Trouble At The Cable Mill
by Paul McGoldrick
Beyond Al Gore, this year's NCTA (National Cable Television Association)
convention in New Orleans has shown an interesting flurry of innovation
including the formation of an industry driven Java Community Process (JCP)
expert group to derive a common DTV API to allow legacy set-top boxes to
control interactive TV systems.
The industry has also, from the largest player (Comcast) to the most debt-ridden (Charter), been sniffing like vultures around the assets of bankrupt Adelphia, each vying for its own meal from the carcass. But by far the most interesting comments have been made in terms of fighting for any kind of government-mandated control on pricing or content.
A panel discussion that included Brian Roberts (Comcast) Paul Allen (Charter -- Allen recently declared bankruptcy of the Rose Garden Complex in Portland, OR, solely to force a reduction in the interest rates on loans) and Richard Parsons (Time Warner) warned off the government and, in particular Congressman Nathan Deal (R-GA) who had the temerity to introduce a bill to be called the Video Programming Choice & Decency Act of 2004. This amendment would be 12-month voluntary program, monitored by the FCC, which would offer viewers control of the channels in their basic cable TV package -- the à la carte amendment as it is being called. It is tied to the reauthorization of the Satellite Home Viewers Extension Act.
Those in favor of the change -- including consumer organizations and active parent associations all say that the system would prevent their children from tuning into channels like MTV and FX which are included in most basic packages. Consumer arguments range from content control to value, with the argument that if you go into a grocery store to buy milk you don't have to buy beer and cigarettes as well -- the morality approach there is not my commentary.
The industry responded in New Orleans that the abundance of narrowly-focused cable channels was like the variety offered in a shopping mall; that the smaller players get a chance at leveling the playing field by being able to be present, and that allowed them a chance for advertising sponsorship.
The truth is that even if the industry wanted to go along with this approach they never will because, first, they want absolutely no external control of their business and, two, most systems could not be engineered to play that way. The amount of money that has been thrown into cable systems (estimated at $85 M since deregulation in 1996) has mostly gone into expanding the bandwidth to allow more channels and engineering high-speed (sometimes) duplex access. The cable system running past my front door, for example, still has its 1970 splices in it and there is no facility to provide the multiple taps that would be needed for à la carte programming. And despite the investment in channel capacity to attract more cable customers, the industry has forced prices up 53% since 1996 (GAO numbers) while inflation has gone up only 19%, so much for the argument that deregulation spurs price competition.
But in Canadian systems they have been able to partially achieve viewers' choices by bundling obvious selections of "like" channels into smaller groups, allowing for considerable choice by subscribers. And, very unadvertised is the fact that many local public utility commissions have forced numerous cable systems to offer more "basic-than-basic" programming: bundles of just local channels plus government access channels for prices with only a single dollar digit.
But what about Al Gore? Well, he and fellow Democrat (ex-Finance Chair
of the DNC) Joel Hyatt have bought the very unknown cable channel of Newsworld
International from Vivendi. Money wasn't mentioned at the time of the transaction
but the Canadian Broadcasting Corporation (CBC), which provides the 24/7
news programming for the channel, mentions US$70 M. Gore told reporters at NCTA that the
station would focus on issues for 18-34 year-olds, but would not be political.
With CBC continuing to provide the programming and with Gore, as Chairman
of the new company and promising to focus on the channel, I would love to
be a fly on the wall when the meetings start on how to change the news content
to focus on that age group. CBC regards itself, very rightly, as a modern
copy of the BBC model; it doesn't like to be thought of as anything other
than independent. But so do the cable companies…