NCTA's McSlarrow Tired Of Hearing About Supposed 'Threat' From Internet Video
Are cable operators trying to stifle the distribution of video over the Internet?
I don’t think so. But the notion that the industry is trying to protect its core TV product by imposing certain restrictions on broadband users certainly has legs.
The idea popped up last year when Comcast was accused of trying to inhibit Internet video by throttling back peer-to-peer applications like BitTorrent. (The MSO has since moved to a usage-based technique.)
Now the anti-cable crowd is firing the same allegation against Time Warner Cable, which is planning to test usage-based billing in four markets this year.
Free Press, in announcing a petition drive to gather signatures to call on Congress to “investigate” TWC’s plans, said that “many see this as an attempt to stifle the emerging online video market — a competitive threat to Time Warner Cable’s television service.”
NCTA president and CEO Kyle McSlarrow, for one, is tired of this argument.
In a blog posting today in which he labels the Free Press petition drive a publicity stunt, McSlarrow says the notion that cable companies are being protectionist vis-a-vis Internet video distribution is “stale” and “at odds with the facts.”
“[I]t is somewhat tiresome to have Free Press repeatedly assert that every effort by network providers to examine any new approach or idea in our or related industries is somehow designed to protect against the supposed ‘threat’ of ‘Internet video,’” McSlarrow wrote.
His evidence? McSlarrow points out that cable companies are actually looking at new ways to bring Internet video to TVs and he noted that online video usage — via YouTube in particular — has surged over the last few years.
Obviously, that isn’t going to be enough to dissuade disgruntled consumers and anti-cable bloggers that TWC’s bandwidth-pricing schemes are anything other than pricing gouging (LA Times), an attempt to discourage Internet-video usage (GigaOm), or both.
Hey, if I had been getting unlimited gas refills at my local station and they decided to switch to selling by the gallon — I’d be pissed, too. (Indeed, last summer’s soaring gas prices generated a huge consumer backlash.)
The incontrovertible fact is that it’s always hard to take away something customers feel they’re entitled to.
DWS commented:
@Chikken Little
So the fact that TWC and the other cable companies feel that they have to compete with other companies that provide content online is proof that they want more of that content online? I really don’t think so. The simple fact is that more and more content is being delivered online whether they like it or not and the cable companies are being left behind, so they feel that they have no choice but to take an “if you can’t beat them, join them†attitude towards that content. In reality, if they can limit the use of all of the content that is available online by rationing bandwidth with ridiculously small caps and outrageous overage charges and go back to the “good old days†where people got that content via their televisions and their services they would be more than happy. If they can’t get back to those “good old daysâ€, well then they are at least maximizing profits of the HSI business by effectively gouging those customers to the tune of a potential 300% increase in those customer’s monthly HSI bills.
Chikken Little commented:
DWS,
I see how you’re trying to read between the lines but you’re drawing exactly the opposite conclusion from what’s actually going on. The cable companies want to provide **MORE** content online, not less.
Check out one of the other risk factors in Time Warner Cable’s 10-K:
TWC’s business is subject to risks relating to increasing competition for the leisure and entertainment time of consumers. TWC’s business competes with all other sources of entertainment and information delivery, including broadcast television, movies, live events, radio broadcasts, home video products, console games, sports, print media and the Internet. Technological advancements, such as VOD, new video formats, and Internet streaming and downloading, many of which have been beneficial to TWC’s business, have nonetheless increased the number of entertainment and information delivery choices available to consumers and intensified the challenges posed by audience fragmentation. Increasingly, content owners are delivering their content directly to consumers over the Internet, often without charging any fee for access to the content. Furthermore, due to consumer electronics innovations, consumers are more readily able to watch such Internet-delivered content on television sets. The increasing number of choices available to audiences could negatively impact not only consumer demand for TWC’s products and services, but also advertisers’ willingness to purchase advertising from TWC. If TWC does not respond appropriately to further increases in the leisure and entertainment choices available to consumers,TWC’s competitive position could deteriorate, and TWC’s financial results could suffer.
dws commented:
yeah, I wonder where anyone ever got such a silly idea as cable companies being worried about internet video...oh maybe it was TWS annual 10-K report?
Significant unanticipated increases in the use of bandwidth-intensive Internet-based services could negatively impact customer demand for TWC’s video services and increase TWC’s costs. The rising popularity of bandwidth-intensive Internet-based services poses special risks for TWC’s video and high-speed data businesses. Examples of such services include peer-to-peer file sharing services, gaming services and the delivery of video via streaming technology and by download. Increasingly, content owners are delivering content directly to consumers over the Internet, often without charging a fee for access to the content. The increasing availability of free content over the Internet could negatively impact customer demand for TWC’s video services, especially premium and On-Demand services, and could result in content owners seeking higher license fees from TWC in order to subsidize such free distribution. In addition, if heavy usage of bandwidth-intensive services grows beyond TWC’s current expectations, TWC may need to invest more capital than currently anticipated to expand the bandwidth capacity of its systems or TWC’s customers may have a suboptimal experience when using TWC’s high-speed data service. Also, in order to continue to provide quality service at attractive prices, TWC needs the continued flexibility to develop and refine business models that respond to changing consumer uses and demands and manage bandwidth usage efficiently. TWC’s ability to do these things could be restricted by legislative efforts to impose so-called “net neutrality†requirements on cable operators.
Dave Coleman commented:
Unlimited \’free\’ refills at your gas station? You clearly haven\’t seen my typical Time Warner cable bill! There\’s nothing free nor unlimited, I assure you. Unmeasured? Perhaps. But even that is a misnomer, as I\’m quite sure TWC knows precisely the amount of data their servers are, well, serving. Free Press is 100% right. If TWC wants broadband monies from taxpayers, they need to first give back the hundreds of millions in broadCAST subsidies they get via tax credits every year. In essence, it is the US taxpayer who is \’giving free refills\’ to TWC, not the other way around.
