The FCC could soon give more power to cable companies | Hacker News Reader

The FCC could soon give more power to cable companies

washingtonpost.com

80 pointsGeorgeOrr66 comments

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These changes don't sound like they're really addressing the core problem.

Here's how things currently work:

- Broadcaster sets rates.

- Cable company negotiates and eventually settles (with or without blackouts).

- Cable company bundles these rates with other rates from other channels and passes it on to the consumer.

- Cable company gets the backlash from the consumer as a result of rate hikes.

So as you can likely tell, broadcasters have too much power, because cable companies will ultimately be blamed either for blackouts (failed negotiations) OR for rate hikes. So it puts them in a lose/lose situation.

Instead what cable should be doing is:

- Unbundle channels entirely.

- Pass on rate increases to the consumer for that specific channel.

- Itemise how much of what you pay goes to the broadcaster Vs. the cable company

- Alternatively the cable company could charge $0 on the channels themselves (100% broadcaster) and charge a "delivery fee" or "service fee" on the entire account.

This way the broadcaster gets blamed for the rate hikes directly from consumers, and consumers now have more power to drop certain channels if they feel the value they receive is lower than the cost they pay (e.g. $5/month for Trutv).

That's what the FCC should be doing.

Unfortunately it is the content providers that have forced bundling onto the cable providers. Verizon FIOS was the first major cable provider though to successfully implement unbundling. As you said, the FCC would do well to restrict forced bundling.

http://money.cnn.com/2015/04/17/media/verizon-fios/

While your point about content providers is well-seen, let's be clear about what we mean by "unbundling." I think the consumer expectation is true a-la-carte, i.e., channel-level granularity in package choice. What Verizon has implemented is packages of bundles of channels, plus a required minimum base package. While this is progress, it is not real a-la-carte.

Personally, the add-on fees and mandatory equipment rental accounted for 50% of the nominal price of my FiOS TV bill. Packages would have barely dented this. Therefore I canceled FiOS TV earlier this year.

By the time the cable providers actually implement a-la-carte, no one under the age of 40 will be subscribing.

People only think they want truly a-la-carte. The fact that most people don't watch most channels is already built into the system.

The average consumer won't save any money because the price of these channels already reflects average viewership. Those who watch a bunch of different channels would pay a lot more. Only those who watch a very small amount of channels would actually save money.

But paying for access to a channel doesn't really make sense anymore. Why should anyone care what channel content is broadcast on?

Why should someone watching a few hours on two channels pay twice as much compared someone one watched one channel all the time? The later is consuming much more content. Paying by channel is just a shitty way of gauging usage.

A la carte will reduce the amount of content without really reducing prices. Every station will essentially be like TNT or TBS.

Netflix shows that people want the opposite of a la carte. They want an unlimited plan.

It's probably a moot point, video on demand is going to kill cable no matter what.

So continue to offer the bundle as well.

> It's probably a moot point, video on demand is going to kill cable no matter what.

Cable is a major channel for video on demand, and the cable companies are also the major ISPs, so VOD is win/win for them anyway (especially if they succeed in challenging the FCC Open Internet rules.)

They are going to be "killed" by it the same way that the incumbent wireline telcos were killed by mobile.

Do you think they maybe meant the bundle of channel subscriptions?

My preferences coincide with yours (as I agree the latter option would be better for everyone), but I do not understand why the FCC must impose either solution. Why does the FCC need to get involved in this situation at all?

I also don't understand how the FCC will determine whether someone is negotiating in 'good faith', as each party to a negotiation has only two options: give the other party more, or walk away (at least temporarily). Is there another option that I am not aware of that is indicative of 'bad faith'?

I'm not even sure whether someone can negotiate in 'bad faith', because if the party that walks away is losing less money from walking away than they would lose by giving more the the counter-party, walking away is the rational choice; if they lose more by walking than by giving in, they are the ones being hurt the most.

Regardless of what happens with "cable", it seems to me that 'channels' are gradually unbundling themselves by providing access over the internet, and shows may soon unbundle from channels in a similar fashion. Both of these moves provide content providers more feedback with respect to what the consumers demand, which will benefit the consumers most. Personally, I hope consumers demand space operas.

if they lose more by walking than by giving in, they are the ones being hurt the most.

That doesn't actually follow. Consider the case of Alice (who owns 1 cow) and Bob (who owns 9 cows). Charlie wants to buy cows, but only if he can get exactly 10 of them. Alice and Bob might negotiate a deal whereby Alice gets 25% of the proceeds and Bob gets 75% despite the fact that Bob is providing 90% of the goods. This is because Bob has significantly more to lose by the deal falling through.

So I think this is a good model for consumers, but probably not great from a sales perspective. Think of the broadcasters as charging for "selling" their companies. I hate cable companies, but still worth thinking about why they don't do this presuming intelligence instead of stupidity (referencing good recent AHarris post).

> good model for consumers, but probably not great from a sales perspective

That’s what regulation is for: The only thing we should be concerned about is the consumer, the employee, the normal person.

This includes job security, but it also includes allowing a free market in the terms that is necessary.

For TV channels, a free market is obviously an advantage, where the user can choose which channels to pay for and which not.

(Btw, this is one of the types of business where TTIP will not influence existing EU legislation at all, but only bring today’s EU laws to the US)

The cable companies won't do itemizing since they make money off people that don't watch channels they don't watch.

Also if you look at the graph in the article, the broadcasting portion of the cable bill is relatively small.

Although as a consumer I would like unbundling, and make it clearer who is responsible for the rate increases, this could have unpredictable consequences to revenue for the cable companies. If the unbundled, I would pay for 2 or 3 channels, whereas I now pay for none. On the other hand, how many people currently pay for a bundle and would also only pay for 2 or 3 channels?

Cable companies would just need to make their pricing structure more accurately reflect their cost structure. Comcast could charge me a base "connection" fee which cover's their overhead plus an itemized amount for each channel I subscribe to.

Making the cost per channel exactly what they are charged by the network would be a great way to pass consumer pressure back upstream.

The problem with forcing unbundling is then you'd have a huge number of people paying only for ESPN (which costs a lot of money) and tons of other channels would simply go out of business. Maybe that's a good thing? I don't know, I'm a cord-cutter.

The entire model of having "channels" is going away. Studios already produce content across multiple genres; "channels" are just their way of organizing those shows into packages to make them easier to show on a linear cable channel.

Netflix and Amazon have shown that you can manage a single brand with many genres beneath. There's no need to have channels; we can just have "ABC", "NBC", "Fox", "Scripps", etc. ABC would include ESPN, Disney, and all their other channels; Fox would include FX and whatever else Fox has, etc.

It won't happen overnight, but I would expect channels to go away gradually over the next decade.

At that point, we won't even have those channel/network brands to the same extent. The independent production studios that actually make the shows will increasingly take their shows directly to Netflix/Amazon/etc.

Most production studios are owned by the networks. Media is a very incestuous business where a group of 7-10 companies own nearly the entire industry. They get away with it because nobody usually owns more than 10-20% of any single company in the next level of the chain. So a production company may be owned by 6 different networks, all of whom bid on which shows they want to pick up for distribution. But in the end, all the money flows to the same people, and the relationships between producers and distributors are where the value in the industry is.

Whoever runs the money today (the networks) will continue to do so in the future, because they own the entire supply chain. The people who make a living funding TV shows today will continue to do so regardless of the distribution channel. It's all a shell game :)

I think this just exposes how much of an unnecessary middleman cable companies have become.

So is network TV on cable different from the local OTA broadcast? If network TV is free OTA then why do cable companies have to pay to rebroadcast it? Wouldn't in be in the network's best interest to get their broadcasts in front of as many people as possible? It seems like blackouts would just be reducing their ratings numbers and thus reducing what they can charge for ads.

What am I missing?

For OTA you're missing a 1992 federal law[1] that requires the cable companies to get licensing for retransmission of those stations.

[1] https://en.wikipedia.org/wiki/Cable_Television_Consumer_Prot...

Cable companies used to just pull in the local feed, and push that out over their network. The local broadcasters called foul, and got Congress to enact a law (1992 Cable Act) that required cable companies to obtain permission to rebroadcast these public signals.[0][1] This quickly resulted in broadcasters charging ever increasing rates to deliver their content to their own viewers.

[0]https://en.wikipedia.org/wiki/Retransmission_consent

[1]https://en.wikipedia.org/wiki/Cable_Television_Consumer_Prot...

I guess established Broadcast Networks were afraid of increased competition from Cable TV Networks and got the Retransmission Consent provision added to the Cable Television Consumer Protection and Competition Act because otherwise Cable TV Operators would be able to rebroadcast their stations freely which would only encourage adoption of Cable TV? It was sort of a win win for Broadcast Networks regardless of whether Cable TV succeeded for failed.

Here's the basic problem with your proposed model: Channels popularity follows power law[1]. If you gave choice to subscribers to pay-by-channel most of the channels will die horrible death in sort period of time. However this is not good for the cable company because lack of content means they will lose portion of subscribers who are in long tail as well as revenue that is generated by long tail. One may argue it's also not good for consumers as the available selection shrinks dramatically. So in essence cable companies are packaging low performers with high performers so that long tail survives. This is one of the situation where "let the market figure out" strategy doesn't work very well either for producers or consumers.

[1] https://en.wikipedia.org/wiki/Zipf%27s_law

I think they should just go a-la-carte on broadcast channels.

My mother-in-law lives in a small city where she can pick up the big networks + PBS and some minor networks (CW, ion) with just rabbit ears.

With an $80 antenna, I get 11 channels from a city that is 50 miles away. All I had to do is nail a bracket onto the edge of my roof.

I am missing CBS and ABC, but I am planning to fill those in with a VHF antenna that points to another city.

The difference in picture quality between the HD broadcast vs the compressed "HD" offered by TWC is night and day.

It seems to me there is no value in getting a degraded copy of local broadcast TV on cable, so you should be able to opt out of it, or maybe just get broadcast stations that don't come in with your antenna.

> I think they should just go a-la-carte on broadcast channels.

My understanding is that the cable companies want to do this, but a tangled web of long-term agreements to carry channels have painted them into a corner.

Well, if the broadcasters get $ for cable subscriptions, broadcasters have a reason to want you to subscribe to cable. Also, the cable companies really don't want you to get into the OTA habit, since OTA has many of the things you want linear TV for and goes together with OTT like peanut butter and jelly.

Do people think there is something ritually unclean about getting OTA television? I know that a lot of people that I talk to about my OTA setup seem to think I am doing something illegal.

Cable companies are more than happy to have you go OTA+OTT. They make far higher margins on their Internet offerings than on video.

They probally would like to go a-la-carte, and charge a fortune for each channel?

I sometimes think it was a mistake to let cable companies put their cables up, with these long term agreements? Agreements that always seem to favor cable companies?

I've never understood these franchise agreements. I always thought if you allow one company put up their wires, you should allow multiple companies the right to use the same utility pole to put up their equipment. If said company goes bankrupt--the municipality/county would own those wires/fibers, and could sell, or lease to the next company? Or, just rip them off the poles?

I'm kinda at the point where if I chief; I would rip out all the cable companies wires? I would let any company come in and put up new cables, but the service would need to be completely free. They would make money on advertising? The advertising couldn't get much worse?

(The only good thing I heard about cable companies is in CA; there is a bill up for consideration requiring all monthly fees for cable boxes, and modems be eliminated. Or, something along those lines?)

You can stop paying for freely broadcast networks, and only pay for cable channels with a service like Sling TV. They've managed to work out the right deals to get basic cable, including ESPN, into a $20/mo package. The more people who start doing this, the less power broadcasters will have over distributors (cable, IPTV, etc.).

> With an $80 antenna, I get 11 channels from a city that is 50 miles away. All I had to do is nail a bracket onto the edge of my roof.

> I am missing CBS and ABC, but I am planning to fill those in with a VHF antenna that points to another city.

> It seems to me there is no value in getting a degraded copy of local broadcast TV on cable

So, you spent $80 and had to climb onto the roof to install it. You have existing knowledge about what antenna to purchase. You know you need a VHF antenna to get other channels. You know where to purchase this stuff.

All of that isn't existing knowledge to the general public and climbing onto a room isn't a general skill-set. There is definite value in a cable guy coming in and setting everything up for you.

Unless you stay home to wait for the cable guy and he never shows up...

Actually, we're only a generation away from when people did exactly that. My father bought his TV antenna, as did everyone else I knew. Installed it an the roof (a big, unwieldy thing), stood there and turned it's direction while I called up when the picture was best.

So, it's not that far-fetched.

Alot of people who grew up with cable don't even realize broadcast stations exist. I've had to explain to multiple people that you dont need cable to get abc, nbc, etc.

...and yet, if you want to watch, say, the Superbowl online, you do need cable.

NBC streamed it to anyone for free on their website:

http://techcrunch.com/2015/01/20/nbc-will-live-stream-the-su...

I am unsure of terms for the SuperBowl, but if I want to watch Motocross online I have hoops to jump through to prove I pay for an NBC channel in my cable/sat packege. I do not have a cable/sat package, so therefore I cannot watch on their website.

You can watch all the motos here:

http://www.promotocross.com/mx/video

Maybe not live but I watched both 450 Unadilla motos the following Sunday evening. I have no cable/sat package.

Yup, MX has been offering post race viewing since 2012(AFAIK). Been waiting for SX to follow suit.

Original point stands, broadcaster streaming offerings are worthless to uncabled viewers if they cannot prove they pay for the cabled/sat option. Forget about viewers outside the US... That's where goatd comes in, I guess...

I stand corrected - I was unable to watch the playoffs, but was at a party where someone had cable for the actual Super Bowl.

This is probably due to their agreements with local affiliate broadcasters. Which is sort of ironic.

(A lot of the consideration in the affiliate agreements is in the form of local advertising slots in national programming; the national stream can't compete with the local affiliates)

> ...and yet, if you want to watch, say, the Superbowl online, you do need cable.

No, you don't. I don't have cable. Watched the Super Bowl online this year.

Edit to say I watched it legally. Not some illegal stream.

The core problem is the entire idea of timeslotted television content. Content is only available on a certain channel at a certain time of day.

What cable companies should be doing is acquiring the rights to broadcast CONTENT. Cable really should just become a massive collection of on-demand content plus live events (think sports).

The whole idea of television by timeslot is archaic.

Video is a done deal. Most cable companies lose money on their video packages anyway; they're a loss-leader for broadband subs at this point. In 5 years, nobody will be talking about the video business.

And the FCC very well should give more power to cable companies, because the cable companies are at a huge disadvantage relative to the big national telcos (aka AT&T and Verizon). AT&T and Verizon are working together to ensure none of the cable companies becomes a national player capable of threatening them. The old Bells are still much, much larger than any of the cable providers, so they can throw their weight around.

> Video is a done deal. Most cable companies lose money on their video packages anyway; they're a loss-leader for broadband subs at this point. In 5 years, nobody will be talking about the video business.

If that was the case, cable companies would stop selling me the TV package when I already pay the maximum amount for internet they offer in my area.

Yet, somehow, they are always willing to sell me cable TV with free HBO for 12 months and a $50 gift card for $19.99/month.

Because there are still sales organizations within these companies whose bonuses are based on driving video revenue. It takes a while for a large company to unroll those organizations/incentives/etc. As it is, the primary customers of their video products are older adults.

But long-term, video is a non-issue. If prices don't come down, the cable providers will move to a la carte. There's just too much content available online via YouTube, Netflix, etc. It will still be a product, but it will be IP-only, cheaper, and offer more granular video packages.

I don't think anyone should have to pay anything for a broadcast signal within the broadcast area. I mean, it's free to anyone with an antenna already. I'm not sure, but I get the impression that businesses are not allowed to have a TV showing local channels based on the number of them that show a degraded signal from cable when they could just put up an antenna and get HD.

OTOH there is some damage done by bundling local channels onto cable - they now have to compete with non-local stuff so the viewership will be lower.

Broadcast is a moot point for anyone with a computer and at least a DSL connection.

I'm done with instant broadcast by any method if it's supported with commercials. I have little time free to watch TV. It's too valuable to waste 15-20 minutes out of every hour on commercials.

Except when it's not a moot point.

My wife likes to watch soccer when it's on. We have basic cable, so we don't have ESPN. It's either watch using an antenna attached to our TV, watch using low def blurry crap the cable company shows or use some virus-laden app to watch it with a computer.

> using low def blurry crap the cable company shows

This drives me nuts. They strip program information, they downgrade the signal, they include a hundred or so music channels that nobody wants, they broadcast blank channels, and the periodically re-arrange the channels (or change/upgrade/downgrade the basic plan). I can't go to my grandmother's house without having to spend an hour or so to re-do all of her channels on her TV sets; and then try to explain to a 90-yr old why the channels are different.

Seriously, the SD on DTV is bad. Add to that the sport broadcasters using the 'not-so' latest greatest equipment(Canuck NHL teams, the worst) and it looks like you time-warped back to watching TV in the '70s.

LOL.

Is there a real reason for them to need to rearrange the channels? I don't get it.

I don't either!

You can probably get basic cable channels and ESPN from Sling TV ($20/mo) for less than you're currently paying. The best option is always OTA broadcast though. Both in terms of price and quality.

I believe that perhaps you aren't familiar with VPNs. They really aren't shady apps downloaded from risky websites.

You can use OpenVPN (with a config file from the service) to connect to a VPN, or use a DNS spoofing services and simply change your DNS settings to those of the service.

Either route allows you to appear to be located in a country where a particular broadcast can be streamed.

Go to a reputable VPN service and check it for yourself.

Any app you already use that can handle streaming video will work. Your Browser, VLC, the Windows movie player thing, and many other vid programs. Your choice of which video app.

Take care.

Easier solution: Turn the TV to face the wall and unplug it from the cable company.

Net, the OP is about a big battle over something next to worthless.

My ISP in effect pays me to accept their "basic* TV service -- I get Internet access and phone with TV for less than without TV.

Well, I hadn't watched any TV for years. I tried a few months ago to watch the NBA playoffs, but my basic service didn't offer that.

But for the 2016 elections, I just signed up for an upgrade. But, I'm not very happy with the upgrade -- it's a waste of time and money. Even for the elections, I can get what I want, e.g., transcripts, off the Internet.

So, I suspect in another week or so I will cancel the upgrade.

Movies? Okay, DVDs or YouTube.

How anything could be as bad as TV is a bit beyond me.

From the chart, retransmission fees have gone from $0.2bn to $8.6bn (in 2018, so, a projection) Absolutely, retransmission fees are growing faster than anything else.

But Basic Cable net fees have gone from 16.2 to 46.9bn. Fees paid to RSNs (sports?) have (will have?) gone from 2.7 to 7.8bn.

$35.8bn change for "cable stuff" vs $8.4bn change for "local stuff".

So, yeah, local broadcasters are rolling in it, but the dollar impact on your bill is from cable+sports programming. (albeit likely on a smaller per-channel basis).

Absolutely true. The cable companies are about to revolt -- what happens if Comcast says "Fine, we're just giving everyone Netflix + Hulu Plus subscriptions and a Roku box, so ESPN and the RSNs can fuck off; subscribe to MLB/NFL/NHL's streaming packages if you want to."?

Never gonna happen.

* Comcast makes millions, if not billions a year off of equipment rental fees. $8/mo for a gateway and $12/mo for an HD box (at minimum) for cheap, crappy equipment.

* Streaming video has gotten good, but streaming live video is still a tough nut to crack. You can't pre-buffer things that haven't happened yet (said by someone who's used the NHL's offering for the past few years).

* Sports are keeping cable TV alive. NBCSN prints money for Comcast, and they pay the NHL a ton of money for that content, and the NHL has one of the smaller North American TV deals (due to demographics, regional popularity, and the weak Canadian dollar).

As somebody whose main source of entertainment is Twitch.tv I can tell you that streaming live video would be much better if these very same cable companies would get their heads out of their asses and make their Internet services more reliable. The speeds you get from a cable connection are more than enough to stream live HD video, the infrastructure is just terrible in a lot of cases.

This is likely a problem with Twitch and not with the ISPs. With live streaming video, the biggest problem is transcoding; not bandwidth.

* They do, but thinking is evolving that the TCO of having to develop and support those devices isn't worth the revenue they provide. Because the CableCard scheme used in the US is essentially proprietary to the US, the US cable companies have to develop custom hardware at great cost.

* Very true; but there is a lot of investment being made here. Also, if you're watching over the Internet, do you really care if there is a 5 min delay from live action?

* RSNs are a zero-sum game for the cable operators; the money NBCSN makes for Comcast ends up going back out the door to the other RSNs like FoxSN, RootTV, etc. The cable companies would rather not have to pay for any of it. They just use it to bleed each other for money.

For point two, a delay is a problem. Twitch had to introduce a delay as they grew, and it made it difficult for the streamer to respond to things happening in the chat channel. Sticking to traditional TV sports, notification of a scoring event shouldn't happen before the video stream reaches you (ie: ESPN's app notifies you of a scoring event before you see it on a "live" video feed).

But the amount of TV on "cable stuff" channels has exploded. Many channels are running original programming in prime time, stuff with high budgets. It wasn't long ago that networks like AMC, FX, etc. ran reruns only. Since 2006 we've had high quality prestige dramas run on cable. We are paying more to get more. Viewership of cable channels is way up compared to broadcast channels.

On the other hand, the amount of original programming on broadcast has been shrinking. And, it's stuff that is broadcast for free anyway. It's supposed to be entirely add supported.

So broadcast fees explode while their quality and viewership implode.

Just push it towards the internet. Encourage broadcasters to directly-market. Now that Android TV is a thing, this can quickly become very user-friendly.

Why does Android TV matter? Unless you want to watch a show as soon as you possibly can, most content has been available for day-after viewing from Amazon, iTunes, Google Play, Xbox Video, etc etc etc for years.

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