Away from the controversy caused by the inevitable if justified hoopla surrounding Samsung's legal battles with Apple, the Korean giant was pursuing its strategic visions on several fronts at last weekend's IBC show in Amsterdam. The vision was made more evident at one level as David Eun, EVP Global Media Group, discussed the company's options in the content industry. Of most note was his admission that we should not completely rule out Samsung's entry into the content business as developer or owner ("Never say never"), although in general Eun, who was appointed to the role in early 2012, hedged his bets on specifics regarding the company's relationship to the content industry. Samsung "will take a slice of the content value chain" and all options remain open.

The most significant demonstration at the IBC show was on Samsung’s booth, where the company was demonstrating the pay TV app which will be launched later in 2012 by TeliaSonera’s Estonian subsidiary, Elion. This was the closest thing we have seen so far to a virtual set-top box implementation. The app or service runs the entire portfolio of Elion pay TV channels and VOD services, and also provides a virtual (cloud) DVR functionality to replace the hard disk drive which would appear in the (real) set-top box solution.

Most impressive of all was the way in which the pay TV takes over control of Samsung’s smart TV. As soon as the user signs up to Elion’s service via the app, it becomes the default setting, overriding even Samsung’s own Smart Hub. If the viewer switches off the TV at night after watching Elion’s TV channels, as we would expect, the TV boots straight into the Elion app when switched on again in the morning. In order to exit Elion the viewer must select the input select button on the remote control in order to get back to the “regular” TV functions, including the TV’s built-in Smart Hub. We know well from our user experience research that this is not something many consumers will find easy.

The Elion demonstration illustrates the degree to whcih the traditional video ecosystem may be disrupted by apps and cloud technologies over the coming years. Clients wanting a deeper analysis can consult our latest Insight report.

A report was released by the UK Government's Lords Select Communications Committee while I was on holiday a couple of weeks ago but I thought it was worth flagging it up. The report, Broadband For All - An Alternative Vision, speaks to an issue I have been discussing with clients for many years, namely the fact that, given a blank sheet of paper in the 21^st century, we would never design our communications infrastructure to use terrestrial broadcast (wireless) spectrum to deliver television services to fixed devices.

Even when many things are converging, there remains a fairly clear distinction between a device or screen which remains largely or wholly in a fixed position (the large screen TV being the best example) and devices which are, to one degree or another, intended to support portability or mobility (the best example being the smartphone). The nature of communications technology dictates that if we deploy a combination of wired and wireless connections it makes sense to aim wires at fixed devices and wireless at mobile. That all assumes, of course, that we need wired connections at all, since if wireless could support every application then it would even be preferable for fixed devices. But if we assume that large screen television is going to place ever greater demands on networks (through HD, 3D, 8k and an ever growing numbers of channels, applications and screens) it is safe to assume that wires have some role to play for the foreseeable future. (Even the most aggressive 4G proponents are not claiming this technology could completely replace broadcast TV platforms any time soon.)

These are the main arguments behind the Committee’s recommendation to consider moving all current terrestrial broadcasting to the Internet:

“We recommend that the Government, Ofcom and the industry begin to consider the desirability of the transfer of terrestrial broadcast content from spectrum to the internet and the consequent switching off of broadcast transmission over spectrum, and in particular what the consequences of this might be and how we ought to begin to prepare.”

As an industry representative I can offer one immediate topic for discussion: how could the role of the television licence fee be altered to meet this objective? Reaction to the Broadband For All report has already demonstrated a common misconception: that terrestrial broadcasting is currently “free”, and therefore also a false question, namely “how can broadband be paid for when one of its main purposes is to support free television?” Of course, television does not come free, even when viewers can watch it without subscribing to Sky or Virgin Media. UK residents have to pay the annual licence fee of £145.50 ($227) in order to receive any television services, and other “free” services are supported by advertising. These income streams indirectly pay for the broadcast transmission services which currently support over-the-air broadcasting.

So if the Committee’s wishes are ever fulfilled it would seem that some of the licence fee should be diverted towards funding broadband, whether in its establishment or maintenance and operation. Broadband service providers will certainly be interested to know who is going to pay for the vast amounts of data which broadcast-equivalent internet television services would consume. One way or another the topic of the licence fee will inevitably become a key element in the broadcast switch-off debate.

Incidentally, it’s also good to see another of my long-held views (see Time to End This Broadband Nonsense: Ofcom Must Enforce Minimum Speeds) being reinforced by the Lords Committee, namely the demand to avoid the meaningless “up to” broadband speed marketing of the ISPs and focus on minimum requirements. “We recommend that the Government's targets should refer to minimum and median levels of service, and that Ofcom adapts its scorecard accordingly.” Hear, Hear!

David Mercer

Freeview's Managing Director, Ilse Howling, today warned UK regulators and politicians that the free digital TV service could only continue to grow if it had access to the 600MHz and 700MHz bands. Speaking at this morning's Westminster eForum event, she also reconfirmed her company's opposition to the current proposals for use of the 800MHz band by 4G services, which could, according to Arqiva's Charles Constable, lead to many more than two million homes losing access to some or all Freeview services.

Howling praised the Government's decision to fund the cost of the filters required to minimise disruption to television services, but criticised the fact that there was currently no proposal to fund the cost of installing these devices in homes, which is estimated at between £150 and £160 per home. Howling believes that the 'polluter pays' principle should apply, the 'polluters' in this case being providers of 4G services, in case there was any doubt.

Howling's position was supported, not surprisingly, by the DTG's Richard Lindsay-Davies, who said that management of 4G spectrum and white spaces were the most important challenges facing DTT's future. To that end he announced that the DTG's own test centre had been chosen by the UK government to assess the threat of 4G interference with DTT receivers. Professor Sylvia Harvey made the important point that the term 'interference' is inappropriate in the digital world, since rather than deteriorating gradually or suffering partial degredation, services would immediately disappear altogether.

There was also general agreement with the suggestion made by Barry Fox, renowned technology journlist, that a real world trial of 4G, possibly in the Oxfordshire area (containing the constituencies of Prime Minister David Cameron and Minister for Culture, Communications and Creative Industries, Ed Vaizey) would allow everyone to see exactly how many homes and devices would be affected by the introduction of 4G services, since however rigorous the testing, real world conditions are impossible to predict. One can imagine that the disappearance from the Freeview airwaves of a major live sports event – the Olympics 100m final perhaps – caused by a temporary 4G switch-on might be effective in bringing the issue to national attention.

In spite of their natural allegiance to the television industry, most eForum speakers recognised the importance of 4G services in the UK’s overall information infrastructure, but there are clearly battles ahead when it comes to the fine details of which spectrum gets used for which services and who pays for disruption to established businesses caused by the introduction of new technologies.

The wider context of the debate centres on the relative importance of traditional television in the context of the continued expansion and influence of personal and mobile devices such as a smartphones and tablets as media consumption platforms. These issues were also addressed at the conference but with an inevitable bias towards traditional models, in the sense of both “big screen” and “free to access” as key components of what many (British and European) people still understand as “television”.

The key unknown in much of this discussion is whether the current sharp demographic variation in media device consumption patterns indicates a permanently altered landscape. In other words, will today’s young, small screen video viewers remain that way as they grow older or will they seize the opportunity to migrate to a large screen HDTV as soon as they form their own households in later life? Because the assumption of many “wireless” provider seems to be that “wireless broadband” is the only service many people will need in the future to consume whatever content (video, music, games) on their personal smart devices as well as larger screens. The US is already debating whether LTE broadcasting can provide a long term replacement for traditional over-the-air signals (see Ericsson IEEE paper). If such debates come to Europe then the DTT/4G arguments seem set to become even more complex.

David Mercer

Big news today as Cisco announces its intention to acquire NDS for $5bn. Both company boards have approved the deal which is expected to close during 2H 2012. NDS is currently owned by News Corp and Permira.

Cisco made headlines last year for most of the wrong reasons, including famously pulling out of most of its consumer-facing businesses such as the Flip camcorder. Acquiring NDS puts it firmly back on the acquisitions radar, and confirms what John Chambers told me during our analyst roundtable at the 2012 CES: “the consumer still remains a key element in Cisco’s strategy”. Cisco supports service providers who support consumers, and NDS fits nicely into that positioning. According to Chambers during the financial analyst call today, NDS’s strength in software is exactly what Cisco’s customers have been looking for.

NDS helped create the pay TV industry. Originally developed out of the News Corp organisation, its smart card technology was a critical element in the development of Sky in the UK, and from that base it expanded into many pay TV operators around the world. Along the way it expanded into interactive (now more fashionably known as smart TV middleware and many other components of the television technology chain. And while the company’s charismatic leader, Abe Peled, used to make great play of the longevity and importance of the smart card/set-top box model, his company nevertheless has been preparing the way for the OTT/connected TV era. The fact that News Corp is willing to sell NDS is another sign (after Sky recently announced its own independent OTT service) that media companies see their subscription businesses as less reliant on the television set-top box, instead moving towards a multi-device, software and network based model.

If anyone doubted Cisco’s seriousness about the consumer video space (rumours about the future of its Scientific Atlanta business regularly resurface), this acquisition confirms it still intends to play a critical role in television’s transformation over the coming years. Assuming that the transaction goes ahead and NDS can be successfully integrated, NDS’s operator relationships, R&D strength and technology visions should help Cisco’s service provider and media customers make better sense of the value chain disruptions which lie ahead.

David Mercer

Former President of the European Parliament Pat Cox closed this morning's keynote at Cable Congress 2012 in Brussels by alluding to Roman Emperor Seneca the Younger's warning: "if man does not know to what port he is sailing, no wind is favourable." He was speaking in reference to the never-ending travails of the European Union as it seeks to resolve its financial problems. But he might as well have been commenting on the state of the European cable industry.

Europe's cable TV subscriber base has been flat for many years, although it has had some success in growing TV ARPUs. According to this morning"s press conference at Cable Congress in Brussels the fastest growth is now in broadband data, at least in the German market, where cable broadband had a very slow start.

Manuel Cubero, COO of Kabel Deutschland, made a telling remark when he said that the German cable industry now thinks of broadband customers using OTT video services as its own video customers, and in that context the cable industry’s video or TV customer base is growing.

Cable has always been the original broadband pipe, with the potential to offer video, television, communications, data and advanced services like smart home, all using the same network access platform. But while this inherent multi-service capability has always been seen as a strength, has it also obscured the industry's direction? If cable operators are now happy to accept customers who only pay for data as though they were video customers, what business is cable in?

As our research has shown, cable TV is caught in a pincer movement between higher value, technology-leading satellite services, and free DTT. It’s understandable that cable operators want to emphasise broadband as their growth opportunity, but at the same time I have heard a lot today about video being central to their future. Messages do seem to be somewhat mixed.

During the next panel discussion Mike Fries of Liberty Global touched on the old question of whether cable operators are in the content business. He indicated that cable certainly intended to expand its presence in content. He made the interesting point that cable's primary competitor, in all markets including the US, is free-to-air. So as cable navigates stormy seas, if it is defined primarily in relation to its main competitor this suggests that cable's port can be described as simply getting people to pay for something, or possibly anything.

That conclusion is clearly unsatisfactory so I am on the lookout for further guidance on cable's strategy and direction over the next couple of days. In the worst case perhaps we will just conclude that the sea fog is so thick that we can't even see where we are going, never mind know where and when we are expected to arrive.

David Mercer

 

Executives from Alcatel-Lucent (ALU) presented the company's latest technology roadmaps and innovations at its recent Technology Symposium in (and just outside) Paris. Stephen Carter, Chief Marketing, Strategy & Communications Officer, described the six key trends as ALU sees them:

• Wireless
• Cost Experience Transformation
• The Apps and Content Value Chain
• Cloud
• Critical Network Infrastructure
• Internet of Things

 None of these is a particularly new idea but they neatly sum up the key battlegrounds for ALU’s core customer base, the network service provider industry.

The continued evolution of wireless technologies is well documented, as global 4G rollouts will be the focus of attention for the next few years. But ALU has a key interest in the transformation of fixed line broadband as well, having played the leading role in establishing the dominant xDSL technologies over the past couple of decades. In spite of the global predominance of wireless access technologies, it may come as a surprise that fixed access still has a vital role to play, in mature markets at least.

For many years there has been much talk of fiber-to-the-home as the ultimate fixed broadband solution, but the relatively limited commercial deployments of such solutions (such as Verizon’s FioS) have been slow to emerge and, if anything, are showing signs of plateauing rather than becoming de facto alternatives. BT is the latest telco to stumble on its plans for FTTH (or FTTP – Premises – as it prefers to call it): installations during the trial phase are taking seven hours on average, against a target of four, and it is reported that a quarter of installations are taking as long as two days to complete.

There just doesn’t seem to be any obvious solution to the dreaded last mile challenge, which is less about developing ever more advanced communications technologies than about the need to invest in shovels and spades to dig up roads, pathways and gardens. The labour required for such “replacement” wires is pretty much fixed cost, unless anyone is suggesting an unlikely collapse in labour rates; and, as BT is demonstrating, you just never know what physical or organisational obstacles will lie in the way of new wire installations.

ALU thinks it has come up with a viable alternative to FTTH. As part of its High Leverage Network architecture, for which video services are seen as a major driver, it believes that the established copper access infrastructure can be upgraded to support speeds of up to 900Mbps. Key enabling technologies behind this transformation are vectoring (involving the removal of crosstalk), as well as quadruple bonding of copper pairs. Four pairs are not commonly available, but the technology would still provide bandwidth of nearly 400Mbps over two pairs over a distance of 400 metres.

ALU’s major challenge is to convince its service provider customers that any such next gen network investments will generate sufficient return from new service and application revenues. However positive a spin ALU puts on the potential for new data-sapping video services, our reading of service provider strategies is a high degree of caution about any significant net revenue growth impact from such services. As Telefonica noted recently during its investor day, incumbent telcos are projecting very modest revenue outlook (1-4%) for the foreseeable future, in spite of accounting for new service growth globally across wireless and wireline businesses. New network investment will continue but it is driven by competitive dynamics rather than the expectation of discovering a new pot of gold. Whether regulators decisions on next gen network policies, in Europe in particular, can have any impact on the established trendline seems doubtful at best.

David Mercer

Client Reading: Broadband Service Provider Performance Benchmarking: Europe Q4 2010

 

At this year's CES, we said that 2011 would the year of the Smart Home Applications. To be sure, tablets took the forefront at the show, but the "smart home" could not be ignored. We estimated the US market value alone to be on the order of $5.6 billion by 2015. While the term "Smart Home Applications" could conceivably a variety of services, in our analysis, we included Remote Energy Management, Broadband-enabled home security, and Telepresence

Up until now, despite what seems like years of trade show mockups, demos, and media hype, Smart Home Applications have failed to garner the attention of Service Providers on any measurable scale. In 2011, market conditions and consumer interest appear to be finally aligning.

Two recent Service Provider announcements suggest momentum:

AT&T and Xanboo

AT&T's acquisition of its longtime home monitoring and smart home application partner, Xanboo late last year garnered some brief media attention, then quickly receded below the radar. AT&T was and continues to be reluctant to disclose their plans with regards to the acquisition. A March 31^st letter sent by AT&T's counsel terminating dealer relationships effective July 2011 suggests that the company may be preparing to rebrand and relaunch in the near future.

Verizon's Moves in MDU

Verizon last week announced a partnership with Healthsense to provide remote health monitoring to senior communities another indicator that years of industry talk is finally being converted into action. Penetrating the target-rich MDU (multi-dwelling unit) market is one way to reach CEO Ivan Seidenberg's stated goal of 40% takeup of the FiOS service. Adding Cisco's umi Telepresence to the mix could make virtual doctor consultations a reality though, as always, pricing is an issue.

 

Recent talks with clients confirm this renewed interest in the Smart Home area Service Providers are clearly eager to uncover new revenue streams, and view Smart Home Apps (SHAs) as a new and uncluttered adjacent market.   They are likewise keen to mitigate churn, and our research has consistently shown that bundling provides some "insulation" against churn. Manufacturers see SHAs as a potential "hook" into the home, and are just as interested in how this plays out.

 

The past two years have been tough on Pay Cable TV. In 2010 alone, the industry saw over two million video subscribers drop their subscriptions. While certainly not great news, there was a silver lining. In the same seven quarters, Cable High Speed Internet (HSI) gains more than compensated for Pay TV losses.

Has Cable been in the wrong business all these years?

Following that same trend, Time Warner Cable today announced that it had lost another 66,000 Pay TV subscribers in the first quarter. The good news? It added 177,000 broadband subscribers.

We've heard (and indeed, have been saying) for so long that traditional Service Providers were threatened with "disintermediation" and risked being relegated to the role of a "dumb pipe." I, along with many analysts, have advised Service Providers to avoid this trap at all costs.

But in retrospect, is being a "dumb pipe" such a bad idea?

High Growth, High Margin

As Pay TV subscribers (and margins) continue to dwindle, Cable Broadband profitability is growing. Our analysis shows that HSI margins are anywhere from 70% to 110% higher than Pay TV (depending on whether or not advertising is included in the calculation). Broadband is likewise changing the face of the "traditional" Cable bundle. In 2008, Video contributed 59% to Cable's Revenues. In 2010, the number was 53%.

TWC's CEO Glen Britt told analysts on the company's Q1'11 earnings call that the company is rethinking the role of broadband in the company's portfolio. "High-speed data is quickly becoming the anchor product in the eyes of our customers," he said.

Don't reprint those business cards quite yet

While on the surface it may seem like a no-brainer, doubling down on broadband may not be the best long-term strategy for Cable.

As a highly commoditized consumer offering, it is extraordinarily challenging to differentiate, and is one easily duplicated by competitors. Furthermore, prospects for increased ARPUs in fixed broadband are decidedly limited, as few have been able to successfully monetize incremental bandwidth offerings.

To be sure, it's doubtful that any MSO would abandon its core TV offering. But as Cable ponders its next move on the OTT front, it should be of some comfort that broadband continues to take up the slack.

-Ben Piper

The UK’s telecoms regulator, Ofcom, has announced the results of its latest survey of broadband speeds. But it has again failed to recommend the main policy which would help consumers: minimum broadband speeds. As I posted last July this is the only way that BSPs will be forced to give broadband customers the level of service they are entitled to, and at the same time create a more level playing field for broadband providers.

Instead, in a response to a review by the Advertising Standards Authority into broadband advertising practices, Ofcom recommends that BSPs should be forced to publish a “Typical Speeds Range”. This is described as “representing the range of speeds actually achieved by half of customers”.

Ofcom also recommends that “If a maximum ‘up to’ speed is used in an advertisement, then the TSR must have at least equal prominence. Furthermore, the theoretical maximum ‘up to’ speed stated must be a speed actually achievable by a material number of customers.” This is particularly odd, since DSL technology simply cannot deliver the theoretical maximum (as advertised) in real life.

Finally, Ofcom has finally agreed with something I have been calling for since 2006, namely “a move away from advertising ‘up to’ headline speeds”. Well, that’s not quite as strong as banning this useless phrase, but we should be thankful for small mercies.

Whether any of these recommendations is ever implemented, and in what form, of course remains very much open to question. It would be surprising if, even after several more rounds of recommendation, review and procedural drafts circulating between the various regulatory and government bodies, that BSPs and their advertising partners were not able to neatly sidestep the key issues and keep consumers just as confused as they always have been.

The TSR idea sounds persuasive at first sight, but in reality, if implemented, is likely to do little to make broadband services clearer to consumers. BSPs will find all sorts of ways to obfuscate what TSRs really mean, there will be endless arguments over how they should be calculated, and in any case, if the TSR has as much prominence as the “Up To” speed in advertising, this is likely to be even more confusing to end customers.

It seems almost as though Ofcom got half way towards recommending Minimum Speed guarantees, and then pulled back, for what reasons we can only surmise. After all, a true TSR would include both a “minimum” and a “maximum”, at either end of the “range”. But if it only applies to half the customer base, it is as good as useless.

As I have pointed out many times, the background to this debate is the universal broadband commitment, which is itself an outcome of the misguided attempt to avoid talking about the politically incorrect “rural divide”. We need to get over this – it’s the nature of the technology and there’s nothing anyone can do about it until we run fibre to every doorstep in the country. It’s the poor souls in the 5-10% of the country who live too far from exchanges and out of cable coverage who are the reason we have to have these fruitless debates. If the government and regulator did the decent thing and put those homes, however many there are, into a special “rural broadband” category, the rest of the population and the industry in general could get on with talking about broadband in grown up language. Advertised minimum speeds would be perfectly feasible and DSL services could be banded into packages consumers could understand.

Too little, too late; but now that Ofcom has finally bitten the bullet on “up to”, here’s something else it needs to get stuck into: anecdotally I am seeing increasing numbers of friends and family getting frustrated with switching broadband providers. In particular the issue seems to come down to where responsibility lies for any problems with the line or broadband service. I am aware of several cases where AOL (TalkTalk) broadband customers have had problems getting acceptable service, either as new customers or when they upgrade for some reason; AOL/TalkTalk is unable to help, BT is unable to help, and the customer feels that they “may as well” go with BT because they know BT owns the network and will get the problem sorted out.

There are too many conspiracy theories to start thinking about, but there seems little doubt that it is too difficult to switch and many consumers consider it too much hassle. Our own survey of UK broadband customers (admittedly carried out in late 2008) showed that “hassle of scheduling connection/installation” and “inconvenience of cancelling service” were the single most important reasons why consumers would avoid switching to a new BSP. Ofcom may eventually get the advertising sorted out, but that will have little impact if consumers still feel it just isn’t worth trying to change providers.

David Mercer

Client Reading: Broadband Service Provider Performance Benchmarking: Q3 2010 (Europe)

The FCC’s recent approval, by a 4-1 margin, of the merger between Comcast and NBC Universal effectively transforms the nation’s biggest cable company into its largest media company as well. The $30 billion joint venture which was first announced in 2009 has many—including News Corporation, Time Warner and Disney—calling foul. To nobody’s surprise, the affirmative ruling (all 279 pages of it) came with some significant strings attached, including provisions around Net Neutrality, Over the Top (OTT) distribution and transparency, broadband affordability, as well as the new company’s role with Hulu.

Net Neutrality: Special Rules Unit 

The FCC’s Net Neutrality ruling last December was a compromise of sorts, leaving none of the interested parties particularly happy. In essence, the decision created “rules of road” for the Internet, though different rules for fixed and mobile services. As stated previously, we believe that the final disposition of this issue will take place in the Supreme Court.

It is interesting, then, that one of the “voluntary commitments” (as opposed to “conditions”) of the deal concerns net neutrality.  The order states that “neither Comcast nor Comcast-NBCU shall prioritize affiliated Internet content over unaffiliated Internet content,”   Furthermore, the order protects the commitment against any future (and probable) modification.  It states, “in the event of any judicial challenge affecting the latter, Comcast-NBCU’s voluntary commitments concerning adherence to those rules will be in effect.”

What this commitment essentially does is to lock NBCU into Net Neutrality, irrespective of the potential disposition in the courts.  The implications could be significant if NBCU-Comcast eventually finds itself subject to rules that its competitors aren’t.

OTT, OVD, FCC? OMG!

One condition that could potentially open the floodgates to new Online Video Distributors (OVDs) is the provision stating that “Comcast offer its video programming to legitimate OVDs on the same terms and conditions that would be available to an MVPD,” and that it make “comparable programming available on economically comparable prices, terms, and conditions to an OVD that has entered into an arrangement to distribute programming from one or more of Comcast-NBCU’s peers.

 From an OTT video service perspective, the conditions that FCC attaches to the merger approval do not harm—and could actually benefit—the value proposition of OTT services. The FCC requires that Comcast make available certain comparable content to an online distributor if one of its competitors does so. Although it does not imply a dramatic change to the current media distribution environment, it shows the FCC’s gesture to ensure OTT video services to have an equal opportunity of acquiring content and competing with MVPDs. Given emerging OTT services’ efficiency of formulating and executing strategies, an equal competitive environment gives them the upper hand to out-innovate those larger and slower MVPDs.

The single OTT video service that will benefit most from this merger approval is Netflix. As Comcast is spending its time integrating NBCU and probably will have to restructure or realign the company and redesign its online distribution strategy, Netflix is running far ahead in terms of expanding its content catalog, releasing more apps on different platforms and CE devices and improving user experience.

The Matter of Hulu

            Another provision of the ruling requires Comcast/NBCU to relinquish managerial control. uncertainty has mounted around Netflix’s main competitor in the online video space, Hulu, as Comcast/NBCU will have to relinquish managerial control in the online video distribution site. It makes possible for NBC to pull back its investment from a venture it would have little control, making Hulu less attractive to consumers and financially weaker than it is now.

For Hulu, the provision requiring Comcast to relinquish the managerial control of the OTT service could be beneficial as long as Comcast continues its investment in Hulu both in terms of financial backing and content availability. But different from NBCU, the new Comcast has had its own online strategy, which might be at odds with Hulu’s proposition. So Comcast may not want to invest in the Hulu business as much as NBC did before. On top of that, Comcast might eventually prefer to reduce or sell off its stake in Hulu due to the relinquishment requirement of managerial control on Hulu’s board.

Nobody wants to buy something that they don’t know much about and cannot control. If that were to happen, Hulu could still get NBC content as the approval requires, but it would lose its favorable position in the OTT space as the son of NBC--especially important when it comes to content deal negotiation.

Overall, the merger approval makes the prospect of Hulu fuzzier, if not gloomier.

 

‘Naked’ Broadband, Soviet Style

One of the most under-reported and potentially worrisome provisions of the order requires that Comcast provide standalone broadband access at “reasonable” prices. In theory, of course, this makes sense.  Consumers should not be required to take on a cable package in order to receive broadband, nor should it be constructed in such way that a bundled offering is, as the report notes, “the consumer’s only reasonable economic choice.”

               Where it gets hairy, though, is in the details.  The order goes so far as to mandate the minimum acceptable package and pricing (“At a minimum, Comcast shall offer a service of at least 6 Mbps down at a price no greater of $49.95 for three years”).  Seeing the FCC set pricing and package specifications should send a chill down the spines of free market enthusiasts.

Critics of the merger—and there are many— fall into two camps: those who feel the conditions go too far, and those who fear that they don’t go far enough. Dissenting FCC Commissioner Michael Copps pointed out that the ruling has implications on every corner of the media landscape, and that it “confers too much power in one company’s hands.”  Others call it a regulatory shakedown, setting a potentially worrisome precedent of the FCC inserting itself in the workings of an industry over which it has no mandate or authority.  

 

-Ben Piper and Jia Wu