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Cord-Cutting Rises as Consumers Shift to Streaming Over-the-Top Video, According to NTIA Survey

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BROADBAND BREAKFAST INSIGHT: That latest internet use survey from the Commerce Department’s National Telecommunications and Information Administration shows that the proportion of internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017. The organization added a question about over-the-top vide viewing to its survey in order to track trends and demographic differences in internet use. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017, which is down from a high about a decade earlier.

Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV, from NTIA:

Americans increasingly are moving away from cable and satellite pay-TV services and opting to stream online video offerings, data from NTIA’s latest Internet Use Survey show. While most households still subscribe to cable or satellite television services, the survey shows the proportion of Internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017.

Internet-based video services typically provide on-demand streaming from a large content library, and are not dependent on the offerings made available by any particular cable or satellite provider. The shift away from pay-TV services crosses all age groups, but younger Internet users have consistently been much more likely to watch video online than their older counterparts. For example, 86 percent of Internet users between the ages of 15 and 24 watched video online in 2017, compared with just 40 percent of users ages 65 and older (see Figure 1).

Graph showing percentages of Internet users watching videos online

Given this rapid change in just a few years, as well as the significant demographic differences, NTIA in 2017 added survey questions that specifically asked about subscriptions to traditional cable and satellite programming. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017. Of the 27 percent that did not, two-fifths (40 percent) were “cord cutters,” or households that reported previously having a subscription, while the other 60 percent said they never signed up.

Internet users in cord-cutting households were more likely than their peers to watch video online; 82 percent of cord-cutting Internet users watched video online in 2017, compared with 67 percent of those in households with a cable or satellite television subscription, and 71 percent of those in households that never had such a subscription. This is an indicator of how the traditional television subscription is faring in the era of pervasive streaming, and we will continue to track this trend in future studies.

Why are Americans dropping subscription services? For some, particularly younger viewers, it’s a matter of preferring online video to subscription services. While 26 percent of non-subscribing households between the ages of 15 and 44 cited the use of Internet-based video services as a reason, only 15 percent of their counterparts between 45 and 64 and 8 percent of those ages 65 or older cited this reason.

Concerns over cost and relevance were common to all age groups, with 46 percent of non-subscribers citing cost and 38 percent saying they had no interest. These results suggest that while cost and personal preferences dominate decisions about purchasing cable or satellite television services, the availability of Internet-based video services is also influential.

Nineteen percent of households lacking cable or satellite TV service cited using Internet-based video services instead of traditional television service. This includes 24 percent of cord cutters and 16 percent of households that had not previously subscribed.

About three-fifths of non-subscribing households were “cord nevers” that never bought a pay-TV subscription. The cord-never households tend to be younger, lower-income and less likely to be non-Hispanic white than those with cable. In contrast, cable subscribing households are on average over 50, and less likely to have children in the house than cord-cutters. Consider that there is nearly a 20 percentage point difference in terms of mean age between cable and non-cable households.

 

Figure 2: Selected Characteristics by Current or Previous Cable Subscribership
Percent of Households, 2017

Has Cable Previous Cable Use Never Had Cable
Total Households 92.7 Million 13.8 Million 20.8 Million
Family Income < $25K/Year 19% 25% 38%
School-Age Child Present 23% 27% 22%
Located in Rural Area 14% 13% 14%
Household Reference Person* Characteristics
Mean Age 53.0 45.8 47.6
No Post-Secondary Education 35% 32% 45%
White, non-Hispanic 69% 67% 57%
Internet Usage Details
Internet Use at Home 81% 81% 62%
* The reference person is the first individual in each household who is identified as owning or renting the housing unit.

 

This is the first time NTIA has asked questions about cable and satellite television subscriptions. Data gathered in the next Internet Use Survey will build upon the research generally in how Americans are using the Internet, and more specifically should shed more light on trends in subscribership.

NTIA intern Kevin Mersol-Berg contributed to this report. Want to read more of NTIA’s research? Sign up for the Data Central mailing list to be among the first to hear about future publications.

Source: Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV | National Telecommunications and Information Administration

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Big Tech

Washington’s Antitrust Push Could Create ‘Chilling Effect’ on Startups, Observers Say

There is concern that an FTC focused on ‘big is bad’ will stunt economic growth in the future.

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FTC Chairwoman Lina Khan

WASHINGTON, September 23, 2021 – Advocates for less government encroachment on big technology companies are warning that antitrust is being weaponized for political ends that may end up placing a “chilling effect” on innovative businesses.

The Institute for Policy Innovation held a web event Wednesday to discuss antitrust and the modern economy. Panelists noted their concern that antitrust law may be welded with political aims that will ultimately create a precedent whereby the federal government will stifle innovators who get too big.

Jessica Melugin, the director of the Center for Technology and Innovation, said technology companies could see what’s happening in Washington – with lots of talk of breaking up companies deemed too big – and be uncertain of the future.

She noted that growing companies largely seek one of two things to make it big: grow to file an initial public offering, where the company’s shares are publicly traded, or wait until a large company buys you out. She said talk emanating from the White House and Washington generally about regulating the industry could deter larger companies from acquiring them, and onerous financial regulations could put a damper on IPO dreams.

“If you start robbing companies of other smaller companies they purchased, it’s going to give a lot of entrepreneurs and a lot of funders in Silicon Valley pause,” Melugin said. “If another path to success gets blocked – the IPO is now harder, and now acquisitions are a little bit questionable…that’s a chilling effect.”

President Joe Biden has made a number of appointments to key positions that is bringing more attention on Big Tech, including known Amazon critic Lina Khan to chair the Federal Trade Commission, which recently filed an amended case against Facebook for alleged anticompetitive practices. He also appointed antitrust expert and Google critic Jonathan Kanter as assistant attorney general in the Justice Department’s antitrust division.

FTC could set a bad precedent if focus is ‘big is bad’ 

Christopher Koopman, the executive director at the Center for Growth and Opportunity at Utah State University, said he’s concerned about the precedent Khan could set for big companies.

He said the odds are that once Khan starts, she will continue down “this path of ‘big is bad’ because that’s a prior that she has and she’s continued to operate on her entire professional career. It just so happens that the focus of this is on tech companies.

“We may be building a regulatory apparatus that will continue to burrow a hole right down the middle of the American economy before we even have a chance to ask if that’s really what we want,” Koopman added. “We just have to recognize that it doesn’t matter, really, who is running the FTC – once we tell the FTC to go break up big companies, they’re going to go break up big companies.”

And the concern for Carl Szabo, vice president and general counsel of lobby group NetChoice, which advocates for less government regulation on the future of technology, is not just a domestic problem, but an international one, too.

“I really do worry about us shanking our innovation and essentially giving a free kick to our competitors and that seems to be what we’re doing,” Szabo said. “Right now, we lead the world.

“This is an international issue, this is a national issue, and we really need to – whether Conservative or Democrat – as Americans we need to see the forest from the trees. And if we want to put corporations ahead of competitors and think those are good democratic values, go ahead and do it.

The House has before it six antitrust bills targeting big technology companies, which passed the chamber’s judiciary committee in June. The goal of the bills is to rein in the power of Big Tech through new antitrust liability provisions, including new merger and acquisition review, measures to prevent anticompetitive activity, and providing government enforcers more power to break-up or separate big businesses.

Federal Communications Commissioner Brendan Carr said earlier this year that Big Tech has too much influence and power, citing the ability of Apple and Google to remove applications like controversial chat website Parler from its app stores.  Carr recently recommended that Big Tech contribute to the Universal Service Fund, which supports broadband expansion in low-income and rural areas of the country, because these companies benefit from broadband.

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Big Tech

Tread Carefully on Tech Platform Data Portability, Conference Hears

Politico panel debates merit of allowing tech platform users to migrate data freely.

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Public Knowledge's Charlotte Slaiman before a Senate committee on September 21, 2021.

WASHINGTON, September 23, 2021 – Panelists debated Monday the merits of forcing companies to allow users to migrate their data from one platform to another, with some lauding the proposal and others cautioning Congress not to stifle innovators by taking a blanket approach.

The Politico Tech Summit hosted a panel discussing legislation before the House – H.R. 3849 – that would force companies to allow users to move their data from one platform to another. The idea behind the concept of data portability is to instigate competition by reducing the barrier for users to use other services that they would otherwise avoid because they cannot take their contacts, connections, and photos with them to the new platform.

Experts say such a portability mandate would be welcomed by younger internet platforms that are competing to grow their networks, but admonished by larger firms like Facebook and TikTok, who would argue that they grew their networks organically and don’t wield any uncompetitive pressures by keeping their networks private.

“[Anti-trust legislation] is really about opening up markets for innovative competitors to enter,” said Charlotte Slaiman, competition policy director for public interest group Public Knowledge.

“Network effects are very powerful in many of these dominant digital platforms. Network effects means it’s very difficult for a person to leave a network. Even if you’re upset with Facebook, you don’t want to leave because of your one thousand connections or whatever.

“If you think about it from the perspective of an entrepreneur, they’re facing this problem times a million users,” Slaiman added. “The sources of funding know it, the venture capitalists know…interoperability is about addressing those network effects.” Interoperability is the extent to which a platform’s infrastructure works with others, which can facilitate data portability.

And more competition is emerging in the online platform space. For example, sites like Parler and Vero have emerged as social networking alternatives to the likes of Facebook, while video sites like Rumble and Locals have emerged as alternatives to YouTube.

Slaiman argues that platforms should compete on the features and user experiences they offer, not on owning a pool of users and profiles.

Slaiman testified similarly before the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights on Tuesday.

Caution for portability legislation

Zach Graves, head of public policy for the think tank Lincoln Network, said there are a lot of cases where mandated portability “makes a lot of sense.

“If you look at the telecom context, you know the fact that you can take your phone number and port it to a different carrier. But we should approach this with caution. There are tradeoffs… I think there’s sort of a category error in how they’re constructing this that big is bad and that’s how we should regulate it,” he said.

“I would prefer a more sector specific approach,” Graves added. “If we’re talking about online retail, we should regulate online retail. If we’re talking about online ads, we should regulate online ads. The fact that we’re saying these companies are big and we should scrutinize them and give them a special framework I don’t agree with.”

Steve DelBianco, CEO of lobby group NetChoice, which pushes for a tech future free from onerous government regulation, was more blunt.

“The interoperability mandate will be a disaster for competition, for privacy and for data security,” he said. “There’s a complete difference between phone number portability and data portability compared to having interoperability where you open a hole into your application which means that any competitor can see data that violates your own privacy requirements. [That creates] security problems.

“People can join multiple social networks at the same time. The theory of network effects really falls down on this.”

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Section 230

Repealing Section 230 Would be Harmful to the Internet As We Know It, Experts Agree

While some advocate for a tightening of language, other experts believe Section 230 should not be touched.

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Rep. Ken Buck, R-Colo., speaking on the floor of the House

WASHINGTON, September 17, 2021—Republican representative from Colorado Ken Buck advocated for legislators to “tighten up” the language of Section 230 while preserving the “spirit of the internet” and enhancing competition.

There is common ground in supporting efforts to minimize speech advocating for imminent harm, said Buck, even though he noted that Republican and Democratic critics tend to approach the issue of changing Section 230 from vastly different directions

“Nobody wants a terrorist organization recruiting on the internet or an organization that is calling for violent actions to have access to Facebook,” Buck said. He followed up that statement, however, by stating that the most effective way to combat “bad speech is with good speech” and not by censoring “what one person considers bad speech.”

Antitrust not necessarily the best means to improve competition policy

For companies that are not technically in violation of antitrust policies, improving competition though other means would have to be the answer, said Buck. He pointed to Parler as a social media platform that is an appropriate alternative to Twitter.

Though some Twitter users did flock to Parler, particularly during and around the 2020 election, the newer social media company has a reputation for allowing objectionable content that would otherwise be unable to thrive on social media.

Buck also set himself apart from some of his fellow Republicans—including Donald Trump—by clarifying that he does not want to repeal Section 230.

“I think that repealing Section 230 is a mistake,” he said, “If you repeal section 230 there will be a slew of lawsuits.” Buck explained that without the protections afforded by Section 230, big companies will likely find a way to sufficiently address these lawsuits and the only entities that will be harmed will be the alternative platforms that were meant to serve as competition.

More content moderation needed

Daphne Keller of the Stanford Cyber Policy Center argued that it is in the best interest of social media platforms to enact various forms of content moderation, and address speech that may be legal but objectionable.

“If platforms just hosted everything that users wanted to say online, or even everything that’s legal to say—everything that the First Amendment permits—you would get this sort of cesspool or mosh pit of online speech that most people don’t actually want to see,” she said. “Users would run away and advertisers would run away and we wouldn’t have functioning platforms for civic discourse.”

Even companies like Parler and Gab—which pride themselves on being unyielding bastions of free speech—have begun to engage in content moderation.

“There’s not really a left right divide on whether that’s a good idea, because nobody actually wants nothing but porn and bullying and pro-anorexia content and other dangerous or garbage content all the time on the internet.”

She explained that this is a double-edged sword, because while consumers seem to value some level of moderation, companies moderating their platforms have a huge amount of influence over what their consumers see and say.

What problems do critics of Section 230 want addressed?

Internet Association President and CEO Dane Snowden stated that most of the problems surrounding the Section 230 discussion boil down to a fundamental disagreement over the problems that legislators are trying to solve.

Changing the language of Section 230 would impact not just the tech industry: “[Section 230] impacts ISPs, libraries, and universities,” he said, “Things like self-publishing, crowdsourcing, Wikipedia, how-to videos—all those things are impacted by any kind of significant neutering of Section 230.”

Section 230 was created to give users the ability and security to create content online without fear of legal reprisals, he said.

Another significant supporter of the status quo was Chamber of Progress CEO Adam Kovacevich.

“I don’t think Section 230 needs to be fixed. I think it needs [a better] publicist.” Kovacevich stated that policymakers need to gain a better appreciation for Section 230, “If you took away 230 You would have you’d give companies two bad options: either turn into Disneyland or turn into a wasteland.”

“Either turn into a very highly curated experience where only certain people have the ability to post content, or turn into a wasteland where essentially anything goes because a company fears legal liability,” Kovacevich said.

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