PBS Helps Comcast Crush Competition

June 30, 2006 FCC , Policy Blog

RCN, a broadband and cable overbuilder, has filed very disturbing documents in the FCC review of the Adelphia transaction. RCN recounts how PBS has apparently signed an exclusive deal with Comcast for video on demand distribution of its PBS Kids Network and Sprout Network (oriented toward younger children). Comcast has wassted no time leveraging this exclusive distribution deal to disadvantage RCN — which competes with Comcast in Boston, Philadelphia, and Washington DC.

Last year, PBS Kids pulled access to its programming from RCN. The effect on RCN's video on demand (VoD) service was immediate and dramatic. According to RCN, use of VoD dropped by 85%.

While stunning, it seems obvious in retrospect. Parents will use VoD to keep the kids entertained, and PBS Kids has trusted programming. Folks who dislike the crass commercialism of Nickelodeon or Disney, or who want to provide educational programming rather than just entertainment, will want PBS programming.

Ultimately, RCN agreed to terms that provided it access to PBS' VoD programming. But it has now hit a new wrinkle. PBS has signed an exclusive distribution deal for PBS Kids and Sprout with Comcast's VoD distribution platform, Comcast Media Center. Unsurprisingly, Comcast wants RCN to pay through the nose, including for content it already gets through its chosen VoD provider, TVN. Anyone familiar with the history of Microsoft and how it leveraged its desktop dominance by requiring distributors to pay licensing fees even when they didn't take the product — or risk exclusion from all MS products — understands how this kind of deal kills competition. No one wants to pay twice. Heck, if they want to stay in business and offer products to customers at competitive prices, they can't afford to pay twice.

What makes this particularly outrageous, in my opinion at least, is that the PBS Kids and Sprout programming at issue is developed in no small part with public money and donations from viewers and businesses that had no intention of giving Comcast a club to beat competitors over the head.

In the short term, the FCC should address this issue as part of any program access conditions it imposes. PBS Kids programming for VoD appears, at least on the basis of RCN's experience, as much "must have" programming as regional sports. In addition to fighting the "last war" by making sports programming available, the FCC should also stop anticompetitive practices in the merging VoD services — particularly when the "must have" programming got financed by tax dollars and donations.

But the PBS situation highlights a broader problem. We have disserved our public institutions and centers of knowledge terribly, with the result that they remain vulnerable to this kind of exploitation. The PBS-Comcast deal flows from the same problems and attitudes that created the Smithsonian-Showtime deal (under which Showtime acquires exclusive rights to an as yet undisclosed amount of Smithsonian material) and the numerous examples of drug companies using public grants and grants to universities to develop medications they market for billions.

For too long, we have moved from treating the non-commercial community, folks like PBS, the Smithsonian, etc. with contempt. Gone are the Progressive and Great Society ideals that all citizens should have access to a common treasury of culture, education, and innovation. For years, Congress and society at large have scorned these publicly supported endeavors while praising the private sector. We have repeatedly cut funding for these institutions, required them to find funding on their own, and chastised them for living as "permanent dependencies" rather than supporting them.

Small wonder that these institutions increasingly drift away from their missions and ideals. Worse, the non-stop denigration of their contributions to our art and culture causes them to undervalue the resources they have. If we keep saying that Nickelodeon and Disney can do a better job than PBS, that Kim Possible is just as good as Cyberspace and that Rugrats is interchangeable with Between the Lions, we should not be surprised to find that these financially strapped institutions not only sell themselves, but sell themselves cheaply.

I call this the "Magic Bean" problem. Cash strapped non-profits, with no appreciation for the value of what they hold, trade their milk cow to a big corporation for a handful of "magic beans" that supposedly grow into a giant beanstalk leading to the pot of gold of self-sufficiency. Unfortunately, this isn't a fairy tale. At the end of the day, the public and the public institutions get a bunch of scawny bean plants while the private sector companies milk the public.

In the short term, the FCC should put a stop to Comcast's ability to leverage its exclusive deal with PBS Kids and Sprout by imposing a suitable condition on the Adelphia transaction. In the longer term, however, we must deal with the "magic bean" problem before all our non-commercial cultural institutions have made similar bad deals.

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One flag debate down, another to go

June 28, 2006 Broadcast Flag , FCC , Policy Blog

Today, the Senate rejected by one vote, a constitutional amendment to ban flag burning. At the very same time, another flag debate was raging in the House of Representatives. The Telecommunications and Internet Subcommittee of the House Energy and Commerce Committee held a hearing on the audio and video broadcast flags.

The hearing was divided into two panels – the first, on a proposed audio flag for digital broadcast and satellite radio, was very well attended and the subject of much debate between the panelists. There weren't any arguments we hadn't heard before. Mitch Bainwol of the RIAA argued that a satellite radio receiver which records radio programming and then disaggregates that programming into individual songs is akin to a download, and therefore requires a separate license. Stewart Harris, a country songwriter, claimed that without such a license, he and other songwriters will go broke. Andy Levin of Clear Channel (on behalf of the National Association of Broadcasters) argued that imposing a content protection scheme on digital broadcast radio (misnamed "HD Radio") would kill that nascent technology, since unlike digital TV, consumers need not transition to digital radio. And Ruth Ziegler of Sirius Satellite Radio said that the RIAA's effort was part of a larger plan to limit consumers' rights to make personal home recordings, in violation of the Audio Home Recording Act.

What was different, however, was the hostility of a Subcommittee of the Commerce Committee to the industries that it regulates, namely broadcasters and satellite radio broadcasters, which both argued against the audio flag. The content industry usually does not fare as well in the Commerce Committee as it does in the Judiciary Committee, but you wouldn't have had that impression today. With perhaps four or five exceptions of the eighteen who attended, the members were overwhelmingly in favor of an audio flag technology mandate.

What this says is that the recording industry worked the subcommittee hard, and our side has an awful lot of catching up to do. While the full Committee Chairman Joe Barton joked about marking up an audio flag bill next week (not possible since Congress will be in recess at time), the debate over the audio flag is really just starting in the House. But don't forget, the Senate telecom bill has an audio flag provision in it, and should the Senate pass the bill and seek to conference it with the House version, all bets will be off.

Oh, and the second panel, on the video flag? I testified on that one. Because the first panel ran so long, only three members saw fit to stick around when it started at 5:00. Clearly, the audio flag was the topic of the day.

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Hypocrisy and Broadcasting Indecency

June 8, 2006 FCC , Policy Blog

I had a classmate at Princeton named Richard Land. In the years we were at the University, from 1965-1969, we lived in a world of constant ferment: from the civil Rights demonstrations of '65 and '66 to the anti-war protests that lasted right up to our graduation. During all that time, I never saw Richard Land. The moral crusades of my generation: rights for blacks and women and the opposition to a war in Vietnam started under the false pretenses of the Gulf of Tonkin Incident, passed him by but now he's got a real moral crusade. Richard Land is now President of the Southern Baptist Convention and as his bio cites "Dr. Land has represented Southern Baptists' interests in the halls of Congress, before U.S. Presidents, and in the major media."

Yesterday, at the behest of Land and his brethren, James Dobson and Tony Perkins the Senate passed the Broadcasting Indecency Bill that makes sure that if Bono uses the F word in celebration on NBC's Golden Globes again, every one of their hundreds of affiliates will get slapped with a $300,000 fine. But guess what? The 300 cable networks of this country from Spike TV to E! are exempt from this legislation because of "free speech concerns." In other words, like the anti-gay marriage amendment, this is a fig leaf for political posturing in November and nothing else. If I saw Richard Land at a Princeton reunion I would tell him that I would like to have a serious conversation about the Pornoization of American Culture. I would like to know why Rupert Murdoch publishes trash like Jenna Jameson's "How to Make Love Like a Porn Star". I would like to know why some of America's largest media and hotel corporations are making billions on XXX porn video. I would like to know why teenage girls think the route to their 15 minutes of fame is removing their shirt on "Girls Gone Wild". I would like to know why the magazine stands seem to be filling up with Maxim and Penthouse clones. But we won't hear any conversation on those topics in the chambers of the Republican leadership, because they involve major corporate sponsors of their lower taxes and no regulation agenda. Money trumps morals every time.

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