Tales of the Sausage Factory

Arise Ye Independent Cable Programers! The FCC Wants To Hear Why The Current Cable Programming Rules Suck Rocks.

Well, it took nearly a year since the FCC committed to reforming the leased access and carriage complaint processes as part of its Adelphia Transaction Order, but the wait proved worth it. On June 15, the FCC released a notice of proposed rulemaking asking all the right questions and opening the door for major changes in two critical but dysfunctional laws designed to break the stranglehold big cable companies have over cable programming: cable commercial leased access (47 U.S.C. 532) and the prohibition on favoring affiliated programming (aka “carriage complaint process”) (47 U.S.C. 536).

Done right, these two laws can usher in a new era of independent programming by giving programmers access to cable systems on fair terms. As you might imagine from the current cable programming universe — in which we get 30 different flavors of HBO (affiliated with time Warner) and however many Comcast-affiliated channels Comcast chooses to carry regardless of how few people actually watch, but you can’t find local programming or programming that competes with Comcast or Time Warner programming — the FCC has done a rather crappy job of implementing these rules since Congress passed the current versions in 1992. Nevertheless, wild-eyed optimist and occassionally successful crusader for lost causes that Iam, I think we have a real opportunity here to make these rules work. All it will take is for the progressives and conservatives who like to whine about how the media is all biased one way or another to get off their patooties and actually file something with the FCC. Then all the progressive and conservative would-be programmers will have their chance to sell their programming directly to audiences rather than negotiating with the likes of Brian Roberts, Sumner Redstone or Rupert Murdoch.

Notice appeared in the Federal Register on July 18, which makes comments due September 4 and reply comments due September 21. For those without calendars, this translates to the day after Labor Day and the day immediately before Yom Kippur. So I confess I begged for and got and extension. Now, comments are due September 11 and reply comments due October 12. The relevant docket number for those of you who file (and you know you all should!) is MB Docket No. 07-42.

So tired of watching crap you hate on cable, and wondering why people can’t get good programming on despite having a gazillion channels? See below . . . .

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Tales of the Sausage Factory

Assessing the 700 MHz Order Part III — Anonymous Bidding Alone Makes This a Big Win

Regular readers will know that, as far as I am concerned, getting anonymous bidding automatically makes this Order a big win. I pushed hard on this in the lead up to the AWS auction a year and a half ago. Sadly, I lost. As a result, the cable companies were able to block the DBS guys from winning any new licenses, and the incumbents generally succeeded in keeping out any potentially disruptive new entrants (the cable guys having made it clear they would not compete with the cellular guys).

Fortunately, Greg Rose spent a year crunching the data and demonstrated that if the incumbents hadn’t rigged the auction, it sure looked like it from a statistical analysis/game theory perspective. With this “smoking gun” evidence in hand (utterly dickish footnotes by the Wireless Bureau staff to the contrary), we were able to persuade the Commission that adopting anonymous bidding rules would make the auction more competitive, give new entrants a better chance, and as a result probably increase the auction revenue overall.

So, having lost this last time around, I consider it a real coup to get it now. As both Google and Frontline supported anonymous bidding as necessary to encourage new entrants, I am hopeful that we may still get our “third pipe” provider even without wholesale open access.

Analysis below . . . .

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Tales of the Sausage Factory

Dr. Rose Proves It Was Spectrum Co. In The Kitchen With the Candlestick . . .

My good friend Dr. Gregory Rose has released two studies on last summer’s AWS Auction. I just bloged about them at length over at the Public Knowledge policy blog. So rather than repeat myself, I will merely say:

I argued after the AWS auction that cable companies and wireless incumbents had used the auction to kill DBS as a competitor. Rose proves that in his first report,
How Incumbents Blocked New Entrants In The AWS-1 Auction: Lessons For The Future.

Rose’s second report, Tacit Collusion In The AWS Auction: The Signalling Problem, looks at the use of bids to communicate. Again, as I’ve argued before, only by adopting anonymous bidding rules can the FCC stop bidders from suing the auction process to signal each other.

For the rest of my commentary, check out my PK blog.

Stay tuned . . . .

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Tales of the Sausage Factory

VDC — Video VOIP

I confess I hadn’t heard of VDC: Virtual Video Cable until they filed a program access complaint. Of course, since the vast majority of people probably hadn’t heard about that either (or even know what a “program access complaint” is), I imagine I remain in the distinct minority.

VDC bills itself as a purely broadband-based cable-like service. I compare it to “video VOIP” (or voice-over-IP for the five readers unfamiliar with the acronym). In theory, a service like VDC could provide real competition to cable by letting you get an actual cable service (as opposed to video clips like YouTube or random episodes from iTunes or from some streaming site) — just like VOIP allows a company like Vonage or Sunrocket to offer voice if you have a broadband connection so you can discontinue phone service, saving a bundle (assuming your broadband provider does not make you buy a bundled service or interere with your VOIP packets).

So it is unsurprising that when a possible competitor like VDC emerges, cable uses its market power to try to squash it like a bug. In this case, cable companies have resurected one of the old reliable tricks from their early days: deny the would-be competitor needed programming. Here, Time Warner has refused to enter into negotiations to make CNN available to VDC. (We can expect that if this doesn’t do the trick, cable cos will move to the new fangled tricks — mess with the packets.)

But VDC has a few weapons in its arsenal. It has invoked a provision of the 1992 Cable Act called the “program access rule” that Congress passed to force cable operators to make programming available to would-be competitors like Direct Broadcast Satellite (DBS) providers. VDC has only two problems:

1) The complaint is being handled by the FCC’s usual cable enforcement staff which, as I have observed previously, does not exactly move on “internet time.”

2) The program access rules stop working (“sunset”) this October. So even if staff resolve the complaint in something approaching reasonable time, it may not do much good.

So is video VOIP dead before it even starts? Not necessarily. For a full explanation of what’s going on and how you (yes, you) can help make video VOIP a reality, see below . . . .

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Tales of the Sausage Factory

FCC Makes Cable Companies Obey Law! Activist Lawyer Faints In shock!

Oh my stars! After endless years of delay, the FCC has has denied the various waiver requests from Comcast and the National Cable Telecommunications Association to delay the implementation of the set-top box interoperability. My stars! The cable industry will actually be required to comply with a law passed in 1996! I am positively weak from shock. Now if only we could get the FCC to resolve the horizontal cable ownership that’s been pending since 1992.

More below . . . .

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Tales of the Sausage Factory

There's funny “ha ha” and there's funny “patheticly lame” . . . .

As anyone who watches television or movies knows, some things are outrageously funny because they hit the comedy bone just right. Other things are unintentionally funny. They come accross as so lame, so sad, so pathetic, that you can’t help but laugh.

Net Neutrality has produced some fine examples of both. No doubt I show my biases by finding many more examples of genuinely funny stuff in the pro-NN camp and many more examples of pathetically lame in the anti-NN camp. But two recent examplars absolutely stand out.

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Tales of the Sausage Factory

The Adelphia Day of Judgment Comes

For over a year now, I’ve intermitently tracked the transaction between Comcast and Time Warner for the bankrupt Adelphia systems. At tomorrow’s open meeting (assuming no last minute delays for further negotiations), the FCC will issue its decision.

How we got here, what happens, and why you should care below.

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Tales of the Sausage Factory

The Joker in the Stevens Deck — Section 1004

In the dead of night, just before the latest draft of the Stevens bill came out, a helpful Telco lobbyist inserted a little provision to stack the deck in the case of judicial review. Section 1004 of the Stevens draft now places exclusive jurisdiction for all decisions by the FCC in the D.C. Circuit. This includes not just network neutrality, but media ownership, CALEA, wireless issues, anything.

Why would anyone do that you ask? Because the D.C. Cir. is, without doubt, the most activist court in the land when it comes to pressing its vision of media and telecom policy. More than any other court, the D.C. Cir. can be credited with destroying hope of telecom competition in the United States by perpetually reversing and remanding the FCC’s efforts at rulemaking and enforcement until the FCC finally gave up and effectively deregulated. The D.C. Cir. is also responsible for vacating (eliminating by judicial fiat) the rule preventing cable companies from owning television stations where they have cable systems, and overturning much of the FCC’s cable and broadcast ownership limits. Finally, through the legal doctrine known as “standing”, the D.C. Crcuit has done its best to make it impossible for regular people to challenge FCC decisions or bring individual cases on antitrust grounds.

As a practical matter, the move privileges large companies that can afford to litigate in DC. If you are a small company somewhere else, upset about how FCC action impacts your life, you must now get a lawyer familiar with DC practice ad Petition for review here. Of course, the best (and most expensive) firms most likely have deals with your larger rivals, precluding them from taking the case.

So no wonder why the telco lobbyists want this provision. But why on Earth would anyone else? However, because it comes in at the end, while most of the action takes place elsewhere, it may slip by.

So certainly go to Save the Internet and follow the directions on how to call the Senate Commerce Committee and tell them you want real network neutrality. But don’t forget to tell them at the top of your lungs STRIP OUT SECTION 1004! DO NOT GIVE THE DC CIRCUIT EXCLUSIVE JURISDICTION OVER FCC RULES. You’ll be glad you did.

Stay tuned . . . .

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Tales of the Sausage Factory

Quick Reaction to AT&T-BellSouth Merger

Not really a surprise. The government has made clear it will accept the vicious cycle of “the previous merger you approved means I now have to merge.”

Sadly, because the regulators till think of these primarily as monopoly voice markets, and long ago gave up hope the Bells will compete with each other, they don’t worry about the increased size of the national footprint as an indicator of market power in any of the relevant service markets. If anything, it’s regarded as a plus because under the logic of “convergence,” this makes AT&T a better video competitior to Comcast, TW and other incumbent cable companies, while doing no “damage” in voice markets.

The complexity of interelated markets, the nature of market power on “upstream” internet content and service providers, and question of what the mature market looks like aludes them.

Oddly, I am at a conference on municipal broadband right now. Soon, cities may be the only competitors. I hope they will realize that they need interconnection and net neutrality to make a real go of it. Or so I will try to persuade them tomorrow.

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Tales of the Sausage Factory

I hope USA Today got it wrong on Kevin Martin and local franchising of telco video.

After a brief vacation from the 21st Century, I am back on the job and as puzzled as ever by this USA Today story.

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