January 1, 2010

The Fox and the Hound

There's a lot of debate about who is right in the matter of FOX vs. Brighthouse and Warner Bros cable. I'm interested to see how it's resolved. But really it's symptomatic of a much larger matter our country will have to resolve shortly.

Cable companies are granted limited monopolies by local agencies over the limited resource of public access for stringing cable to homes and businesses. This is a public good. The granting of this monopoly confers certain rights and responsibilities in their execution of this public good. The business model that made this public good workable is fading because the need for the monopoly is fading.

Content is now available for delivery in many more formats than when the monopoly was established. In the air via HD broadcast and Satellite TV, both of which have some technical issues that make them unworkable for large portions of the nation or via bad weather. Via wire, phone lines and cable are merging to become the same technology each capable of delivering the others content with equal quality and for approximately the same cost. Whether you're watching LOST on ABC.com or on ABC, it was probably delivered via the same wire, either as a download/stream or cable broadcast. This is the reality that both sides of the FOX vs. Warner Cable/Brighthouse are trying to deny.

At this point there are a lot of options for the country to take. But direction has to come from the FCC. Myself, I believe that if network neutrality is a goal, which I think it should be, than we need networks that are truly neutral. So either tighten their grip on monopoly and increase regulations in exchange for granting any and all content for delivery, or get ride of the monopoly all together and open up the wires by nationalizing them.

Of course none of that resolves the problem we're facing today. Both sides have come to their position by looking at the current set of regulations and crunching the numbers. I think Fox has acted too soon. If technology was a little bit further along and products like Apple TV were more widely adopted than I would say that Fox has made the right decision here. They could still get their content out by using wire for download instead of broadcast.

But for now they need cable for broadcast. This is because the cable subscribers are not going to switch to delivery via air or they already would have. They need the wire for their phone and internet systems. They don't want the air delivery because it is unreliable in storms or simply not available to them (as they're in an apartment or area where HD just isn't working very well).

Fox needs to be fighting a different fight if they really want to win this battle. The sooner they realize this, the sooner we can all get on with the next generation of content delivery.