DBS and telco-cable services) is having to deal with the growing demand for carriage rights for channels and content - leading to substantial increases in the cost of channels which are inevitably passed through to increased costs for multichannel customers (see Bates, 2014).  While the multichannels consider breaking their bundles, or going "a la carte" (offering single channels to viewers), the online streaming markets have been booming, offering a wealth of content choices for a fraction of the price.  Until recently, though, that has not included live carriage of major networks.

Carriage of major network content actually started a couple of years ago, when the major broadcast networks started making some of their primetime series to audiences through their own websites, multichannel on-demand services, and even some streaming video services.  Then CBS upped the ante, announcing their own subscription streaming service that would greatly expand access to network content, and both HBO and Sony have announced plans that would offer access to their channels and content online, and independent of having a multichannel subscription.  (TV Everywhere also boasts streamed access to cable channels, but require that consumers subscribe to those channels through a multichannel provider).

The degree to which these streaming efforts are impacting the TV marketplace is reflected in the FCC's recent announcement that it's considering revising its definition of multichannel service to include online sites that offer multiple channels or streams.

Still, DishTV's announcement that it will offer US consumers a SlingTV bundle of basic cable channels (without requiring a Dish subscription) for an initial price of $20/mo. is a significant new competitive challenge.  The basic package includes top channels in many niche categories (ESPN, ESPN2, TNT, TBS, Food Network, HGTV, Travel Channel, Adult Swim, AMC, Cartoon Network, Disney Channel, ABC Family, CNN, El Rey and Galavision, as well as access to Sling TV’s video-on-demand library), with three add-on bundles at $5/mo (Kids Extra, News/Info Extra, Sports Extra). And there seems to be a buzz growing about Apple assembling something similar to the SlingTV bundles for its own entry into the OTT market.

The initial problem for the big multichannels is that the basic service plus an add-on or two, provides access to much of the channels desired by a big segment of current multichannel subscribers, but at a fraction of the cost of the bigger bundles of channels that multichannels now offer.  Multichannels will have to respond with similar mini-bundles at competitive prices, or significant loss in customers to cord-shaving or cord-cutting.

Sources - Sling TV Debuts With Major Cable Channels, MediaDailyNews
Cable-TV Desperately Searches for Ways to Stop the Cord-Cutting, The Street

Editted - added pics.

Local TV faces mobile challenge for weather and traffic

As mobile continues to expand, it's challenging two of the key foundations for local TV news: local weather and traffic reports.  Already, multiple free mobile apps offer up-to-the-minute weather information most anywhere, including weather alerts and radar maps to follow storms, zoomable to neighborhood levels.  And unlike local TV news, you can get the report any time you want, and any place (with cell coverage).

(I used weather apps this summer when Dad and I drove across the country - to check storm tracks when the clouds on the horizon looked ornery, and to know when to pull off the road, or choose an alternate route if they looked too bad.)

Almost all smartphones come with built-in weather apps, and many display weather on the opening screen.  A recent survey found that 79% of smartphone users in the 18-44 demographic have their devices with them almost all day.  More specifically, the IDC study found that 89% of 18-24 year-olds are using their smartphones within 15 minutes of waking.  And weather is among the top three categories of importance in using news apps.

Now, the globally popular Google Maps is adding real-time traffic coverage, from recent acquisition Waze.  With the addition of real-time traffic in many areas, Google Maps provides extra functionality to basic mapping and navigation.  But the critical difference here is adding local real-time value in the ability to assess the quickest routes, and avoid road construction and closures.

In the meantime, Google Now is breaking ground in terms of anticipating user wants and needs.  As users build up their profile, Google Now can pre-emptively notify users of traffic reports when they're headed out, and if there are other accidents on the route, notify travelers when they happen.  There's also reports that Google Now is experimenting with adding local news reports to the information it filters through.

The latest Pew State of the Media Report shows that local broadcasters have been increasing the proportion of air time devoted to weather and traffic (29% last year, opposed to 25% in 2005).  Still, the Pew report noted that audience demand for the topics were “ripe for replacement by any number of Web- and mobile-based outlets.”

The massive reach and prominence of mobile devices and apps are impacting how people get news and information.  The ability of major national and international apps like Google Maps and The Weather Channel to provide localized (and increasingly personalized) content makes them at least somewhat competitive with local TV newscasts.  The ability to do so at any time, at any location, and the growing ability to personalize content and delivery provides additional levels of value and service, and over time will likely lead to such apps being the place to go for weather and traffic information.  Local TV news needs to prepare for that eventuality.

Source  -  Local TV facing increasing competition in weather and traffic,  LostRemote
79% Of People 18-44 Have Their Smartphones With Them 22 Hours a Day (STUDY) All Twitter
Always Connected, IDC-Facebook research report
Local Media App Trends: Summer 2013, Stepleader Digital

Battle of Las Vegas

The Las Vegas Review-Journal and Las Vegas Sun both publish daily newspapers in Las Vegas under a joint operating agreement (JOA).  Under the agreement, the two papers share printing and advertising staffs, but keep separate editorial staffs.  The current status of the JOA is unusual; instead of printing and distributing two separate newspaper editions, the Sun is published as a small advertising-free insert within the Review-Journal. The Sun, instead, has shifted its editorial focus to its online version - which has been very successful both editorially (winning several major journalism awards in recent years) and financially.  Earlier this month, the Review-Journal's owners (Stephens Media) reached an agreement with members of the Greenspun family (owners of the Sun) to "release" the Review-Journal from the JOA.

The Sun's editor and publisher, Brian Greenspun, has gone to court to challenge the proposed dissolution of the JOA.  The deal would free the Review-Journal from the burden of printing and distributing the limited insert that is the only print version of the Sun, in return for transferring ownership of the domain name www.lasvegas.com (currently leased to and run by the Las Vegas Convention and Visitors Bureau).  The cancellation of the JOA would leave the Sun without the infrastructure to print and distribute the physical edition of the paper.  The agreement also reportedly includes a non-compete clause prohibiting the production of a print newspaper or dissemination of news online, effectively killing the competition provided by the online Las Vegas Sun.  The deal was accepted by the two younger Greenspun siblings against the advice of Brian Greenspun.

Frankly, the Sun doesn't really need a print presence in Las Vegas - the current daily insert consists almost exclusively of features and is designed to minimally abide by the terms of the JOA.  Whether the JOA parties can unilaterally dissolve the agreement is debatable.  Those that have ended have done so by one of the newspapers folding.  Still, the most troubling part, and the one most likely to form the basis of a successful legal challenge, is the non-compete clause.  By its very nature, the clause is anti-competitive and flies in the face of the intent behind JOAs - maintaining competitive news presences locally.

It would be a shame to kill one of the best and most innovative online local newspapers in America.  I hope a way to let it continue operations will be found.
(And, incidentally, shifting ownership of the lasvegas.com domain name from the newspaper would increase the likelihood of a successful domain name challenge from the city or other entity like the LVCVB - so the promise of big bucks from leasing lasvegas.com may be ephemeral.)

Source -  Las Vegas Sun at Risk of Folding, Wall Street Journal
Las Vegas Sun website

FCC Releases 15th Video Competition Report

Some highlights from the Executive Summary (I'll try to get back with fuller analysis later).


With this report, the FCC has distinguished three types of video channels

1. MVPDs -Multichannel Video Programming Distributors (Cable, DBS, and Telco cable), 
2. Broadcast Television Stations (over-the-air free broadcasting), and
3. OVDs - Online Video Distributors (any service delivering video over the Internet)

Between the last report's data collection (Dec, 2010) and this (June, 2012), there has been a slight growth in MVPD subscribers.  However, cable has continued to lose market share to DBS and Telco cable.

The push for 'TV Everywhere" has grown in the last two years, with an estimated 5.1% of the MVPD audience using it as of Sept 2012.

MVPD systems continue to shift from analog services to digital. Among the top 8 cable MSOs, more than half of their customers receive all-digital service.  DBS and Telco cable are already all-digital.  Larger cable MSOs are also experimenting with switched digital video, where only the channels being watched are transmitted to the home.

Roughly three quarters of US homes can receive and display digital signals; 43.8% have DVR capability; and there is increasing availability of video-on-demand access of recent content.

Less than 10% of US homes rely on over-the-air broadcasting for video access.  In contrast, viewing of video content from online sources (OVDs) is growing, with estimates that more than a fifth of US homes are "Internet-connected" - that is, capable of watching online video on a TV set.  The continued growth of OVD viewing is increasing Internet traffic in peak hours, to the point where ISPs are increasingly considering imposing bandwidth caps.

Source -  FCC Adopts 15th Video Competition Report, FCC report

Too Competitive to Care

 From a New York Magazine piece on the decline and fall of NBC's Today Show comes an anecdote about the bad side of competition.

  Many attributed the decline to Ann Curry - some arguing that she wasn't right for a morning news host, and many others pointing to how NBC handled her firing after it became glaringly obvious that the chemistry between Curry and Matt Lauer was toxic - and that at least one of them had to go.  At that point, fears, contracts, reputations - and particularly the growing success of Good Morning America - made a mess of things. The article makes for some fascinating reading on the inner workings of a disaster in the making.

But for me, the central theme of the piece was the mounting paranoia as Good Morning America supplanted the Today Show as top of the morning show heap.  And this short anecdote captures its essence:

When Robin Roberts left Good Morning America a month later to get treatment for MDS, Curry asked NBC if she could tweet a note of sympathy for the ABC co-host. NBC said no, afraid she was trying to aid the enemy.

That just about sums it up.

Source -  Long Night at Today, New York Magazine

Dish vs. ESPN over fees

Dish is alleging in a recently-filed lawsuit that ESPN violated a provision in its current carriage deal that Dish says requires ESPN to offer the "same terms" for carriage fees that it offered other major competitors.  In other words, Dish thought it was getting a lowest-cost guarantee.  Instead, they allege that ESPN gave Time Warner Cable a better deal on "ESPN Desportes", and allowed Comcast to drop some carriage (thus fees) of ESPN Classic channel in some of its cable systems.

  ESPN argues that the clause applies to the whole carriage package, and it shouldn't be held to minor differences in terms offered for specific network offerings, or where specific market factors create different marketing foci.  And anyway, as one writer quipped -

One key bit information that hasn't been disclosed: How does one TV distributor know the specific details of another TV distributor’s deal? Aren’t those private contracts?

  The significant growth in network carriage fees (and retrans fees) are having a growing impact on cable, DBS, and other MVPD basic subscription fees - and meaningful differences among the competing multichannel providers can significantly impact on the public's preference among providers. I can see why one (DISH) would want to ensure that their competition couldn't undercut their prices by getting a better rate, just as another (Times Warner) would try to get a better deal.  And of course, why ESPN would want to get the highest carriage fees they can get away with.

  I'm not confident that Dish will win this, but they do provide a glimpse at the level of intense competition among multichannel video program distributors.

Source -  Looking To Combat Sports Network Leverage -- Or At Least, High Fees,  TV Watch

What future for cable MSOs?

Today I want to look at the future of cable, considering that cable MSOs are facing a lot of the same changes and issues as the TV networks. 

  The future of cable depends on your definition.  A while ago, I coauthored a chapter on the economics of cable that found that the cable industry in the U.S. had gone through three distinct phases - cable as CATV (Community Antenna TV), cable as TV of Abundance (massively multichannel TV), and transitioning to cable as broadband over the last couple of days.  The future for cable as CATV ended officially with the 1984 Cable Act, although cable as multichannel TV had been transforming the industry since the late 1970s.  Similarly, you could argue that the future for cable as multichannel was dismal after the 1996 Telecomm Act, as the Act opened the way for multichannel competition.  (Actually, DBS started a few years earlier, but the Act removed cable's local monopoly status).  Luckily for cable, there was broadband, and Internet access has been the profitable service for cable systems for the last decade.
  Now, even the cable industry is recognizing that it is broadband digital services, not multichannel TV delivery, that is the future of the industry.

"Clearly the relative importance of the video business has declined over time. I think broadband clearly is becoming the anchor service."  Glenn Brit, CEO Time Warner Cable

You can also see it in Comcast's move with Xfinity, which is essentially a broadband service featuring lots of TV channels - a service that is more like Verizon's FiOS and AT&T's U-verse services than old-style cable over coax.
  Still, that would leave cable MSOs with expensive hybrid systems on the ground, competing with fiber-based telco broadband services on the broadband front, and with those services, DBS satellite services, and IPTV (video streaming over the Internet) for access to TV programs.  The real problem for cable as broadband, though, are two emerging services - LTE and 4G wireless broadband and Google's Giganet overbuild.  Both have the potential to provide faster broadband data service than existing services.
  Most cable as broadband providers set aside around 30 Mbs of bandwidth for data/Internet services, which is split among all online users linked to the neighborhood hub.  They've been pushing the hubs further downline, so fewer customers are sharing, but would need some significant upgrading to offer higher speeds.  Some of the big MSOs have upgraded some systems to 30-50 Mbs (Charter-30Mbs, Time Warner-35Mbs, Cablevision-50Mbs), but still split that bandwidth among active users.  And if you want to get the highest speeds you pay significantly more.
  In contrast, the telco-based services tend to use DSL-based approach, which provides each user with dedicated bandwidth.  The advertised speeds of these tend to be lower than what cable offers, but remember that cable splits that bandwidth among a number of users.  Thus, the actual speeds that telco-based services provide often can end up being faster, and the service more reliable.  Depending on what kind of DSL service is offered, between 10-30 Mbs of dedicated bandwidth is available.  Telco-based systems also charge more for higher bandwidth availability/speeds.
  The latest report from the FCC shows that the current network/ISPs are doing a good job at actually reaching advertised speeds.  Also that users are moving to higher bandwidth offerings, past the point where you have the speed to stream HD video programming in real time (that's about 10 Mbs to be safe).
  While those speeds seem high, 4G and Google's fiber networks promise significantly more. There's currently a wide variety of 4G mobile broadband systems under development. As they're emerging, here's what the technical standards call for in terms of broadband bandwidth: HSPA+ provides 20-672 Mbs download speeds; Mobile WiMax can provide 37-365 Mbs; LTE provides 100-300 Mbs (LTE-Advanced can handle up to 1 Gbs (1000 Mbs)); and even weak sister MBWA provides for 80 Mbs.  All of these are similar to cable's offerings in that these numbers reflect total bandwidth available to be shared among users.
  If you've got LTE service available, you've got twice the bandwidth/speed of the best that cable and telco-TV land-based services currently offer - at least until the local node gets clogged with users.  And most of the upgrades to 4G are building to the high end of data bandwidth standards, so 4G mobile broadband users will see access speeds 2-30 times faster than current land-based network offerings.  And then there's Google's Giganet fiber network.  Google's pilot fiber network in Kansas City promises dedicated Gigabit access speeds (1000Mbs), a Terabyte of Cloud storage, and provides a free Google Nexus 7 tablet as a remote control (in addition to a rapidly expanding range of TV networks).  That's 20 times the bandwidth / speed currently available from traditional cable and telco based ISPs, for about the same price. It's also 2-10 times the capacity that 4G mobile broadband offers.
  What 4G and Giganet services provide are the speeds that allow multiple users of the ISP account to watch separate HD-quality video streams. If 4G services can offer viable flat rate pricing, this is likely to speed up the move to Internet video streaming as a significant source of TV viewing.  Amazon's already offering flat rate pricing for LTE service on its top Kindle Fire HD model ($50/yr for 250 Mb per month) - which will encourage others to follow.
   TV watching is already shifting to Internet video delivery (as shown by most media use research, and the booming Netflix, Hulu+, and Amazon Prime subscriber base), but bandwidth and pricing become limiting concerns.  If viewers can get bandwidth capable of handling one or more HD video streams, at a price that doesn't make them pause and wonder if the program they want to watch is worth the added data fees, the transition to online delivery will speed up.  Critical to that perspective is flat rate pricing, like what cable offers - access to the programming you want for a flat monthly fee.  Viewers are less likely to shift to online delivery if they have to wait too long to start watching, or if they're worried about exceeding caps and/or the added cost of the program.

In sum, cable MSOs face increased competition, and may soon be relegated to the less valuable and attractive alternative for broadband services - the aspect they're embracing as the future of cable MSOs. A combination of technology and pricing strategies are at play. Within the next year or so, cable broadband speeds will be surpassed by mobile 4G and pure fiber networks.  Without yet another significant and costly rebuild of their systems, they're increasingly likely keep losing subscribers to alternative broadband services.  In addition, the trend among cable MSOs has been to shift from flat rate pricing (without caps) to pricing with caps and usage-based pricing.  That's not what users prefer, especially those considering shifting their viewing to online sources.
  Another key concern driving cord-cutters is the rising cost of multichannel video and pay TV.  Here, all MVPDS are hostage to rising carriage fees from cable networks and local stations.  With full bundling, these services are quickly reaching the point where subscribers are wondering if the cost of the whole bundle is worthwhile for the 6-10 channels that they actually watch.  If cable, in particular, unbundles channels, that can have a significant impact on their local advertising rates and revenues, as well as reduce subscriber revenues.  In addition, unbundling could accelerate the move online, with users finding that they can get much of what they want from a few fairly low-cost services.
  The FCC's not helping with their current investigation into Cable MSO's data caps and pricing strategies, and the push of some public interest groups for "Network Neutrality".  Analysts fear that fear of FCC action in both areas may accelerate the shift to usage-based pricing to avoid antitrust concerns, which could push broadband subscribers, particularly online video watchers, to shift to other options.

  Historically, cable's been fairly slow to innovate.  Expansion of channel capacity has often been held up due to the need to amortize existing network investment, and the cost of upgrades.  And while cable system operators were quick to offer Internet-access once the upgraded system permitted, they've been slow to add other digital Internet based services (IP telephony, home monitoring, videogaming platforms, etc.), even when projections suggested they'd be highly profitable.  Yes, a large part of the delay in offering telephone services was a section of the 1996 Telecomm Act that let local phone companies offer video services only after local cable offered telephone services (encouraging local systems to delay offering telephone services in order to keep telcos out of their market).  But that's just one case.  Most of the delay is likely due to the same line of thinking that created problems for newspapers and broadcasters as their industries evolved and changed - they saw themselves as in the "cable" business - as a multichannel TV carriage system - not as a broadband digital networking service.
  Well, as the statement from one cable MSO executive said - they recognize that broadband's the business they're in now.  Too bad they didn't realize it before they were on the way to become the more limited, more costly, and less valuable, option in that rapidly changing market.

Sources  -  I've Always Thought Cable Companies Would be Fine When TV Collapsed, But They May Actually Be Screwed..., Business Insider blog
Cable Needs to Fear Less, Innovate More, MediaPost blogs
Time Warner Cable Head Says Company Future Is Broadband, Not TV,  ReelSE
Google Fiber Goes Live, Google Enters TV (MVPD) Biz, Media Business & Future of Journalism blog
A Report on Consumer Wireline Broadband Performance in the U.S., FCC Report, July 2012

FCC to move on cross-ownership

The 1996 Telecommunications Act requires the FCC to periodically its ownership rules, primarily to consider whether the existing limits can be relaxed or dropped.  The FCC's actually a cycle or two behind schedule, due in part to the inevitable legal challenges that surface if they change any of the previous rules.  Still, the word in DC is that the FCC is planning on releasing a formal Notice of Proposed Rulemaking on ownership rules before the end of the year.  That's normally the last step before formally adopting the proposed rule changes.
  The last formal proposals included dropping the rule against owning a TV station and radio stations in the same market, and loosen restrictions against owning both TV stations and newspapers in the same market.  The FCC is expected to leave its local market ownership limits for radio and TV as they are.  And if past history is any indication, they might propose some minor increases to the current national ownership limits for radio and TV.  The FCC has also floated a proposal for dropping the national ownership limits for cable - but the negative reaction to that proposal at that time suggests that they may try raising cap limits substantially rather than dropping them entirely.

  While there's likely to be the same hue and cry from various interest groups to any proposed changes that relax ownership limits, I have to say that they make sense - particularly if the rationale is to preserve existing channels and service.  The FCC's worked hard to keep local radio stations on the air, and with the coming economic changes facing smaller TV stations, allowing radio-TV crossownership in local markets might keep stations on the air.  On the other hand, relaxing TV-newspaper ownership limits (in top markets) are designed more to keep newspapers alive, letting TV station profits help subsidize failing newspapers.  As for concerns about concentration, national caps for broadcasters were mostly irrelevant anyway, as stations operate in local markets, not in national markets - and the FCC's likely preservation of local market ownership limits is what's important in that regard.
  The cable national caps issue is probably the most controversial.  Initially, cable systems were local monopolies in almost all communities, and the national caps were there to protect against cable MSO's using their monopoly power against cable networks, equipment manufacturers, and advertisers.  Since then, however, DBS systems have gone national, AT&T and Verizon have been implementing their own multichannel video programming delivery services (and with Google just starting), and online video streaming services have taken off.  It's increasingly difficult to make the case that cable systems are local monopolies (here in Knoxville, for instance, we have access to 5 multichannel providers).
  It's also becoming apparent that platform-specific ownership limits aren't that helpful in controlling concentration and monopoly power, as two of the top 3 MVPDS systems (in terms of subscribers) are DBS systems, and another 2 of the top 10 are telco MVPDS.  On the other hand, one of the problems that the small local cable operators face is the cost of upgrading their systems to be competitive.  The larger cable MSOs have the know-how and access to capital that could help smaller cable systems to upgrade their systems to be competitive with other video delivery platforms.  Lifting caps, particularly if targeted towards acquisitions or partnerships with small systems, could be beneficial for viewers and communities.
  I look forward to the new ownership proposals, and to the debate they'll engender.

Source  -  FCC Sources: Chairman Wants Media-Ownership Vote on Nov. 30,  Multichannel News
 

Report: Apple's iOS and Google's Android to split mobile market

Research from Global Equities Research suggest that the Apple and Android operating systems are likely to increase their dominance of the mobile marketplace, eventually coming to share 98% of the market.  After talking with app developers, they concluded that

"98 percent of [the mobile market] will be shared by Google Android and Apple iOS. There will not be any third spot left. Nokia, Microsoft and RIM will struggle in the remaining 2 percent of the market."

  There's numbers backing that conclusion.  Apple's sold more than 400 million iOS devices, and the number of people who have set up one-click-billing accounts has doubled in the last year (reaching 435 million accounts - last year there were 180 million).  Google's Android is also doing well, with more than 1.2 million device activations a day.  And there is cross-over as well - the recent Google YouTube iOS app was downloaded a million times in the first 24 hours.
  In contrast, analysts were cautiously mixed in their predictions about the heavily hyped Nokia Lumia 920/Windows Phone 8 product launch.  Some even called the product pair "poor industrial design" and "dead on arrival."  (In large part because the screen is too large for easy one-handed operation).  While the Nokia just launched, the new RIM - Blackberry product launch has been pushed back to January.
  In the meantime, Apple recently launched the iPhone 5, and analysts expect an iPad Mini to be available next month.  On the Android side, Kindle just launched a new family of Kindle Fire tablets, and October should see the new Android OS (Jelly Bean), some 30 new Google apps, and at least 15 new Android-running smartphones.

"The innovation rivalry between Apple and Google will not leave any third slot in the mobile space," concluded report author Trip Chowdhry. He added, "Innovation velocity of both Apple and Google far exceeds that of its peers."

  The analysts see one potential ray of hope for a challenger OS - the fact that Apple and Android dominance (and their competition) have forced wireless operators to heavily subsidize many of the newest products.  Some financial analysts have warned that the iPhone 5 launch would likely result in a significant hit on wireless operator profits.  The various wireless operators could help a third OS challenger by pushing a third platform; but this is only likely to help if that third platform could offer highly capable, competitive, smartphones at low price points.  Microsoft has the funds to subsidize product lines if it wants to, and has been very innovative in the past.  Its had a problem, though, getting many of those innovations adopted by consumers.

Source -  Android, Apple Dominance Leaves No Room for Third Platform: Report,  CIO Insight Mobile & Wireless.

Latest FCC Report on Video Competition available

The FCC recently released its 14th report on the status of competition in the video marketplace.  While the FCC is supposed to do this annually, it tends to be somewhat late - this just-released report is officially the 2010 report (covers 2007-2010).
  The expressed conclusion is that the level of competition in the video marketplace is "insufficient to hold down cable prices".  This despite finding that cable's market share is declining (to 60%), satellite services growing to 33% of the market, and the rise of competition to 7% market share (in 2010).  More recently, there's also been the growth of online video and mobile video systems.  And broadcast TV is becoming more of a direct competitor as stations take advantage of the ability to multiplex separate channels within their digital signals. So while video markets across the US are all more competitive from the situation examined in previous reports that concluded that there was sufficient competition, the FCC now finds there is insufficient competition.
  Part of the rationale for the change in conclusions may be a shift in what kind of competition is being considered, or a change in the threshold for "sufficient."  One change evident in the report is that the FCC now divides the video marketplace into 3 separate pieces - the Broadcast market, the Multichannel Video Programming Distributor (MVPD) market, and the Online Video Distributor (OVD) market.  The OVD market was also very narrowly defined as services offering professionally produced content previously shown in theaters or on TV.  While there may be value in differentiating the three, basing consideration of competitiveness solely on the number of outlets in each market (separately) is a narrow and problematic perspective.  From a consumer perspective, these aren't independent markets - at the very least they are very close substitutes for one another, and should be considered (at least) as interlinked markets.  There's a similar issue with the way the report considers the Broadcast market, as their analysis seems based on counting licenses rather than separate programming channels, or the programming itself.  Similarly, ignoring the huge gains in volume and use of online video (outside the retransmission of previously aired programming) sets a very narrow and unrealistically defined market.
  It would seem that the report is attempting to minimize any measurement of competition by failing to consider all competing alternatives in the video marketplace (and not merely a narrowly defined set of distribution services).  It also appears that they approach competition from a political economy perspective (how many owners) rather than a consumer perspective (available choices and options for video consumption).  And for a study purporting to look at the forces impacting cable pricing, it completely ignores the single largest contribution to costs (and thus prices) for cable services (as well as other MVPD and OVD services) - the cost of programming.  The report does not seem to consider the content side at all (other than, once again, from a political economy perspective of what channels are owned by which distributors). 
  Finally, while I have yet to closely read the whole report, there doesn't seem to be a clear standard set for what would constitute "sufficient" competition.  This allows FCC Commissioner Roger McDowell, to claim that the information presented in the report could as easily "affirmatively conclude that the video programming marketplace is competitive."  A second Commissioner, Ajit Pai, also commented that the data in the report shows that the video marketplace is "more competitive than it has ever been."
  The conclusion that the market (or markets) are not sufficiently competitive in terms of cable pricing seem to be drawn from a variety of claims made by a few commenters - based on anecdotal claims, or unrealistic comparisons to "ideal" market structures that do not exist (and can not exist in the U.S. due to FCC standards and regulations).
  While the basis for the report's conclusions are questionable (and in my view, suspect), there's still a large amount of good descriptive information in the report that is useful, if sadly outdated in age of rapidly evolving media and information markets.  It's worth a look, and I'll try to give it a more thorough look and commenting later.

Sources  - FCC Releases Video Competition Report,  Multichannel News
FCC,  14th Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming
 

Content and Value

  One indicator of the continuing "content is king" meme is the movement of a number of major Internet firms into the content business.
  Major social media services are working to integrate media content into their social media platforms.  Facebook is making deals to stream movies and music concerts through its service.  Twitter is making sponsored deals with high-profile figures to create Tweet streams at big events like the Consumer Electronics Show.
  In the last year, Google has made significant moves into content services, with the addition of the Google Music cloud service, and the addition of content sales and rentals to the Android Marketplace.  Google's YouTube operations have not been ignored, with Google spending $200 miliion (so far) to acquire high quality, high demand, content, and content creators, to supplement the user-generated videos on YouTube.  Google's been working with US studios on a movie rental service. Outside the U.S., they've made deals to stream movies and sporting events.
  Amazon is making the move from just selling books to publishing them.  Amazon's Kindle books service has encouraged and provided a market for self-published works since its introduction, but Amazon took the move into content further with the creation of its own publishing house, releasing titles in both print and online editions.  Apple's followed suit in promoting self-publishing, even to the extent of offering a free iPublisher software tool to facilitate book creation.
  In addition, numerous traditional and new media outlets that started as content aggregators and distributors are making deals to create new content for their services.  This started long ago with pay TV and cable channels, but in the last year, AOL purchased the Huffington Post collection of blogs to boost its original content offerings, and Netflix is commissioning original series for its streaming service.  And, as noted briefly earlier, YouTube is pushing professional-quality content, with new dedicated channels and investment in production houses.

What all of this shows is that good content drives demand, and has significant value.  The push for more original content also reflects the increasingly competitive marketplace at work - having unique content is a competitive advantage to be exploited.

Source -  Content is Dead -- Long Live Content,  OnlineVideo Insider

Claire Suddath (& SJ) on the Future of Journalism

Post contributed by Summer Johnson -

Claire Suddath, a Time Magazine online and print writer, wrote an article in October 2011 that discusses how Time and other major news sources are dealing with the digital age. Suddath claims that journalists are scared because, “Basically, we're like the music industry, except none of us can sing.” Suddath reported that many journalists, from all forms of media, attended the Chicago Ideas Week panel on news in a digital age to figure out what will happen to the future of journalism.
  The Chicago Ideas Week panel suggested that old media is incapable of immediacy in news, being overshadowed in that regard by social networking sites like Twitter. For example, a journalist at the panel claimed he knew of Steve Job’s death a few minutes after it happened because the information spread over Twitter so quickly, yet the television news medium came out with the “breaking” story the next day.
  The panel further discussed that more media platforms are doing more journalism with fewer people, and it’s hard to run a business when it yields no revenue. Time’s Managing Editor and host of the Chicago Ideas Week panel, Rick Stengal, raised another issue. Stengal acknowledged that "there is more information available to more people than ever before. We just haven't figured out how to charge for it yet."
  I have a proposal that may fix this problem in regards to online news.
  The problem began when online news sites spoiled readers by posting news for free on their websites.
  I propose news websites begin charging an online membership fee. I believe they should provide headlines and the “short story” (by short story, I mean the sentence or two below the headline” to viewers for free, but only subscribers/members would be able to read the entire story.
  I think this will work because, as the panel discussed in Suddath’s article, all media platforms have some competition with social networking sites in immediacy; however, social networking sites are unable to provide the entire story. And breaking stories deserve more information than social networking sites’ few worded sentences.
  There are some problems with this idea, but I believe following my proposal would be the lesser of two evils: either charge the audience and risk losing a few readers, or continue making no money. The first of the two would at least yield some revenue where the latter continues making nothing.
  News websites have been offering information for free for so long, charging for information may turn away customers. My theory on this is if consumers pay for news when they buy newspapers, magazines, or cable, why shouldn’t they pay for it online? News is a much sought after commodity, and should be paid for regardless of the form of media.
  The tricky part would be charging for information via online news websites; it must be a group effort. All news websites from all platforms must pull together, and begin charging for information at competitive rates at relatively the same time.
  Instead of online news networks crying about losing money, they should get up and do something about it. The longer they wait, the more money they will lose, and the less job security we all will have.

Check out Suddath’s original article from Time’s online website

IPTV Challenges Cable

More news on the emerging transition in TV from traditional broadcasting and multichannel services to IPTV..

Netflix is emerging as a driving force pushing IPTV.  A new study shows that Netflix users are twice as likely (this year as compared to last) to degrade or cancel cable subscriptions.  Meanwhile, content licensing is becoming more competitive, with Netflix making exclusive deals for TV programming.  While cable creates walled gardens limiting access to other services, and touts "TV everywhere" at some point in the future, Netflix is already there, with its service offered on more than 250 devices, some of which offer a dedicated Netflix button on the remote..
Meanwhile, a new report from Nielsen concludes that there's a new trend in homes with both TV and Interent access shows that

the lightest traditional television users streaming significantly more Internet video via their computers, and the heaviest streamers under-indexing for traditional TV viewership.  This behavior is led by those ages 18-34... while certain segments of the population are migrating toward specific services and viewing habits, the resounding trend is (for slight increases in total viewing across screens)

Nielsen's new C3 ratings are also showing significant numbers of additional viewers coming from online viewing.  A CNN executive reported that more than 50 individual telecasts saw significant ratings improvements with the addition of online viewers.
To pile on the bad news for traditional TV, a new Harris Interactive Poll for Adweek looked at media and online video use and attitudes towards the Internet's relationship to TV.  The results showed broad increases in online video use, with 77% indicating they've watched shows online.  Use was highest in the 18-34 demographic (at 88%), but remained high for all demographic segments, all the way through the 55+ segment (64% have watched).  In addition, about half indicated that they have watched shows online that they had not previously seen on TV, suggesting expanding choice options online.  Wide adoption of online video makes IPTV a stronger competitor to cable and DBS services.  In fact, 44% of respondents said they would cancel cable if they could get the shows they liked online for free.  That number falls to 16% if their shows were only available online for a small fee.  Still, at a time when cable has been losing subscribers consistently for years, and IP-delivered video choices are increasing (with AT&T's U-verse and the rise of streaming providers), of  it's not good news for cable and DBS.
If this wasn't bad enough, consider the continued maturation of user-generated-content (UGC) and UGC-sharing sites like YouTube.  Improvements in technology enable users to create higher-quality content.  In addition, YouTube and similar sites are providing opportunities for the distribution of professional quality content and traditional TV programming. The programming options and reach of UGC channels are only getting bigger, and a lot of content is getting better, making it a stronger competitor to traditional TV for both audiences and advertisers.
All these show an improvement in the access to IPTV, and improvements in its value coming from better content, more programming options, and more choice in when and where viewing occurs.  While cable and DBS can respond to some of these, an emphasize on keeping subscribers tied to their services is not helpful.  Look for a continued decline in cable and other multichannel services, and continued expansion of IPTV as a delivery system for video.


Sources:
"Who are we kidding? Of course it's Netflix vs. cable," Gigacom
"Heavy Streaming Vidoe Viewers Watch Less TV, Nielsen Says" Media Daily News.
"Turner Discloses Tens of Thousands Of Online Viewers Being Added To Its TV Ratings"  Media Daily News
"Survey: Sure, We'll Ditch Cable... Make an Offer!"  Vidblog
"UGC Is All Grown Up!" Online Spin

Newton Minow - From wasteland to abundance

Fifty years ago, FCC Chairman Newton Minow called television a vast wasteland at his first NAB Convention.
In a recent op-ed for the Chicago Tribune, Minow turned his thoughts back to television., concluding that "the promise and possibility of television is so vast that we can only guess at where it will take us."
Yes, he writes, TV is far vaster than could be imagined in 1961, and parts of it are still wastelands.  The vastness is a reflection of the explosion of stations and networks, an abundance of outlets that "far exceeded my most ambition dreams," an explosion of choices for viewers and listeners.  As he quips, "wasteland has turned into broadband."
While still chastising the industry in two areas (the lack of public service time for candidates, and the low level of support for public broadcasting), Minow cautioned against over-regulation which could restrict competition.  It wasn't a new concern for Minow, who harkened back to another speech given in early 1962:

"For just as surely as a commercial is wrapped around a station break, the television industry in the long run faces one result or another: more competition or more regulation.  My own vote is for more competition.  And my faith is in the belief that this country needs and can support many voices of television - and the more voices we hear, the better, the richer and the freer we shall be."

Source: "From wasteland to broadband in 50 years" Chicago Tribune

The Return of Municipal Broadband (updated)

About a decade ago, there was a strong push for local communities to build and operate their own broadband networks, either as a ground-based fiber network, or through a municipal WiFi network.  At the time, the technology was perhaps a bit raw and expensive.  That, along with objections from existing public service telecomm providers (mostly telcos and cable systems), and their success in some states in getting state law to block city-owned networks, slowed development and reduced expectations of success.  And when the major initial outside players (EarthLink in WiFi and Google) dropped out, the idea of municipal nonprofit broadband faded into the background.
But apparently the idea hasn't completely disappeared.  The Institute for Local Self-Reliance, a community advocacy group, has issued a report showing that over 100 communities around the U.S. have built their own fiber-based broadband networks.  Eventually, they hope to include municipal WiFi and fiber to business networks, but for now they're concentrating on lobbying the FCC and various state legislatures to stop the spread of legislation limiting the development of municipally owned networks.

Source: "Community advocate: Muni-broadband networks top 100,"  Connected Planet

Also: ILSR website
         ILSR report, "Publicly Owned Broadband Networks: Averting the Looming Broadband Monopoly"
         ILSR interactive Community Broadband Network Map

Update: Found another Broadband "map" of interest, and added it to the Net Resources section.

M-Lab's Visualization of broadband performance using M-Lab data.
  This map focuses on actual performance of broadband networks, and uses a visualization process in conjunction with Google maps and data. 

From CableCard to AllVid: Is this Progress?

In their first attempt to integrate the need for scrambled signals for pay TV (i.e., cable), the FCC same up with the idea of the Cable Card.  Instead of a set-top-box, they tried to put the ID and descrambling technology on a small card that you could insert in the back of newer HD digital TVs.  There were lots of technical problems, and the technology was largely rejected by both the set manufacturers and cable companies, despite mandates from the FCC.
The next "new idea" from the FCC is AllVid - described as "a small adapter" that would unite cable, satellite, and telco signals and "present a standard interface to all consumer devices."  The chances for this working took a step forward when a number of companies (Google, Best Buy, Sony, Mitsubishi, TiVo among them) expressed support by forming the "AllVid Tech Support Alliance."  On the other hand, cable (through its trade association, the NCTA) has raised a number of technical issues that would need to be addressed, and remains skeptical, if not opposed.
I remember other talk about a "small device" to mix signal paths a number of years ago, this one converting all-digital to a mix of analog & digital for in-home distribution, allowing for true fiber-to-the-home broadband service.  At the time, they were talking about $10K per device, and had technical issues at that.  Of course, technology improves and gets cheaper over time.  Still, will the various signal providers willingly support the breaking of one of their last barriers to entry and move to pure competition (where anyone can get any signal or service from any provider)?
(Hat-tip to Gina Hudson)


Report from Wired.com

NPR seeks to silence competition

A story on Radio World notes that NPR (National Public Radio) has filed comments objecting to a move to allow local radio operators to utilize Low Power Television channels for what it argues is primarily audio broadcasting on channels neighboring the FM band..Those operating these stations respond that they provide additional opportunities for local and minority-focused services, and there is a history of audiences primarily utilizing audio feeds from television broadcasts.
But it does fit the model of traditional media outlets objecting to, and trying to shut down, innovative services taking advantage of technological advances.
(Edit - corrected typo in header)