On March 12, 2015, the FCC published its 300-page-plus Net Neutrality ruling, titled In the Matter of Protecting and Promoting the Open Internet: Report and Order on Remand, Declatory Ruling and Order.
As expected, Republicans in Congress immediately threatened to undermine it. US Representative Fred Upton (R-MI), Chair of the House Committee on Energy and Commerce and two Congressional colleagues announced their objections the same day.
Another US Representative, Marsha Blackburn (R-TN) exclaimed that “Trying to regulate or reclassify the Internet has as much support as transferring Guantanamo Bay detainees to the United States. Both proposals are net losers that need to be retired once and for all.” She is co-sponsor of an anti-Net Neutrality bill, HR4070, The Internet Freedom Act, which is currently before the 113th Congress.
Was the FCC strong-armed?
Republicans believe that President Obama inappropriately influenced FCC Chairman Tom Wheeler on Net Neutrality. So far, Republicans in Congress have scheduled five hearings into the matter:
- US House Oversight Committee, March 17
- US Senate Committee on Commerce, Science, and Transportation, March 18
- US House Energy & Commerce Committee, March 19
- US House Appropriations Committee, March 24
- US House Judiciary Committee, March 25
This week, The Washington Post reported that the FCC’s Inspector General, who is named by the FCC Chairman, has opened an internal investigation. On March 17, US House Communications and Technology Subcommittee chairman Greg Walden (R-OR) released a draft bill to reauthorize the FCC. One of its stipulations is to make this Inspector General independent of the agency.
While the Republicans are firm in their convictions, others believe that this situation simply repeats a tactic that they’ve used since the days of Ken Starr and Whitewater, and most recently after the killing of the US Ambassador in Benghazi Libya: conduct endless hearings to create the appearance of a criminal situation where none actually exists.
Perhaps a better tactic would be to do a little research about the legislators initiating these hearings, to see where their campaign donations come from.
The FCC goes to the movies
I’m reminded of two movie references, the obvious one being The Empire Strikes Back. Just before the the FCC’s vote, Republican FCC Commissioner Ajit Pai even quoted Emperor Palpatine, saying “Young fool… Only now, at the end, do you understand,” imagining that someday, people would look back wistfully upon the decision with regret that they didn’t stop it when they could.
But perhaps more aligned with America’s political climate, there’s also that charming character from the last scene of Pixar’s The Incredibles.
Today’s Net Neutrality declaration by the FCC is unquestionably the most important telecommunications policy decision thus far in the 21st century. In recent weeks, it had become increasingly clear that this would be the FCC’s direction.
There had been doubts, given FCC Chairman Tom Wheeler’s previous associations in the telecommunications industry. From 1976 to 1984, he was President of the NCTA and from 1992 to 2004, he was President & CEO of the CTIA, which lobby for the cable and cellular industries, respectively. Both groups oppose Net Neutrality today.
In addition to the Chairman, the FCC is governed by four other Commissioners. The FCC’s majority reflects the political party of the President, so therefore, Mr Wheeler and Commissioners Mignon Clyburn and Jessica Rosenworcel are Democrats. They voted ‘Aye.’ Commissioners Ajit Pai and Michael O’Rielly are Republicans, and voted ‘No.’
Chairman Wheeler summarized the ruling in his statement
“We asked the public to weigh in, and they responded like never before. We heard from startups and world-leading tech companies. We heard from ISPs, large and small. We heard from public-interest groups and public-policy think tanks. We heard from Members of Congress, and, yes, the President. Most important, we heard from nearly 4 million Americans who overwhelmingly spoke up in favor of preserving a free and open Internet.
“Building on (a) strong legal foundation, the Open Internet Order will:
- Ban Paid Prioritization: “Fast lanes” will not divide the Internet into “haves” and “have-nots.”
- Ban Blocking: Consumers must get what they pay for – unfettered access to any lawful content on the Internet.
- Ban Throttling: Degrading access to legal content and services can have the same effect as blocking and will not be permitted.
“These enforceable, bright-line rules assure the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.
“The Order also includes a general conduct rule that can be used to stop new and novel threats to the Internet.”
What the opposing Commissioners had to say
Those who watched the FCC proceedings online, as I did, were given a real treat. After Mr Wheeler’s opening statement, the Commissioners took turns to make statements of their own. Given today’s antagonistic political environment, the primary role of the two opposing Commissioners was to misrepresent the outcome and use scare tactic positioning as they expressed their disagreement with the decision. I must admit that they are very good at what they do.
For example, Commissioner Pai made several points in his statement:
- (Paraphrasing) “The Internet will be taxed.” And he went on to talk about the Universal Service fee *** on your phone bill, and how a new line item will show up on phone bills for the Internet. In reality, “the Order DOES NOT require broadband providers to contribute to the Universal Service Fund under Section 254. The Order will not impose, suggest or authorize any new taxes or fees – there will be no automatic Universal Service fees applied and the congressional moratorium on Internet taxation applies to broadband.”
- “The Internet will be slower and prices will be higher.” Large carriers attempt to justify their claim about slower speeds by saying that Net Neutrality would be a disincentive for them to invest in their networks. So AT&T or Verizon would actually give Comcast or a future DISH Network wireless broadband service an opening to take market share away from them?
- “Nothing in this order will promote competition… If you liked Ma Bell monopoly in the 20th century, you’ll love this in the 21st.” Actually, today’s ruling is very clear (see above) that there will be no preferential treatment for access or interconnection. Creating a level playing field that anyone can enter; a sound foundation for competition.
*** It should be noted that the Universal Service fee helped give telephony to rural areas in the 1930s, and in a very real sense, helped incubate IPTV among rural operators a decade ago.
Commissioner Pai used words like “takeover,” “sham proposal,” and “special interests” to position the Net Neutrality decision exactly inside-out from what it really is. He also claimed that the government didn’t create the Internet, hoping that listeners may have forgotten that the Internet was ‘invented’ by DARPA (the Advanced Research Projects Agency within the US Department of Defense, a government agency), and a community of government-funded academic institutions.
The other opposing Commissioner, Mr. O’Reilly, also pulled no punches, calling the Net Neutrality decision an “unlawful power grab.” Then Mr O’Reilly went on about how Title II is all about price regulation and taxation. So the truth comes out: taxation is bad. Net Neutrality should be opposed because it is a new tax, and that “this is back door rate setting authority.” Despite explicit statements in the ruling that it is not.
But read the FCC’s order, read the statements of each of the FCC Commissioners, and then decide for yourself.
Fear ruled the weeks leading to this decision
These comments by the minority Commissioners simply reflected the meme that had been running unchecked in the wild.
In the days and weeks leading up to this FCC decision, the opposition played on anti-Obama sentiments with ridiculous propositions like “Barack Obama is shutting down the Internet,” and insulting statements that Tom Wheeler is “simply Obamas’s (colorful language for the word ‘tool’) on this.” US Senator Ted Cruz (R-Texas) insisted “Net Neutrality is Obamacare for the Internet.”
One commenter went so far as to say that (I’m paraphrasing and can’t remember the source) ‘..only four million people submitted comments to the FCC, out of more than 300 million Americans,’ implying that the 4 million were meaningless.
What the Net Neutrality decision really means
Today’s ruling put an end to the notion that “open access” to the Internet was to be a function of lesser or greater means. It’s that simple.
I have no doubt that some of my friends and colleagues stand as opposed to Net Neutrality as I stand in favor. Everyone is entitled to their opinion. But as opposing parties begin to notice that Net Neutrality has opened market opportunities to them that otherwise would not have been available, they will thank the FCC.
The other FCC decision on this day
The Net Neutrality discussion overshadowed another important ruling that was announced the same day: that the FCC granted petitions from two community broadband providers in North Carolina and Tennessee, to expand broadband services into neighboring unserved and underserved communities. The opposition was from incumbent service providers.
Update 11 Feb 2015: The majority of FCC’s five commissioners are always of the party of the sitting President. So when FCC Commissioner Ajit Pai exclaimed: “I have studied the 332-page plan in detail, and it is worse than I had imagined,” it was no surprise, as Mr Pai is one of the two Commissioners in the Republican minority.
The wait is nearly over: FCC Chairman Tom Wheeler posted an article with Wired that previews the FCC’s decision on Net Neutrality. At risk of alienating some old friends and making some new ones, my opinion is that the FCC’s pending regulation under Title II of the Communications Act of 1934 is exactly the right thing to do. Operators with their own network facilities have challenged NN and will continue to do so, but their bark is worse than the bite.
Why? Because the FCC holds the keys:
- The FCC set the precedent for N.N. in 1934 by mandating a responsibility to put phone calls through (common carrier), and reinforced it in 1996 by adding transparent handoff between wireline and wireless.
- What happens when any of these network providers starts producing its own content (As owner of NBC Universal, Comcast comes to mind), and gets throttled by another network provider? The FCC is the arbiter.
- If any of these operators actually did go ahead and not play by the FCC’s rules, the FCC can issue warnings, followed by fines, followed by revoking their licenses to operate.
Besides, do you honestly think that your favorite cable, telco or wireless operator would actually walk away from business (e.g. stop investing in their networks, as AT&T and Verizon have each threatened to do) if the FCC put NN in place? Really? Would you like to buy a bridge?
In my opinion, N.N will result in exactly the opposite. Readers of my blog know about my trevails with Centurylink, which currently has no incentive to give me more than 3.2mbps down and .9mbps up. I am out of mobile range, and no cable operator serves my neighborhood. If Centurylink were suddenly to have competition, I would expect them to protect their share, not abandon it.
In other words, I believe that NN will spur a race to the top, not the bottom.
On March 31, the FCC declared that local TV broadcasters can no longer enter into joint advertising sales agreements (JSAs) in which one station sells 15% of advertising time (or more) for another station in the same area. Joint ad sales agreements are common: Comcast’s Spotlight subsidiary has had them with AT&T and Verizon, which of course are pay TV competitors – and these parties see opportunities to scale their advertising efforts at a lower overall cost by partnering.
The spirit of this new FCC JSA ruling is intended to promote localism and diversity, and keep individual media companies from controlling an inordinate amount of power in any given local market.
But buried about half-way into the JSA announcement was another more important announcement: that the FCC has initiated the 2014 Quadrennail Review of Media Ownership. Since the 1990s and particularly over the last decade, the percentage of broadcast and newspaper media markets served by any one company has been a contentious issue. As it stands now, no single company can own more than one TV station in a single market – or in the largest markets, no more than two; as long as one of them is not a top-four station.
But neither the new JSA ruling, nor the current set of media ownership rules, have much bite to them: they can be skirted through waivers. If the FCC really wanted to address what many perceive to be inordinate power among local media outlets, it could address the ownership limits that were proposed but never fully adopted from the 2010 review cycle, in the 2014 Media Ownership review cycle.
I hadn’t been active with my blog in a while, but I was so incensed at my poorly coordinated broadband activation by CenturyLink that I posted six articles in rapid succession, ending yesterday with my thoughts about competition.
So, from my own personal perspective, the announcement that Comcast would acquire Time Warner Cable struck me as ironic. Some of the early reports seemed to position this acquisition as a fait accompli, which it is not. Most news outlets, ranging from The Wall Street Journal and Bloomberg to The PBS News Hour and National Public Radio, emphasized that the deal would take time, and face regulatory scrutiny. As a point of reference, Comcast’s acquisition of NBC Universal took two years to close.
One of my morning calls today (2/14) was with an industry friend in the UK, who asked “What do you think?” From a services perspective, Comcast and TWC serve mutually-exclusive territories, so competition among TV, voice, and broadband providers in any given locality is not likely to change significantly. And although this acqusition would make Comcast more powerful overall, a successful acquisition isn’t likely to reduce the number of voices in the American marketplace of ideas because Time Warner content is not part of the deal. The acquisition is likely to be approved, but I hope that certain conditions are applied.
The greatest potential for risk comes with broadband market share. A merged Comcast-TWC would serve nearly 30% of American households. With that kind of market presence, the results can be both good and bad. On the good side, a larger Comcast could conceivably negotiate lower costs from its programming suppliers because the new entity would be reaching the new and higher aggregate number of subscribers (although whether or not such a negotiation would be successful, and whether or not such a savings would then be reflected in the consumer’s bill are both open questions. I do know that my Comcast broadband-only bill was nearly $80/month before I moved out of their service territory this past month, which included ambiguously-defined surcharges).
On the other side of the coin, many fear that the company could quietly compromise the quality of over-the-top video services like Netflix with impunity, and ignore or rationalize their way past any challenges to such a practice. Comcast and others have been accused of this practice. (the corollary of that being that, maybe, Hulu would remain at full quality, since Comcast’s NBC Universal is a co-owner in Hulu). But that is an ill-informed point of view (** See below).
Just last month, we were reminded of this issue when D.C. Circuit Court of Appeals invalidated the Federal Communications Commission’s 2010 Open Internet Order, which Verizon Communications and others had challenged. A group of US Senators quickly sent a letter to FCC Chairman Tom Wheeler, who is evaluating that situation; urging him to “quickly adopt enforceable rules to prevent the blocking and discrimination of Internet traffic… (and) withstand judicial scrutiny.” Mr. Wheeler says that he will try. US Senator Ed Markey (D-Massachusetts) introduced a bill to keep Net Neutrality in effect until this evaluation is complete.
Internet advocates have differing opinions as to whether or not Net Neutrality will stand. The Electronic Frontier Foundation is pessimistic, while Freepress thinks the FCC can preserve it. I personally believe that Net Neutrality is as basic as universal telephone service or the availability of electricity, or law enforcement, or fire prevention: available to all, without bias.
One of the FCC’s conditions in the Comcast NBC Universal acquisition was for Comcast to maintain a practice not to discriminate against online video programmers, and to add ten independently-owned programming channels to its cable lineup over the 8 years following the acquistion. But what happens after 2018, when the non-discrimination period expires? Will Internet access speeds be intentionally limited for streams of IP video programming that originate outside of a Comcast headend? Will independent programmers find themselves shut out? Comcast has many friends in the US Congress, and contributed more than $853,000 to members of the Subcommittee on Communications and Technology in the US House of Representatives between 2001 and 2012.
If only just to quell the fears of the paranoid, I would propose that FCC Chairman Wheeler take two steps: first, make the non-discrimination clauses of the FCC’s conditions to Comcast from the NBC Universal acquisition permanent as a condition of a Comcast – Time Warner acquisition. Second, extend those conditions to all service providers. The FCC could reclassify broadband as a Common Carrier service, obligating Comcast and all other operators to carry any traffic on their networks or face legal action.
As remote as the FCC may seem to average mortals, anyone can submit comments to the FCC about this issue (and select “09-191 Preserving the Open Internet” from the drop-down menu). On the other hand, it’s best to keep emotions at a minimum: fear that the sky is falling is probably misplaced.
The above-linked Wall Street Journal article on the acquisition provides a detailed timeline of consolidation in the cable industry, and the Columbia Journalism Review maintains Who Owns What, to track the holdings of major media companies.
** Edited February 25: Netflix will in fact be paying Comcast to guarantee QoS/QoE over Comcast’s network. If the intent were to collude in order to raise prices to the consumer, it would be a terrible precedent and probably found to be illegal. But that fear is not grounded in realities of OTT delivery, because paying Comcast or any other access provider for transport on their networks is a common practice, and is more likely reduce the content providers’ transport costs, not raise them. Pay TV operators with broadband services have always positioned OTT video providers as freeloaders on their networks, but that positioning is disingenuous because paid transport at a wholesale level is a common practice and a revenue stream.
See Dan Rayburn’s recent posts for the best characterization that I’ve seen to date.
In the wake of my long debacle to get new voice and broadband services from CenturyLink, detailed in my five-part article, I was reminded that many consumers in the US are still served by what, in effect, are telecommunications monopolies.
Even though large operators (often backed by legal disclaimers) say that there is plenty of competition in local markets, my own reality was to have no viable alternative for fixed voice and data communications services. With no competitor looking over CenturyLink’s shoulder, I was virtually forced to beg for service for more than a week. And I must settle for 3 megabit broadband access.
It isn’t this bad for most consumers
Fortunately, the competitive landscape is different for most consumers. In most local markets, at least in metropolitan areas, they can choose from among at least two fixed-line providers: their local phone company and the local cable operator. In some cases, there are additional alternative private – and even public (municipality- and public utility-based) – broadband providers. Rather than pleading, those lucky consumers can simply change providers without too much sacrifice.
As for pay TV, even though most areas have only one cable operator, all of them face competition from two strong satellite TV competitors: DISH and DirecTV. Plus now, Telco IPTV is a full-fledged competitor to cable and satellite, and direct-to-consumer (OTT) distribution brings a steadily-increasing range pay TV and local broadcast programming. I’m sure that this level of competition motivates at least most of them to improve continually.
On the mobile side, the US has four national cellular carriers – AT&T, Verizon, Sprint and T-Mobile - and the healthy competitive battle among those ensures that, if one of them provides doesn’t reach or provides inadequate services, there are others to choose from.
Stay tuned for the next battlegrounds
So, the battle among service providers in the physical world is well engaged. Now, all eyes should turn to the FCC, as it fights to reassert authority over the ongoing consolidation of the media industry, and Net Neutrality. Whether or not operators like Comcast and Verizon are purposely degrading service for content that they don’t originate or profit from themselves are two sides of the same coin.
But those are stories for a different day. (Ed: As it turned out, it was a story for the next day.)
Furthermore, Centurylink wasn’t done with me either.
The FCC has issued the Fifteenth Report on Video Competition, as mandated by the Telecommunications Act of 1996. Although it had been issued annually in the past, this is the FCC’s first such report since 2010.
Needless to say, a lot has changed since then:
- Cable has lost more than 2.5 million subscribers
- Between them, AT&T and Verizon have achieved 10 million subscribers
- IP delivery and “the Cloud” have transformed TV service infrastructure
- TV programmers are now online via “TV Everywhere”
- Over-the-Top and multiscreen services have become mainstream
- The next round of competitors looms large: Google, Apple, Intel…
It’s interesting to compare this report to the 14th Report, which remains available. My bet is that the 16th Report will make mention of connected cars, home control, and home automation – all of them being on the radar screens of the pay TV service providers.
Anyone surprised by DISH Network’s bid to acquire Sprint Communications is probably wearing cable-colored glasses. Many cable industry observers look at competitors through the filter of who is offering pay TV or triple-play (TV, broadband access and voice) services, and don’t seem so worried about quad-play competition (adding wireless) because most of the major ones partner with the enemy (Verizon) for that.
Public companies in the US are required by the SEC to file quarterly and annual reports that include management narratives about the health of the company and company risk factors, and that’s a good place to read the tea leaves because at least the tea leaves have some basis in reality. It’s no surprise that the reports of Comcast, Time Warner Cable, and all of the others identify satellite as a competitive risk in the pay TV category.
Beyond video, Time Warner Cable and others make general reference to the competitive threat posed by satellite TV operators providing voice and data services through partnerships with telephone companies (and symbiotically, so Telcos can also add TV services to their range of services or reach un-served territories without having to build their own TV infrastructure).
Some of these filings also make general reference to competition from satellite-delivered broadband. DirecTV’s makes specific reference to DISHNet satellite Internet service. Similarly, most MVPDs* recognize facilities-based video from Telcos (IPTV) as a threat. Most MVPDs also recognize video distribution to consumer devices over broadband both as threats (inflicted by others) and as opportunities (for themselves).
But NONE of the 2012 year-end SEC filings by any of the major MVPDs explicitly identify DISH Network or EchoStar as a 4G wireless threat.
DirecTV is the only one that recognizes any specific video-over-wireless threat by identifying AT&T U-verse Mobile, Verizon FiOS TV’s Flex View and Verizon Wireless Viewdini services. And of course AT&T and Verizon are increasingly open about their plans to deliver all of their services over IP, including video (Yes, LTE is IP-based, and no, neither AT&T nor Verizon identify DISH as a 4G competitor in their SEC filings either).
Other than that, it just doesn’t appear on their radar screens.
Meanwhile, DISH’s quad-play plans have been brewing for years
An intriguing series of events over the past several years makes it clear that DISH has ambitious quad-play plans. It’s really no secret: these events have been hidden in plain view.
- In 2009, DISH Network was granted licenses by the FCC, to operate services over the 700Mhz band. The spectrum can be used for mobile broadcast TV, or to tie in with LTE Advanced service.
- In 2011, EchoStar acquired Hughes Communications for about $2 billion, including debt,
- In 2012, EchoStar acquired DBSD North America and TerreStar Networks for a total of about $2.9 billion. This gave DISH new S-band spectrum that could be used by DISH to launch wireless broadband Internet access and voice services over LTE-Advanced network technology. DISH proposed a hybrid satellite-terrestrial mobile broadband network to the FCC, which the FCC first denied and later approved.
- DISH’s 2012 annual report states clearly that all of these acquisitions could require “significant” further capital investment before they can be commercialized.
And now, along comes Sprint
In a situation that conjures up mental images of the classic three fish scenario:
- In October 2012, Japan’s SoftBank made a bid to acquire 70% of Sprint for about $20 billion, ostensibly to establish a foothold in North America. Softbank seems to want Sprint only with Clearwire.
- In December 2012, Sprint announced a $2.2 billion agreement to acquire the remaining 49 percent of Clearwire that it doesn’t already own. Sprint indicated that Clearwire’s other voting stakeholders (Intel, Comcast and Bright House Networks) had approved. Regulatory approval remains pending here in April.
- In December 2012, DISH requested that regulatory approval of Sprint’s Clearwire acquisition be delayed.
- In January, DISH made its own bid to purchase Clearwire for about $2.3 billion. Some observers believe that DISH’s Clearwire bid was also aimed at dissuading Softbank from buying Sprint
In mid-April 2013, DISH confirmed its intentions to buy Sprint, confirming rumors had been circulating for at least a year
- Perhaps feeling threatened by DISH, Verizon seems to want in on Clearwire as well
During 2013, Sprint is in the process of rolling out its 4G LTE network nationally. In addition, DISH seems comfortable that Clearwire would be under DISH’s control, regardless of whether or not Sprint’s acquisition of Clearwire goes through; assuming DISH’s acquisition of Sprint does happen.
The end result of all this acquisition activity for DISH would be a virtually unparalleled range of spectrum, from which they can build broadband video services over wireless. In fact, DISH CEO Charlie Ergen said so this week.
But that’s not all
In further support of the hypothesis that DISH is actually interested in building a quad-play service platform and not just collecting licenses, it should be remembered that DISH has also made other types of network acquisitions.
In 2011, DISH acquired South.com, which owns FCC licenses for Multichannel Video and Data Distribution Service (MVDDS) broadband wireless spectrum. This could conceivably enable DISH to deliver multichannel TV and/or broadband multicast services over line-of-sight over-the-air terrestrial broadcast, in territories where incumbent providers can’t. To be fair, I have spoken with observers who think just the opposite: that DISH is holding these licenses with no intention to build.
Also in 2011, DISH acquired Liberty Bell Telecom. Liberty Bell is licensed to operate in 13 western states and could conceivably become a platform for DISH to offer wireline broadband and triple-play services in that region.
With all of these factors taken into consideration, there seems to be little question of DISH’s long range intentions: that DISH wants to leapfrog the cable triple-play and become a quad play operator. In fact, DISH itself has reported on all of these acquisitions in its SEC filings, so the writing has been on the wall.
What could possibly happen?
An acquisition of Sprint by DISH would instantly make DISH a 4G wireless competitor with a national footprint, giving it a major competitive advantage over DirecTV, and over cable TV (although as noted earlier, Comcast, Time Warner Cable, Cox Communications, and Bright House Networks now partner with Verizon Wireless).
A Sprint acquisition also would place DISH in more or less a peer position against AT&T and Verizon, in terms of the range of available services, since DISH would be able to offer a quad-play of pay TV, data, voice and mobile services, and all three operators of these operators would have national wireless footprints.
But even if DISH’s aggressive bid for Sprint (and/or Clearwire) were to fail, it seems likely that DISH will introduce wireless services anyway, sometime in the foreseeable future, since the FCC did approve DISH Network’s request to use its wireless spectrum for an LTE wireless service. But Sprint would give DISH a faster path to market.
Three fish and a game of chicken
I think the three fish scenario, in which DISH acquires Sprint which acquires (or at least controls) Clearwire, would be good for DISH and good for competition. By many reports, DISH actually wants to build a service, whereas Softbank is mainly interested in Sprint as an investment and to give Softbank a US roaming partner.
DISH may also be motivated by a factor other than competition: it must have completed 35% of its deployment over its 700Mhz spectrum by June 2013. Could the acquisition of Sprint be a catalyst that helps DISH fulfill that requirement as well? June looms large. If that speculation is correct, DISH CEO Charlie Ergen is playing a heck of a game of chicken. DISH has asked the FCC for special considerations in the past and could conceivably ask for another to extend this deadline.
One more thing, in case you were wondering
MVPD is the acronym for the term Multichannel Video Programming Distributors, defined by the Telecommunications Act of 1996 for pay TV operators. MVPDs include cable and satellite TV operators and Telcos that offer TV services.
The FCC’s Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Fourteenth Report, released July 20, 2012, reviewed the period between 2007 and 2010. It is very educational and highly recommended. OTT providers, by the way, are classified by the FCC as “OVDs” (Online Video Distributors), a new category that was established in 2010, separate and distinct from the MVPD category.
All of the cable, telco and satellite operators have been responding to the threat of OTT video for several years now. Time Warner Cable’s 2012 annual report goes a step further and cites the threat of OTT voice.
This week, the FCC unanimously approved a reform of its Universal Service Fund into the Connect America Fund. One of its stipulations is that communications carriers will be required to offer broadband access to anyone that requests it. It also defines broadband speeds as 4mbps downstream and 1mbps upstream.
It’s a step in the right direction, although, according to a 2010 study by Oxford University, funded by Cisco, the U.S. still ranks just 15th worldwide in broadband. The study cites the leader, South Korea, as having 100% broadband penetration at an average speed of 35mbps.
In today’s American political climate, we can only hope that common sense prevails in the broadband arena, and that this modernization of the Universal Service Fund holds up. The old Bell System chartered itself to serve only urban areas, which is why rural residents can thank the U.S. government for mandating funding – a program with roots in the 1930s – to help ensure rural service. But, like today’s health care debacle, many rural people are likely to be hoodwinked into voting against their own self interests and oppose universal broadband as a wasteful socialist program.
Mea Culpa note: I posted a blog entry a few weeks ago when it began to circulate that Intel had pulled the plug on its Atom (CE4100, CE4200) chip sets. In fact, only the marketing team was dissolved and reassigned. According to reliable sources, the chips themselves are alive and well, and the next-generation 51xx dual-core series are in the hands of outside developers, with the first new products coming in the CES 2012 time-frame. That’s what I get for succumbing to sensationalism.