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Broadband Roundup: With Aereo off the Air for Now, Alternatives Seek Advantage, and Legislators Advocate for Municipal Broadband

in Broadband Roundup/Copyright/Wireless by

WASHINGTON, June 30, 2014 -Following the Supreme Court’s blow last week against Aereo, the video streaming service has shut down indefinitely as it drags back into the lower courts. Aereo CEO Chet Kanojia wrote a letter to consumers explaining the decision.

“We have decided to pause our operations temporarily as we consult with the court and map out our next steps,” Kanojia said. “All of our users will be refunded their last paid month…the spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud.”

Aereo lost last week’s case because the Supreme Court ruled that the service was violating network television providers’ copyright by streaming their programming without paying royalties.

With Aereo gone for now, The New York Times said other streaming companies are scrambling to fill the void by luring former traditional TV customers with their own offers. Hulu, Amazon, Google and Netflix are all developing cheap alternatives.

Roku, Sling Media, TiVo, Mohu and Simple.TV are selling hardware that lets viewers stream television to digital services or view web video on TV sets.

Simple.TV lets users buy their own antenna and the $199 Simple.TV box, which records programs on a connected hard drive. Premium service features automatic recording and remote access from around the globe. And unlike Aereo, The Times said Simple.TV customers capture signals in their homes, which consequently “fits squarely into fair use,” said Simple.TV CEO Mark Ely.

Eight Democratic congressmen led by Sen. Ed Markey, D-Mass., and Rep. Mike Doyle, D-Penn., are vigorously defending municipalities’ rights to build broadband networks. In a letter to Federal Communications Commission Chairman Tom Wheeler, the group wrote that “local communities should have the opportunity to decide for themselves how to invest in their own infrastructure.”

The group called on the FCC to use its “full arsenal of tools” to pre-empt state laws that prevent city-owned broadband.

Speaking of the FCC, Wheeler scheduled a vote in July on rules for closed captioning online video clips for improved accessibility, according to The Hill. While the rules would only apply to online clips of video of video programming that aired on television with closed captions, Wheeler wants all online videos closed captioned in the long run.

The Digital Media Association, which represents Amazon, Apple, Microsoft and Google’s YouTube, warned that “the time and cost of enabling captions is not substantially less for a 2-minute clip than for a 2-hour full-length movie.”

The National Association of Broadcasters voiced similar concern: ““the FCC must shy away from unreasonable demands that would have adverse consequences for viewers by forcing video clips off the Internet.”

Lastly, Akamai Technologies released its 1Q State of the Internet report. It revealed that global Internet speeds have increased by 24 percent over the last year and almost two percent in the last three months.

Time Warner Cable and Viacom Take iPad Dispute To Court

in Copyright/Intellectual Property by

Time Warner Cable’s dispute with Viacom over the question of whether the cable company is allowed to stream certain television channels onto its customers’ iPads within the confines of their own homes spilled into court Thursday when both sides asked the court to enforce their interpretations of their business contracts.

Time Warner Cable’s free iPad app, which allows its existing customers to access some of their channels through the iPad within the confines of their homes, launched March 15 with 32 channels.

Viacom says that its executives discovered Time Warner Cable’s plans to launch its iPad app shortly before the March 15 launch date. Its executives told Time Warner Cable that its contracts didn’t allow for the streaming of Viacom’s channels, but that the cable company went ahead and included the channels anyway.

Since its launch, the app has been downloaded 360,000 times.

“We have steadfastly maintained that we have the rights to allow our customers to view this programming in their homes, over our cable systems, without artificial limits on the screens they can use to do so, and we are asking the court to confirm our view,” Marc Lawrence-Apfelbaum, Time Warner Cable’s executive vice president and general counsel said in a statement to the press Thursday.

Time Warner Cable filed a motion for declaratory relief with federal district court for the Southern District of New York Thursday, saying that its contracts with Viacom channels never specified anything about the kinds of devices that the programming could be streamed to within customers’ homes, that the streams to the iPads deploy the same transmission technology as is used for television programming, and that at no time is the programming ever transmitted over the public internet.

The cable company says in its court filing that the iPad is no different from its Broadband TV pilot project between 2005 and 2007 in San Diego, to which Viacom ultimately had no objections to when the technology was explained to its executives.

The company wants a declaratory judgement from the court because it plans on introducing several other kinds of devices to which its cable system can pipe its content, and it wants to remove the prospect of being hit up for more carriage fees, the filing says.

For its part, Viacom is suing Time Warner Cable for breach of contract and trademark infringement.

Viacom points to Time Warner’s use of the internet protocol as a method of transmission, and says that it doesn’t fall under traditional legal definitions of a cable service, and that Time Warner never obtained the rights to “deliver Viacom’s programming via broadband.”

Delivering the content via broadband on iPads will undermine audience measurement firm Nielsen Media Research’s ability to accurately rate television shows for advertisers, it says. That’s a problem because advertising is the main revenue source for the channels.

And Time Warner’s move will undercut Viacom’s other business relationships, say the firm’s lawyers.

“Among other things, TWC’s actions will interfere with Viacom’s opportunities to license content to third party broadband providers and to successfully distribute programming on its own broadband delivery sites,” reads Viacom’s complaint.

“Examples of authorized broadband distribution of Viacom’s entertainment programming include Apple’s iTunes Music Store, which sells secure digital downloads of television shows from several of Viacom’s television networks and streaming services such as Hulu and Netflix,” Viacom told the court in its Thursday filing. “The programming distributed through these licensed online broadband distribution channels include ‘The Daily Show with Jon Stewart,’ ‘The Colbert Report,’ and ‘South Park’ from Comedy Central; ‘Spongebob Squarepants,’ and ‘Dora the Explorer’, among others, from Nickelodeon; and ‘Beavis and Butthead’ and ‘Laguna Beach,’ among others, from MTV.”

Viacom says that the disagreement is primarily about Time Warner Cable’s unilateral actions.

“Viacom is committed to meeting consumer demand for wireless and broadband delivery of its programming,” the company says in its filing with the court. “To this end, Viacom has reached reasonable agreements with several emerging and established digital platforms so that they can stream Viacom’s content and also provide an outstanding user experience.

Viacom has made clear that it is willing to discuss extension of similar rights to others– including TWC. What Viacom cannot do, however, is permit one of its contracting partners, TWC, to unilaterally change the terms of its contractual relationship.”

Of course what is interesting is that interactive tablet devices such as the iPad and SmartTVs were not available back in 2005, 2006 and 2007.

Viacom probably didn’t have the option of streaming its content directly to consumers via broadband networks through tablet interfaces such as Apple’s iOS: So the contract agreed to at the time in San Diego, and that Time Warner Cable points to as an example of Viacom being kosher  with, may not be a good point of comparison because the technology was different at the time.

At that time, the iPad did not  exist, and Viacom did not have the option of building its channels’ brands independently of Time Warner on the Apple iOS platform.


Analysis: Despite New Entrants, Netflix-CBS Deal Secures Spot At The Top

in Broadband's Impact/Media by

WASHINGTON, February 25, 2011 – Amazon’s new movie streaming service represents a first step into the market but it will be a while before it – or any other new entrant to the sector – challenges Nexflix at the top of the heap.

This week through its Prime subscription service, Amazon offered free streaming movies and television shows to its subscribers. Amazon will offer more than 5,000 movies and shows that subscribers can access through their computers, compatible Blu-ray players or set top boxes that Amazon has begun to feature on its website. This move represents Amazon’s entry into the new and unstructured online video market.

Netflix, already a solid leader in the field, also stepped into a more prominent role this week with a new deal with network CBS. The deal, which is worth $200 million, will give Netflix users access current CBS hits as well as a substantial back catalog of classic CBS shows such as “Frasier,” “Cheers,”  and “Twin Peaks.”

These new deals leave Hulu – which made the initial mainstream foray into online video – with a large gap to make up. Hulu features content from  ABC, NBC, and Fox, but  has remained static since the launch of its premium site, Hulu Plus.  Nor does the company look to be building beyond some small additions since its beta in June. Hulu seems unable to build a larger catalog of shows, as its affiliated networks appear unwilling to license whole blocks of shows like those recently acquired by Netflix. Consumers have  also complained about the dearth of Hulu-compatible viewing devices, forcing them to watch shows primarily on their computers. The restriction on Hulu can be largely attributed to the networks, which have an incentive in the form of more advertising dollars to drive consumers to watch their shows on broadcast television rather than online.

Consumers also place a high priority on hardware and are more interested in watching television on their televisions through DVD, Blu-ray, or stand alone boxes, than they are on their computers. Netflix has been able to convince several manufacturers to build its service into their products. The result is beneficial to both parties as it makes the hardware more appealing and more versatile.  AppleTV, for example, provides a stand-alone player that enables rentals and downloads of video through the iTunes store, as well as a dedicated output to send content to users’ televisions. AppleTV also allows users to access the Netflix catalog, but if other providers want to compete they may need to similarly appeal to  hardware manufacturers to build in their service into devices.

This week’s announcements seem to show that Amazon, Apple, Hulu, and other potential providers have a long way to go if they are going to challenge Netflix’ lead in online video streaming. So far Netflix is the only company with the content, delivery system and current market share to be a complete player in the online video market. Amazon has a certain amount of hardware support, but its catalog is too small and lacks widespread availability. Hulu doesn’t have enough control over the content it provides to make it widely available on all devices other than people’s computers.

New players to the online video battle will find a high price of admission without strong content offerings to consumers. Netflix has found itself able to build not only a larger catalog, but also a more diverse one, encompassing Hollywood, television studios, and foreign production companies.  Market analysts agree that Netflix holds its sizable lead mostly due to its superior number of available titles and its already-entrenched mail subscription service.

“At this point,” said Piper Jaffray analyst Michael Olson, “the only company generating enough revenue from subscription video to spend on an improving library without taking a significant hit to the bottom line is Netflix.”


Analysis: CNBCU Conditions Will Stimulate Growth, Not Restrict It

in FCC/Media/Media ownership/Net Neutrality by

The Federal Communications Commission’s recent approval of Comcast’s merger with NBCU has come with some major conditions that will limit any potential discriminatory policies the new firm might have engaged in.

The new entity, CNBCU, will become one of the nation’s largest content creation and distribution companies. CNBCU will be in a unique position in that they will not only control the creation of content but also the method in which it is distributed. Unchecked, this vertical integration could lead to monopolistic actions.

In his dissent to the merger, Commissioner Michael Copps said, “[this merger] confers too much power in one company’s hands.” However, with the conditions imposed by the commission, CNBCU, while powerful, will be unable to act in a monopolistic manner.

While some critics have called the FCC’s conditions restrictive, they are directed at potential areas where the new firm could do direct consumer harm. The main goal of these policies is to protect consumer welfare once CNBCU becomes a major market force in all of the cable, broadband, and online video markets. The FCC worked with the Department of Justice to include provisions that will ensure that the new firm will not violate anti-trust regulations.

The conditions placed upon the merger will guarantee the consumer welfare is protected while also supporting a vibrant marketplace.

The most prominent anti-discriminatory directives – compliance with the Open Internet Order –  is a major factor in ensuring broadband competitiveness. CNBCU will become one of the nation’s largest internet service providers offering access in over 30 states. The merger agreement mandates that the firm must follow all the provisions of the FCC’s Open Internet Order. Even if the Order is modified or struck down in court, CNBCU must adhere to the rules and regulations within the Order.

Compliance with the Open Internet Order by such a large player in the market will not only affect CNBCU but also its competitors.  To remain competitive with CNBCU’s open network, market pressure will mount for rival ISPs to follow the Open Internet Order as well. Given a choice between the open CNBCU network and a potentially closed or limiting internet service, consumers will likely pick the open network.

Verizon and MetroPCS have already filed suit against the FCC over the Open Internet Order; however, regardless of the outcome it will presumably be adopted by all major ISPs. The market power that CNBCU holds will ensure that its competitors will also follow the same rules to offer a competitive product.

CNBCU will be in a unique position of being a content provider and content maker. It will also be the largest player in the emerging online video distribution market. CNBCU will control nearly 5 percent of the online video distribution market including Hulu, Daily Candy, and NBC.com. Additionally CNBCU has signed a lucrative deal with Netflix to offer a large back catalog of content.

The online video market is growing faster than ever as more consumers “cut the cord” and drop traditional cable in favor of online video. The research firm SNL Kagan, estimates that 741,000 customers dropped their cable subscriptions.

CNBCU will presumably earn more revenue from advertising on its traditional cable properties than its online video properties.  The Commission, recognizing the financial incentive for CNBCU to force consumers to watch their programming over cable versus online video distributors, explicitly forbids the blocking or degrading of online video content. This anticipation shows that the FCC believes this emerging market will soon take off and become a major way in which consumers will access content.

The most prominent of these online video distributers is the popular free website Hulu, in which CNBCU - along with ABC and News Corp. - holds a major stake. The website is a limited alternative to traditional cable access. Since CNBCU competes with Hulu in the cable market, however, the FCC is justified that CNBCU may try to limit Hulu. In fact, the 2010 Comcast v. FCC case sprung from accusations that in 2007, then standing alone, Comcast degraded service to services such as Hulu and Skype, which provided free alternatives to their cable and telephone products.  The merger conditions restrict CNBCU from exercising any operational power over Hulu, but it will be allowed to keep its financial stake in the firm. To ensure that Hulu continues to get content from CNBCU at a fair price the FCC has mandated that CNBCU must maintain its current contract with Hulu and continue to provide the same level of content that its partners provide. By maintaining its financial stake in Hulu CNBCU will presumably want the company to do well and provide it with quality programming.

To prevent any exclusionary deals that would prevent other cable providers from access to its online video, the Commission has mandated that CNBCU must offer its online content to others at a reasonable market rate.

Additionally CNBCU is prohibited from offering to its broadband subscribers specialized online video content that includes only NBC programming. In order to offer an online video service the firm must include programming from outside sources as well. However, with its stake in Hulu it seems unlikely that the firm will launch a new online video service.

The online video conditions may seem unnecessary due to the relative size of the market in comparison to that of cable, but online video is continuously growing. The concern by the FCC over the market indicates that the Commission anticipates it becoming a prominent method of watching television and movies in the near future. If CNBCU blocks access to its content, it will severely hinder the growth of the online video market.

While some may claim that the conditions imposed by the FCC on the merger is strong handed government overreaching by the commission, these conditions actually promise to create new markets while protecting consumers and preventing years of anti-trust litigation.

Content Makers Seek Protection but Waver When It Comes to Network Neutrality

in Broadband Updates/Broadband's Impact/FCC/Net Neutrality by

WASHINGTON, October 28, 2010 – Many content makers have called upon the Federal Communications Commission to protect their ability to distribute content via the internet, yet these same content makers are reluctant to play by the same rules. Recent decisions by content makers to block some Google TV and an ESPN service show the murkiness of the debates surrounding network neutrality.

The recent blocking of Fox Broadcasting programs on the online video site Hulu for Cablevision customers has raised network neutrality questions.

After a flurry of criticism from legislators and regulators, Fox restored the service but the blocking of content has raised key questions. A number of content makers also have announced that they will block access to their content from the new Google TV device the Logitech Reveu. The device is a set-top box that integrates the web with the television-watching experience. The Reveu includes online video viewing apps along with a web browser which allows users to surf the web.

While it is clear the blocking of content by Fox was anti-consumer, it did not actually violate network neutrality principles. However, it does however raise the issue of whether content makers should be held to the same neutrality requirements as network providers.

While there is no official set of regulations or rules defining network neutrality, generally it deals with the blocking or slowing down of content or services by network operators. In this case, content maker Fox is blocking the content.

Rep. Edward Markey, D-Mass., said in a statement: “This is not only contrary to the commission’s Broadband Internet Policy Statement of 2005, which states, in part, that ‘…consumers are entitled to access the lawful internet content of their choice.’ “The tying of cable TV subscription to access to internet fare freely available to other consumers is a very serious concern. Consumers are losing their freedom to access the internet content of their choice – through no fault of their own – and this is patently anti-consumer.”

While Markey is correct in that consumers are losing their freedom to access their choice of content, the blocking by Fox does not violate the internet policy statement, which only applies to network providers and not the content makers.

Both Free Press and Public Knowledge condemned the action but did not call the action a violation of network neutrality.

FCC Commissioner Michael Copps said: “For a broadcaster to pull programming from the internet for a cable company’s subscribers, as apparently happened here, directly threatens the open internet. This was yet another instance revealing how vulnerable the internet is to discrimination and gate-keeper control absent clear rules of the road.”

George Ou of Digital Society compare the blocking of content  on Hulu to ESPN360. The ESPN service provides live video to customers of cable companies which pay extra for the service. While this may seem like an apt comparison, the ESPN service is not free. It is a paid subscription service where the ISP rather than the end user pays for the service. Hulu is free to all viewers regardless of their ISP.

ABC, CBS and NBC have announced that they will block Google TV from accessing their online video content. The new service by Google includes a web browser allowing users to surf the entire web including online video sites such as Hulu or network specific sites.

“It is truly disappointing that broadcasters would leverage their programming to deny access to viewers who watch the shows over another medium — on cable or online.  When a broadcaster exercises its market power in pursuit of maintaining a business model while stifling competition by blocking Hulu, Fox.com (or Google TV), the broadcaster violates that public trust and harms consumers,” said Public Knowledge Co-Founder Gigi Sohn.

“Google TV enables access to all the web content you already get today on your phone and PC, but it is ultimately the content owner’s choice to restrict their fans from accessing their content on the platform,” Google said.

This blocking of content is not just limited to the Google box. Last year, Hulu blocked access for Boxee, a software platform which aggregated online video. Boxee tried to come to a deal with Hulu but when Hulu was unwilling to cooperate, the firm developed a work around for the blocking by Hulu.

If content makers are asking the FCC for protection from discrimination, network providers should demand the same. With the increasing popularity of online video as a substitute for traditional cable television these blocking measures will likely increase. This could become a problem not just for online video; it is possible for popular services such as Facebook or Twitter to demand access fees from ISPs.

This practice would be allowed under the rules proposed by the FCC. Even the chairman’s Third Way proposal does not have any provisions for this type of network infringement. The proposal is fully focused on network providers and does not address content providers.

The internet thrives when users are able to connect to their choice of services via their choice of connection method. The FCC has yet to rule on the issue of network neutrality but has been given strong support by congressional leaders who have also condemned Fox for its blocking of access.

Make No Mistake: Internet Content Subscription Models will come!

in Broadband's Impact/Expert Opinion by
Image representing hulu as depicted in CrunchBase
Image via CrunchBase

Why do Internet users continually resist paid content on a systematic basis? Keep in mind that many current Internet business models were built on the premise, (create the content and they will come). We have all seen the sterling examples of this model with Google, Facebook, MySpace, Hulu, YouTube, along with a host of others, including news organizations betting on ad supported revenues to make a profit. While this model worked for some businesses, it has not for others. Relying solely on ad supported revenues is a weak model, as the Broadcast TV Industry found out the hard way.

Historically, news organizations relied heavily on paper subscription models supplemented with ad revenues to make their profits. Linear TV models like CNN and Fox News relied heavily on the Cable Industry’s monthly subscription models while being supplemented with ad revenues. These amounted to dual and re-occurring revenue stream models, realizing the best of revenue worlds, subscription and advertising.

I’m sure the current ad revenue based models were launched based on garnering a gigantic number of users which could be attracted to these sites based on whatever product/service was being offered. Not to mention that these models worked and trained users that Internet Content was free. But what new start-ups today are going to get the numbers needed to break-even, much less make a profit? They are few and far between and Internet junk-yards are full of great ideas based on an ad supported revenue model. One only has to remember the Dot.com era where company valuations were based, not on real revenues, but (pie-in-the-sky) business models.

The time has come with the continued proliferation of broadband Internet users, clamoring for content to distance them from a Linear TV Model, for companies to understand that Internet based subscription models will work, if the business model gives the right combination of a paid and free content model.  The Cable Industry is using this model to perfection with its TV Everywhere initiative, giving away free Internet content, if you keep their subscription based models, see (Nielsen study shows there’s a long road ahead to get people to pay for online content). In the interim, these companies will surely test online dual revenue Internet models of ad and subscription, if not in somewhat of gradual scenario, since Linear TV continues to produce great profits.

The bottom line to subscription based content over the Internet is that consumers want a quality experience at a reasonable price, based on competitive market forces, and one where that do not feel trapped in a spiral of upward rate adjustments. This is where the Linear TV model got into trouble, see (Cable Is Saved?). While it produced great content and hundreds of programming choices, it became too expensive and forced consumers to subscribe to channels they didn’t want or need. But here lies a new frontier where innovation and competition can solve consumer demand at a relative price model. So what do existing and new companies wait for; a realistic business model where investors are willing to put up capital but receive acceptable returns, where consumers will both accept and follow an Internet based subscription model? It’s time is coming, so turn up the bytes and let the good times roll!

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To Comcast-NBCU CEO’s: Consistency in Message to Regulators a Must

in Expert Opinion/Transparency by
Al Franken, Senator from Minnesota
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Recent hearings before the House on the proposed merger between Comcast and NBCU drew both accolades and skepticism for regulators on Feb 4, 2010. The skepticism seemed to come from what was perceived as inconsistencies in previous statements by CEO’s Roberts and Zucker from what was being purported in the public meeting.

Robert’s Inconsistencies

Specifically, Senator Al Franken, (D-Minn.) called out Comcast’s Roberts for being inconsistent in his statements to Franken privately, regarding program access rules, while Comcast lawyers were challenging these rules in Federal Court.

Zucker’s Inconsistencies

Congressman Rick Boucher (D-VA) questioned NBU’s Zucker who seemed to contradict himself on the question of Hulu, owned by NBCU, in blocking users of Boxee from downloading Hulu’s content to the TV. Zucker had two explanations of the incident which did not match; saying to legislators this month that Boxee was illegally taking Hulu’s content; and in a previous statement that Hulu management did not want content to become a TV viewing experience.

Providing a United and Consistent Message

At issue is credibility in addressing an audience of regulators who will determine the final outcome of the merger and then possibly provide stipulations that protect a market with competitive dynamics. The message has to be clear and consistent. These issues brought up on Feb 4, 2010 should have been vetted with external communication experts with both companies, see (Cable Industry Executive Quotes to Remember in 2009).

Rather than appearing to be caught off-guard, both CEO’s should have been ready to explain these inconsistencies with current and prior statements. While I have changed my views on issues from time-to-time with further research, it would be more plausible for these company leaders to admit making those statements and give reasons why their positions have changed.  In addition, consistency in both statements by CEO’s and actions by their companies should be merged into one message. See (Top Issues at Comcast-NBCU Hearings: Jobs, Competition, Broadcast TV and Online Video)

Going Forward

With the resources of Comcast and NBCU, it should not be difficult to adequately prepare for these hearings and to project a united front with a consistent message to regulators. It may seem awkward to revisit previous statements that do not align with your vision today, but from a credibility standpoint explaining the inconsistencies and reasons for a change of heart would be more productive in reaching company goals. My message to both Roberts, and Zucker would be that consistency in message and actions, frankness, and direct dialogue are the (keys to the kingdom).

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Comcast’s impending Regulatory Hurdle: Simple Motives behind a Dream – NBC-Universal

in Broadband's Impact/Expert Opinion/Transparency by
Current logo was used since 1986
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Since announcement of the Comcast/NBC-Universal merger consummated the deal creating subsequent analysis and conjecture about how the new venture will be structured, with its impact on programming distribution and fears of dominance, and anti-trust issues within the marketplace; Comcast is set to go before regulators to convince a skeptical crowd how this union will benefit competition and the continued adoption of broadband access.

News of the deal set-off a firestorm of controversy from public interest groups, competitors, and Internet Access Providers alike, all concerned over the potential abuses such a merger could unleash on Broadband stakeholders and their ability to access, and compete in what is perceived as a Free Internet World.

Ultimately though, a deal such as this has long been the dream of Comcast leadership including lessons learned from previous merger attempts to bond programming and pipeline, thereby creating market dominance along with a competitive edge for the long haul; and it all may be as simple as this scenario which drive the motives behind the acquisition of NBC-Universal. But upcoming regulatory scrutiny will decide how the merger will stand-up under the glare of legislators.

The Pipeline:

Comcast has always, since its inception, believed in the pipeline and the business benefits of building an infrastructure with which to carry interesting, informative, and socially beneficial programming on a broad scale within a national market. The pipeline is the core business, or the building blocks if you will, of which all other Comcast businesses are constructed. The strategy has not changed, and it fits well with the advent of high cost content that has driven smaller operators to the merger or take-over table.

The Programming:

To fill the concept of a pipeline with relevant content, generating concurrent and steady revenues on a monthly basis, Comcast realizes the need to be more than just a pipeline filled with expensive to carry programs. It needs a strong formula to deliver vertically integrated demand driven content that will outstrip the competition in securing bundled revenue streams in an increasingly broadband proliferated genre. Hence, the NBC-Universal merger that gives the right recipe of owned versus purchased programming rights.

Regulatory Finesse

The cable giant has not under-thought the implications of the regulatory hurdles it would face with its merger. The company has for many years relied upon strategic thinking within a 5 to 10 year framework in predicting where the pipeline industry is headed, and then acting upon that strategic intelligence to formulate a plan of action. So, it is not a mere coincidence that NBC-Universal came into its sights at this time, but was more of researching all the implications, including regulatory, and waiting for the right opportunity at the right price. NBC-Universal filled this need as an underperforming part of GE-Vivendi SA considered not a good operational fit from the get-go. It has continually and concertedly moved to reassure regulators of its intentions to run NBC-Universal as a separate company, making it more transparent and independent, to include Hulu with its free Internet content concept.

In conclusion, Comcast motives are simple. Acquire more vertically integrated programming to fill the pipelines serving 24 million customers with unique and relevant content used both in a linear and broadband format that preserves the status-quo and addresses the future. It’s a win-win situation for Comcast; its customers, and the Cable Industry.

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New Broadband Ecosystem – With Content Protection – Offers Better Future for Entertainment Industry

in Broadband's Impact by

WASHINGTON, October 8 – The “broadband ecosystem” of the future needs strong legal, technological and cultural efforts to protect American intellectual property, a group of entertainment and technology executives said Wednesday at the U.S. Chamber of Commerce’s Fifth Intellectual Property Summit.

Although the panelists also spoke about the importance of preserving users’ right to make “fair use” of copyrighted material, they emphasized the importance of technological protection measures.

“We know the story” on the history of the music industry, said Mark McKinnon of Arts+Labs, a coalition of technology and entertainment companies that develops content delivery and protection systems.

McKinnon compared the music industry’s negative experience with Napster file-sharing service with the success of commercial video sharing site Hulu. McKinnon said Hulu accounts for 90% of commercial television being viewed online. “The models are finally being figured out.” In the future, consumers would respond positively to online content that is affordable, legal, and safe, said McKinnon.

There is “no question” that old business models need to change in a networked world, said Rick Cotton, executive vice president and general counsel for NBC Universal. Embracing digital distribution will “drive the future,” Cotton said. “It’s what consumers want.”

New content protection technology brings the promise of a “mature model” of internet distribution that avoids “the dark side” of peer-to-peer technology, said Cotton. The broadband ecosystem envisioned by Cotton would somehow tell people that they can access programming as they please, but also send a message that stealing is not acceptable. Such an ecosystem must be built cooperatively, balancing ease of access, consumer desires and a choice of ad-based or fee-based models.

Putting content-style restrictions on technology can be an “enormously powerful teacher” that can teach people on a “speed bump basis,” Cotton said. Without such technological measures, Cotton said, young people could grow up believing that “if [downloading pirated content] is easy, it can’t be wrong.”

Referring to the success of Hulu and NBC’s Olympic video streaming, Cotton said that a broadband-based model would be successful if there are clear “rules of the road,” and as long as consumers could easily access legal content.

Content protection has a critical role to play in the future, said Rick Lane, senior vice president of government affairs at News Corporation. Protection mechanisms have to allow some control for content owners, while leaving room for new and innovative business models, he said. Without content protection mechanisms, Lane predicted that online content would be reduced to the model of a DVD purchase.

More consumer education would cut down on “Net Pollution,” McKinnon said, suggesting educational campaigns to link pirated content with malware and viruses.

The ecosystem would have some room for fair use, Cotton said. Content protection is not about facilitating mashups, he emphasized. Rather, technological restrictions must focus on whole episodes, skits, and movies, he said.

“Fair use should not be a code word for doing nothing,” Cotton proclaimed, adding that technology should send cues about what is right.

Lane and McKinnon agreed that consumer convenience is paramount in any content protection scheme and should be “seamless,” Lane said. McKinnon predicted that with the rise of broadband and good content protection, it would not be long before “DVD’s are like 8-tracks.”

Fair use is not incompatible with content protection, Lane said. Content protection technology is a “key component” of the future broadband economy, and mechanisms could be devised to protect fair use as well as copyrights. Lane cited News Corp.’s MySpace Music as an example. He said that MySpace had received “zero complaints” about its content protections restricting fair use.

Lane said the idea that News Corporation is against fair use was “ridiculous.” Cotton said that fair use and privacy are too often used as “scare tactics,” and said people need to “get past the name calling” when it comes to examining content protection mechanisms. “Trying to create fear doesn’t help the dialogue,” he said.

Cotton said later in an interview that improving technology will make piracy more difficult, but consumer rights and fair use will be protected with “reasonable accommodations” built into copy protection technology. The “vast majority of people” will be satisfied by such accommodations, while fulfilling the goal of cleaning up the “wild west” of today’s internet, he said.

In an interview, David Sohn of the Center for Democracy and Technology took issue with Cotton’s characterization of fair use as a “code word” for anything. Content protection systems can’t distinguish fair use from copyright infringement, Sohn said. Instead, he called fair use an “important policy consideration” that is not only enshrined in law, but is also a “safety valve” so that copyright law doesn’t violate the First Amendment.

Sohn said he hoped the future will include a “broad range” of options available to consumers. Such options should be in response to consumer demand for content models that meet their needs. Market pressures simply won’t allow content to be completely locked down, he said.

Broadband Breakfast Club Forum on the Digital Millennium Copyright Act:

Editor’s Note: Don’t miss “10 Years Under the Digital Millennium Copyright Act – Success or Failure?”, on Tuesday, October 14, from 8 a.m. to 10 a.m. at Old Ebbitt Grill, 675 15th Street NW, Washington.

This event, the kick-off event in the monthly “Broadband Breakfast Club” hosted by BroadbandCensus.com, is designed to bring several key stakeholders together to share perspectives on this topic:

  • Drew Clark, Executive Director, BroadbandCensus.com (Moderator)
  • Mitch Glazier, Senior Vice President, Government Relations, Recording Industry Association of America
  • Michael Petricone, Senior Vice President, Government Affairs, Consumer Electronics Association
  • Wendy Seltzer, Practitioner in Residence, Glushko-Samuelson Intellectual Property Law Clinic, American University Washington College of Law
  • Emery Simon, Counselor, Business Software Alliance

Breakfast for registrants will be available beginning at 8:00 a.m., and the forum itself will begin at around 8:30 a.m., and conclude promptly at 10 a.m. Seated attendance is limited to the first 45 individuals to register for the event. For more information, visit http://broadbandbreakfast.eventbrite.com

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