The Present of Video

On Wednesday, the House Subcommittee on Communications and Technology is holding a hearing on the video business that will address the retransmission consent/program carriage issue. There is a legal requirement for cable and satellite companies to carry most local programming, and they pay a fee to the programming conduit for the privilege of compliance. These negotiations often become very ugly, as the local network affiliate typically values its programming much too dearly, but the cable/satellite company has no choice but to pay the asking price. The FCC is supposed to limit the price to “just and reasonable,” but in practice they never get involved at all.

People who get mad at the cable company for raising the price of service year after year invariably fail to realize that programming costs to the cable companies escalate year after year as well, so putting all the blame on the cable company is essentially shooting the messenger. One of the witnesses at the hearing is Gigi Sohn, founder of Public Knowledge, so I suppose the panel will get an earful of that sort of thing. Dish Networks has a clever little DVR that skips commercials, and the local programmers aren't very fond of that idea despite collecting fees from the carriers for delivering their ads to consumers. While Dish’s “Hopper” DVR is taking the heat for commercial skipping, all DVRs allow it in one form or another; TiVo has a 30 second skip feature that makes it very easy to miss commercials. Most people don't actually use these features because so much of TV watching is passive these days, and the best shows (on HBO and Showtime) don't have commercials anyhow.

One of the more interesting questions is just what you have to do to qualify as a “multichannel video programming distributor” these days. MVPDs are the subject of the cable act, and today they roughly include cable companies, DirecTV and Dish, telcos who sell IPTV packages (AT&T, Verizon, Century Link) but not Hulu, YouTube, or Netflix. One of the implications of being branded an MVPD is the program carriage requirement, so it’s clearly not in the interest of Netflix to be so identified.

Netflix has witness at the hearing, so I'm sure we'll hear about their wish for less expensive delivery of their programming, something that’s likely to happen as they build their own content delivery network instead of contracting with an endless series of retail CDNs for the service. More stability on their side leads to lower costs for ISPs, which will probably trickle down to consumers at some point. I'm guessing that the major issue Netflix faces is the same one that dogs the MVPDs: programming prices. We've beat their interconnection issue to death, with multiple blog posts as well as a report, Now Playing: Video Over the Internet.

It promises to be an interesting hearing, although I doubt that it will actually cover its titled subject, "The Future of Video" as much as it dwells on the present, but that’s enough.

UPDATE: The archived video of the video hearing is on C-Span.