Choices are always good for consumers, which makes the recent ruling by the FCC (Federal Communications Commission) a good thing. At the heart of the debate was whether a clause in the Cable Act of 1992 was still practical in a world where digital cable services are delivered by a record number of providers, many of which were not in the business of offering digital cable a decade ago. The Internet is to thank for this advance, and broadband in particular, as IPTV (Internet Protocol Television) is the technology that has enabled telecom giants, satellite companies, and other competitors to carve out a slice of a very lucrative pie. Unfortunately, law makers were unable to accurately predict the emergence of so many competitors or even fathom just how radically the cable industry would change once feasible IPTV solutions were available, and thus the Cable Act of 1992 feel short in a few key areas by modern standards.
The Clause and Other Legalities
As with any act, the Cable Act of 1992 is detailed, complex, and open to interpretation. Without going into details that would put lawyers and legal experts to sleep, suffice it to say that there was a clause in the Cable Act of 1992 that enabled some providers to have exclusive access to certain types of programming. That is exactly what some cable companies did, signing exclusive contracts to provide specific content to their customers only.
The problem is that some content, especially sports, is very hard to keep to a single carrier. Part of the problem is that people tend to move and fans of any given team might be concentrated in one region, but there are also fans scattered across the country. On the surface, this does not seem to be a large problem, but few cable operators service all areas, and even those that do might not offer local sports packages in other markets.
IPTV to the Rescue!
IPTV’s growth exacerbated this problem, as IPTV operators such as Verizon (FiOS) and AT&T (U-verse) have been able to offer competitive digital cable services delivered over specialized broadband connections. More competitors is usually a good thing, but that is not the case when none of the digital cable service providers carry the programming consumers want due to exclusive arrangements. The net result is that the exclusivity arrangements were not serving the needs of the consumers, but they were also not serving the needs of businesses. After all, there are plenty of ways to share content while staying ahead, such as time delaying delivery, altering signal quality, and so on.
Exclusive arrangements are not necessarily monopolies, but there are many government regulations that require different kinds of businesses to offer exclusive services to third parties for a reasonable fee. Each industry is unique and lawyers may debate the meaning and intention of the language in such bills endlessly, but cable companies keeping exclusive arrangements without even entering into negotiations to resell their content with stipulations was apparently not part of the plan. For example, Verizon approached Cablevision regarding access to certain sports content and AT&T approached Comcast about sports content as well, but neither Cablevision nor Comcast even attempted to enter into honest negotiations.
Other carriers made arrangements that netted them and their investors a fair price, while typically offering delayed programming to other carriers. It may have been these refusals to enter into negotiations that caused both Verizon and AT&T to lodge separate complaints with the FCC in 2009, but both cases were so remarkably similar that a single ruling was issued. Whether a second ruling is incoming or not may not be important as
The Ruling: What Does it Mean?
The great news for consumers is that the FCC’s ruling essentially leaves consumers with the assurance that nascent technologies that might be used to delivery content will be assured access to virtually everything. Exclusive arrangements may still be possible under some circumstances, but the content must be offered at reasonable prices and with reasonable stipulations. For IPTV, which is not necessarily nascent, but still not entirely mainstream, this is great news. IPTV is clearly the future of television, and things are only getting started. If IPTV cable companies and/or other entities were allowed to virtual stranglehold on certain licenses, the results would have been disastrous for IPTV and consumers alike.
Will another loophole emerge? Possibly, but the FCC has shown that it is responsible in both speed and fairness to all parties. While it would have been nice to see the FCC respond swifter in to this particular type of complaint, the situation is very complex and all parties are entitled to being heard fairly. After all, the cable companies involved did spend millions of dollars promoting their assets obtained via exclusive agreements based on their interpretation of FCC regulations. The extra time taken by the FCC essentially means that all sides were heard and each argument properly weight, and the net result was that consumers ended up winning despite the losses or victories of organizations involved.
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