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Must-Carry vs. Must-Buy
In a roundabout way, Kevin Martin has a point. He makes the case that cable should be forced to carry all digital signals put out by local television stations, even if they don’t want to, because cable operators force their viewers to “carry” stations in their packages of programming that they don’t want, either.
It’s a bending of the must-carry concept, which cable-system operator Comcast, programmer Discovery Communications and two industry lobbying groups, the National Cable & Telecommunications Association and the American Cable Association, sharply opposed in filings with the Martin-led Federal Communications Commission this week.
In the basic version of the must-carry concept that Martin’s FCC is leading the country toward, cable systems would have to carry both one digital signal and one traditional analog signal from each local TV station.
This could be in place for a while. But still lurking is a separate matter before the FCC, which courts could end up enforcing: the concept of a “multicast” must-carry regime, where operators would have to carry all of the digital signals that station operators put out in their allocated amount of over-the air-spectrum. In this version, operators would potentially have to carry the complete package of a local TV station’s digital signals until they stop carrying old-style analog signals altogether.
This is seen as a way to push cable operators to only deliver digital signals after the federal mandate goes into effect in February 2009 that forces broadcasters to only transmit their signals in digits.
Cable operators want to be able to “downconvert” the digital signals they receive back into analog ones to serve customers who may keep their analog TVs. Those analog transmissions could occupy a lot of space, so cable wants to pick and choose what channels it sends out to maximize, in its judgment, the appeal to the widest possible audience.
If broadcasters begin putting out six different channels in the same space they used to send out one, this could cause capacity problems — or at least problems of choice, if operators must carry all of them.
Even the current proposed “dual-must-carry” rule that is before the FCC right now “proposes an unlawful command-and-control approach over the cable operator’s property, using the broadcast digital transition as [a] cloak to disguise a perpetual violation of the Constitution,” the NCTA said in its filing, as Multichannel News’ Ted Hearn reported Tuesday evening.
But back in April, Hearn also reported from The Cable Show ‘07 on how Martin likes to link his stance on the must-carry issue to his long-standing argument that MSOs should offer each channel on the dial to their customers “a la carte,” i.e., at individual prices or in very small bundles.
Martin insisted that every free digital-programming service offered by a local TV station should be carried by the local cable system. But for the first time, he said cable’s free-market opposition to multicast must-carry was unjustified, especially because cable refused to allow customers the free-market choice of buying cable networks a la carte.
“Your industry opposed mandatory carriage, saying that consumers should be able to pick and choose the channels they want, not have programming forced upon them. But if that is really your belief, then it should hold true whether we are talking about broadcast channels or your own cable-programming channels. You can’t have it both ways,” he added.
A simple question: Why not?
This is now a competitive marketplace; and the FCC and state legislatures have worked overtime in the past two to three years to make it so.
Direct-broadcast satellite operators face no must-carry mandate and, if the new channels broadcasters create are worthy of attention, they’ll carry them, to get competitive advantage.
They also could provide channels a la carte if they saw it was to their advantage, and they don’t.
Now, telephone companies are racing into the market, with serious, long-term efforts to become superior providers of multichannel services. They have to, this time around, because survival is at stake. Cable operators are successfully siphoning off huge numbers of telephone customers.
These are three head-to-head competitors, backed with billions of investment dollars in every large market in the country. And even tiny markets have two satellite operators and one cable operator.
Then there’s Internet video, which is doing a pretty good job of operating on the a la carte model — free-of-charge. Even if its video is based on a different kind of content and viewing experience, it’s now being consumed on a broadband basis in two-thirds of American households. In fact, Nielsen, working for the Cable & Telecommunications Association for Marketing, reported Tuesday that 81 million of the 129 million people who access the Internet now watch video at home or work over their broadband connections.
One of the big draws, according to the Nielsen/CTAM report: ABC.com. And in the next year, we’ll see how NBC Universal and News Corp., with a few billion dollars at their disposal, manage in their effort to commercially rationalize and expand the market for video content delivered over broadband-access lines.
If the new packages of digital channels from broadcasters are creative and compelling, they should be carried on cable, satellite and phone-company systems, as well as Internet distribution channels.
But should Martin and the FCC be deciding that? Or should audiences? And, by proxy, competing providers of video services, trying to slake viewers’ thirsts?
There is one solid way to link the must-carry mandate of a government and the “must-buy” mandate of a private enterprise: Make the market as competitive as possible and let the natural drive for profit — satisfying the most customers with the best value — take over from there.
