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Content - The Next Regulatory War Zone

At the 2014 TelSoc Charles Todd Oration the former Chair of the ACCC, Graeme Samuel, warned against the looming content monopoly…

There is a constant risk that the exclusive tie-up of rights to content for new and emerging markets will allow the right holders to shut out competition across a wide range of services delivered over new networks.

He didn’t think that the current telcos have the right expertise to enter the content market, but said:

Telcos have the financial strength and distribution channels to create business advantages in content acquisition and aggregation.

And a final comment from Graeme on this content issue:

What remains important is access to eyeballs, and the content those eyeballs are seeking is becoming increasingly important. Despite the apparent increase in diversity that the digital age promises, there are real risks that we will end up the poorer if we don’t keep an eye on where just control lies over material we want to receive.

He also mentioned that this issue is now the focus of attention of regulators worldwide, including those in the USA. While, as you will see below, the industry structure in the USA is different, the underlying issue of content monopolisation remains the same.

My friend and colleague Gary Arlen wrote an interesting article on the developments in America and below are a few extracts from that article.

For those unfamiliar with the strange way regulations work in the USA—ISPs there refer to what the rest of the world calls (incumbent) telcos. By calling themselves ISPs, internet access suddenly is not a regulated telecoms service any more. In the USA there is no regulatory differentiation in that respect between internet, as in content, and internet as in broadband access. So content is intertwined with access and this combined is in a regulatory way treated as content and as such the telcos (ISPs) are ‘outside’ the telecoms law and can basically do what they want as has been shown in the case of Net Neutrality. They are allowed to provide special preferential access to content providers such as Netflix, if they are prepared to pay the incumbent a premium price. This than brings us to the issue of content monopoly, by being able to strike those deals with content providers we can easily see this market becoming dominated by new monopolies.

Also for clarification, MSOs (see below) are multi-system operators; they are the operators of multiple cable TV or direct-broadcast satellite television systems.

Here are Gary’s quotes relevant to the issues highlighted by Graeme Samuel:

FCC Chairman Tom Wheeler is seeking to put broadband/online video onto a level playing field with cable and satellite carriers, including their relationships and requirements to retransmit broadcast channels. Fundamentally, Wheeler wants internet-delivered video to operate with the same ground-rules as cable and satellite TV, especially when it comes to access to broadcast programming. In the acronym-speak of Washington, that means OVPDs (Online Video Program Distributors—i.e. broadband carriers and internet service providers such as Verizon, Comcast, AT&T, Cox) would be treated the same as MVPDs (Multichannel Video Program Distributors aka Comcast, DirecTV, Time Warner Cable, Cox, Dish).

Wheeler’s vision could also set the stage to crack down on cable operators if they start to abandon their current tiered, linear channel structure and migrate their networks to the broadband platform, enabling more à la carte channels or shows.

Wheeler’s tone seems to be that the FCC will not look kindly if MSOs try to stymie competition by moving content to broadband.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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