FCC and Cable Set Top Boxes. Big Deal?

My exposure to cable began in college.  Yes, cable was around then.

 

When I moved off campus, we figured out that a Yagi or LP antenna pointed at the [what was then twinlead] cable trunk could get a decent signal. 

Cable was wide open – any subscriber (or Yagi owner) could watch all the channels on the line.  About that time, on the tech side, they switched to coaxial cable, forcing us to cough up our $1.25 a month and, on the program side, the FCC flew in the face of cable’s original raison d'être – providing over-the-air television to homes outside the reception area of any existing station.  This change in philosophy – more like a 180 degree flip – said that, at that point, cable operators were no longer barred from originating programming, they were encouraged (shortly to be required) to do so.

Up to that point, cable was, in fact, an extension of broadcast television stations’ coverage areas.  But as the townies said where I first experienced it, “Not na-more.”  Local operations began originating programming.  Most of it was shows like “Furls and Twirls,” a half-hour weekly feature of the local girls’ pompon group, a painful-to-watch single camera production – and I mean single “edit-in-the” camera production where the titles were inserted by panning to signs held by one of the kids and swish pans got you from one angle to another. 

Down the road, though, Time-Life would try Home Box Office (1972) in Allentown – well, actually Wilkes-Barre, – PA.  Telstar had been up for 10 years but even with the succeeding communications satellites, prices for transponders were beyond reach of all but the biggest companies.  That meant HBO was local. 

Down the road a little farther came the satellite-delivered channels and by 1983, when a battalion of cable rules forced all sorts of changes, these channels were solidly entrenched and looking for local cable systems to carry them. 

All the while, those cable systems were looking for programming that would attract more subscribers…and some system of making sure only subscribers could avail themselves of cable’s products and services. 

Programming was growing.  Bill Rasmussen and Getty had launched ESPN so, if you were, at the time, interested in the local high school swimming championships from Bristol, CT, well, you had reason to subscribe.  Then again, if you liked old movies and reruns, WTBS out of Atlanta run by that Turner guy was perfect. 

 

As the programming grew, so did the price.  Along with that came the impulse to, well, “share” a cable connection where someone paid for it and, after Larry left, they immediately installed splitters and amps feeding neighbors and, in a couple of cases, more distant friends.

 

The cable folks took steps to protect their investment.  They didn’t/don’t want siphoning of their services.  They have to protect the copyright of their content providers. So they created encryption which protected the distributed signals.  They also created tiers of service – packages that particular demos of consumers might pay for.  You can imagine the discussion: 

 

“OK, here’s one we can sell.  Let’s link all the ESPNs, OLN, NFL, NBA and the other sports networks in a tier.”

 

“Sure.  But add in Baby Channel and OWN.”

 

“Why.”

 

“Why?  If you have to ask why, you’re fired.  Harrumph.  If we do that, we can generate more per-subscriber billing.  Good for us even with a fraction of it going back to the content provider.”

 

And that conversation basically brings us to today.  Sure, Michael Powell is in there with a la carte proposals.  And “must-carry” and associated retransmission rules have taken punches from all sides, but, as far as access, cable has evolved the way the cable industry pushed it.

 

About the only “innovation” that could allow for more consumer control of the set top is the commission’s ruling in August of 2011 which ordered cable companies to adapt to CableCARD encryption.  This would allow receiver manufacturers to produce products that – through an inserted CableCARD – could display all of the content provided by a cable company without an additional set top box. 

 

We’re free!  We’re free!  Well, not so fast.  The cable company still controls the CableCARD and your access to their system.  Oh, and receiver manufacturers haven’t adopted CableCARD universally.

 

So, cable users are, by and large, captive to their systems, including the set top boxes which decode and display the selected channels.  Even the DVR’s are integrated for the most part with add-ons like TIVO still depending on the cable subscription to operate and using the CableCARD decoding in order to operate.

 

It’s a bit ironic that a former cable guy, Tom Wheeler  is moving forward with the separation of cable and the set top box.  The intent this go-‘round, put forth on February 18, is not to give the consumer free run of a cable company’s product.  Instead, it is simply to break the stranglehold that the cable systems have on set top boxes and, hopefully, reduce set top box costs to consumers.

 

It’s a good thing, if not an easy one.  Not too many years ago, the cable topology was different.  All of the channels the system supplied appeared at your end of the cable.  The cable box was then programmed to allow reception of the package you paid for.  (Remember when you changed the channel and it was there?  When you changed it?  Not 5 seconds later?) ¹  They were addressable by the cable company and the package could be changed by them.  New systems are constructed so that only the channels you are watching are sent down the line to you.  What a bandwidth savings!  They’re encrypted, of course but you get them.  Nonetheless, it requires some really fancy integration to allow outside products to be employed as the go-between in the cable/receiver chain.

 

It’s back to basics – ensuring that you pay for what you get and that copyrights are protected.  It’s just a little harder to do.  In reality, though, the chip, once developed is only a few cents.  That, and the competition among suppliers, should bring consumer costs for set top boxes way down.

 

Well, then, why would the cable guys want to stop that?  First, take a look at your cable bill.  Are you paying a monthly fee for DVR’s or other set top boxes?  There’s reason number one.  But number two is the big one.  Third-party set top boxes can integrate cable content with Internet and other locally-originated programming.  To cable, this is pulling on that snag in a Banlon® shirt…possibly unraveling the whole sleeve.

 

Here’s how:  The box puts cable product on the same plane as a Hulu, Sony, and other independent and “over-the-top” (OTT) content providers.  If manufacturers make access to any given channel, say Netflix, Amazon, USA Network and CBS equally easy, the wheels start turning in the heads of the cable content providers.  “Why?  Why am I providing content to cable companies?  I can deliver direct to home.”  If I’m CBS, I don’t need affiliates feeding cable systems.  If I’m PBS, I can self-fund.  Seriously, do the math on 5¢ per view of Sesame Street country-wide.

 

Schedules go out the window.  Mozart in the Jungle launched when it’s released and gets watched whenever.  It may be pay-per-view, an all-you-can-eat subscription or sponsored but you make the decision.  I’ll go with my line one more time – no one cares what kind of car brings the pizza.  They care about the pizza.  And people are pretty good at finding the best pizza.  (Ray’s Famous Pizza, 7th Avenue, NYC and Pizano’s Pizza, West Division St., Chicago.   LA?  Sorry. I don’t do sushi pizza.)

 

For cable the ruling’s a nightmare.  Being forced to help enable your competition.  Sorta like CBS and the NFL network.  How do they keep control?  Price cuts?  No- or low-charge set top boxes?  A la carte?

 

For the consumer, once we figure out the boxes, we can have a lot of choices, and the price will probably come down, or at least not rise so quickly.

 

Hey, for promotion departments, it’s a godsend.  Those who figure out how to grow tune-in will rise to the top and there’ll be a lot bigger promotion departments for content providers getting the word out.

 

A quick word about one other group who stands to lose:  Advertisers.  There should be a lot fewer ad units available inside programming.  Maybe that’s wishful thinking but millennials specifically and Internet users in general don’t like the intrusions of standard in-program advertising.  They will certainly not abide by a pay business model that also supports the current level of broadcast/cable of non-program material (16+ minutes per hour). 

 

So look for this:  Advertisers (or agencies) develop their own programming distribution systems.  Note to large packaged goods guy:  We told you to do this in 1985.  You didn’t listen.  Now it’s going to cost you by a factor of 100.  Some other guys were a little smarter and stuck their toes in.  You may have to go big time – free “channels” – with advertising.

 

The available third-party boxes haven’t sold well.  But that’s because they really haven’t been promoted heavily and the cable systems have made their installation unnecessarily complicated.  Combine those reasons with the level of Internet-provided content and it’s understandable that third-party boxes haven’t taken off.  But hang in.  This ruling may help.  Internet-distributed content is on the rise.  And I’m sure there’s at least one entrepreneur out there willing to design a box that meets consumer expectations.  With that and the cooperation of cable operators in attacking their own industry, this might just take off.  Did you read that last sentence?

 

 ¹ To be fair, this is a combination of the request/fulfill and the digitization process

Mommy, What's a Channel?

Mommy, what’s a channel?

The question probably won’t be as common as one about the birds and bees but sometime in the not-too-distant future, you’re going to refer to a TV, satellite, or cable channel, or to a “network” and your young kid is going to ask.

Why, you say?  Hwhy?  Because the basic need for a channel – its raison d'être¹ – is as a mechanism for containing programming in order to deliver it to a viewer.  And now, with new technologies, they’re really no longer necessary.

I’ll give you an example.  Cable systems are trying to figure out ways to not have to deliver “ordinary” television.  The reason is simple:  they profit very little from it and that real estate (bandwidth) used by the “channels” occupied by standard commercial television is extremely valuable.

The value realization has already changed the topology of cable delivery.  You may remember when that piece of coax carried every channel all the way from the head end to your home.  Through lots of amplifiers and nodes and splitters along the way, but if you tapped into the cable at any point, everything was right there.  Now, systems are adopting the same technology that the copper twisted pair (AT&T, etc.) use where only the channels you select get forwarded to you.  That opens up a truckload of bandwidth to sell you other things – VOIP, Internet, VOD – ooooohhhhh do they love VOD!

So if cable wants out of basic program delivery, how are you going to watch your favorite NCIS series (how many are there now?).  You immediately jump to “over the air.”  Why’s that?  Because you know that CBS distributes the franchise and it’s that CBS channel that delivers the show to you – even though your local cable system is picking it up locally and passing it along.

That should tell you that there’ll still be a channel.  Maybe.  Maybe not.

First, let’s better define a channel.  Some would call it a distribution medium which gets content from one place to another.  In the past, that’s involved dedicated radio frequency spectrum, about 6 Megahertz worth.²  By dedicated, it meant, for example, the band of frequencies between 54 and 60 MHz for TV channel 2.  That band channeled the programming from the transmitter high atop something to homes in the signal area.  Did you care?  My favorite line is, “Nobody cares about what kind of car delivers their pizza.  They just care about the taste of the pizza.”

The pendulum has swung so many times that Foucault (I’m on a French kick. Maybe I need to surrender to someone) is dizzy.

But there’s a new direction…that of streaming.  Wait.  Why is that a new direction?  The world has been “streaming” since little Sammy Morse sent his dits and dahs through a pair of wires form one place to another.  Probably because just about any individual can access content around the world and can receive it, save it and/or switch to something else instantly, and all on a pair of wires or even over the air. 

What does that have to do with channels?  Well, from my vantage point, everything.  In the linear world of broadcast, someone’s pushing information to you through a dedicated pipeline.  It may be a 6 Megahertz collection of frequencies in the air or over a cable but that content is being pushed in the order and at the time the “owner” chose.  You have to take it that way.  Sure, now you can now DVR it but it’s still coming to you in a specific order at a predetermined time – through a channel.

Streaming can certainly be thought of that way – as a channel – but the difference is that everyone has his/her own, instantly.  And, more importantly, they can open that “channel” to all of the content available to them.

So, a content provider could provide an opening – go ahead, you know the word, a channel – directly to you.  Bellisario Online could offer NCIS, LA, NO, Boise, whatever directly to you.  First run³.  If you think DVRs make it easy, a well-constructed VOD service blows DVRs back to the days of cave paintings.  Yes, I know.  If you’re reading this, you know that already.  But when the Bellisarios of the world start doing that, the middle person won’t be needed.  If you can connect your device directly to the content provider, who needs Channel 2 – or 3 or 4 or whatever?  Who needs a transmitter sucking power and a channel hogging spectrum or a cable [satellite] delivering you specific programming.  It just ain’t necessary.  Forget the fight for ala carte cable.  It’s moot.

Back in the early eighties, a major CBS executive predicted that cable viewing would never cume to more than 1 percent of total sets in use.  It didn’t work out that way.  Looks like we’re in for a similar evolution away from channels altogether.

What’s in the way of it all?  Only a couple of minor hurdles.

First, promoting whatever new content is being offered.  Networks and stations can self-promote.  In fact, tune-in advertising is hard to escape, even in a dark, quiet scene of White Collar when USA Network pops a big, fat, bright, animated lower-third on the screen.  That, however, is changing, too.  Notice how CBS still promoted Thursday Night Football on NFL Network even after CBS had run its measly games?  Tell me that wasn’t part of the negotiation.

So, slowly, networks will, either obsequiously or by force, bite their collective backsides out of business.

Second, Net Neutrality.  The gummint is still trying to sort things out.  It’s a tough topic to discuss but I still think the marketplace can manage it.  Well, with a little antitrust “guidance” from that same gummint.

Third, Private Enterprise.  About that antitrust issue, if a single company owns broadcast, cable, development, production, online and streaming services, isn’t that getting a little close to the edge?  Now factor in the PCS folks like Verizon, Deutsche Telecom, Vodaphone and others, the pressure to give up channels becomes immense.

Anyone remember when the DC guys discovered that Eastman Kodak owned its own silver mines and paper mills?  The justice department got interested.  It’s possible that with a significant number of these so-called conglomerates offering these broad services, they’ll keep one another in check. 

Sure.  The media oligopoly will police itself.  One raises rates and the others will lower theirs to steal more business.  Ya think?  Not gonna happen.  But fewer and fewer entities are controlling more and more of the media world.  And it’s not just controlling a corner, but from creative thought to viewer delivery.  I’m not being political when I say the following:  That kind of control is dangerous.  Both content and pricing run amok.

But given the tenor of those involved – corporations battling for control and profit, gummint pushing for control and taxes, PCS folks screaming for bandwidth, and people having a “pay for it only if I can’t download it for free” mentality, it’s likely that channels will disappear.  Some of us may become frustrated.  Others, unemployed.  But for a lot of “channel” jobs currently in existence, there’ll be lots more in the streaming world.  It’s OK.  Go to the light.

Now, quick.  Teach your kids what a channel is, before they’re extinct. 

¹  I structured the whole sentence just so I could use that little bit of French.  I can’t say which is more silly – the phrase or me using it.

²  In the good old days, broadcasters and cable operators used the whole 6 MHz for a single program; 8VSB digital made room for a lot more in that same channel over the air.  Other compression like QAM on cable reduced bandwidth even further.

³  Which only means originally making it available.  It doesn’t “run” until you “run” it.