Thank God We Don't Have Cable Neutrality
Time Warner Cable, the owners of the Dodgers local broadcast rights is continuing to battle with local cable channels to be added to their cable package. Like last year, it appears that no deal will be forthcoming and the Dodgers (and perhaps more disheartening, Vin Scully in his last year) won't be on many TV sets this summer in LA. Kevin Drum essentially says bravo to the cable companies for opposing the Dodgers bid to jack up basic cable rates in the area.
Boo hoo. They tried everything—everything, I tell you. Except, of course, for the one thing that would have worked: the right to make the Dodgers an extra-cost option, not part of basic cable. Most cable operators see no reason that every television viewer in the LA basin should have to pay 60 bucks a year more in cable fees regardless of whether or not they care about baseball.
And that's the one thing TWC won't do. Why? Because then it will become crystal clear just how few households actually care enough about the Dodgers to pay for them. And that would truly be a disaster beyond reckoning. There's a limit to the amount of sports programming that people are willing to have crammed down their throats!
I actually agree with him, and will add that it is always great to see a progressive acknowledge consumers do actually exercise accountability on businesses.
But I will observe that had we adopted cable neutrality rules** as we have for net neutrality, the cable companies would have found it impossible, or at least much more difficult, to oppose carriage by a pushy and expensive content provider. It is this sort of intra-supply-chain tug of war that generally benefits consumers in the long run (as it has in LA, at least for Drum) that is essentially outlawed by net neutrality rules which basically declare content providers the victors by default. As I wrote before:
Net Neutrality is one of those Orwellian words that mean exactly the opposite of what they sound like. There is a battle that goes on in the marketplace in virtually every communication medium between content creators and content deliverers. We can certainly see this in cable TV, as media companies and the cable companies that deliver their product occasionally have battles that break out in public. But one could argue similar things go on even in, say, shipping, where magazine publishers push for special postal rates and Amazon negotiates special bulk UPS rates.
In fact, this fight for rents across a vertical supply chain exists in virtually every industry. Consumers will pay so much for a finished product. Any vertical supply chain is constantly battling over how much each step in the chain gets of the final consumer price.
What "net neutrality" actually means is that certain people, including apparently the President, want to tip the balance in this negotiation towards the content creators (no surprise given Hollywood's support for Democrats). Netflix, for example, takes a huge amount of bandwidth that costs ISP's a lot of money to provide. But Netflix doesn't want the ISP's to be be able to charge for this extra bandwidth Netflix uses - Netflix wants to get all the benefit of taking up the lion's share of ISP bandwidth investments without having to pay for it. Net Neutrality is corporate welfare for content creators....
I am still pretty sure the net effect of these regulations, whether they really affect net neutrality or not, will be to disarm ISP's in favor of content providers in the typical supply chain vertical wars that occur in a free market. At the end of the day, an ISP's last resort in negotiating with a content provider is to shut them out for a time, just as the content provider can do the same in reverse to the ISP's customers. Banning an ISP from doing so is like banning a union from striking.
** Footnote: OK, we sortof did have cable neutrality in one respect -- over the air broadcasters were able to obtain crony legislation that cable companies had to carry every locally broadcast channel. So that channel 59 that you never bothered to watch now get's equal treatment with the NBC affiliate. This was a huge boon for these stations, and the value of these often tiny stations exploded with this must-carry rule. Essentially they were given an asset for free, ie position in a cable lineup, that other competitors had to fight for.
Al Gore, as an aside, actually became rich with exactly this game. It is hard to fight your way into a cable lineup nowadays. Al Gore did it with this Current TV startup based on his name and a promise of a sort of MTV for politics. The channel went nowhere and lost a lot of money, but it now had one valuable asset -- placement in cable TV lineups. So it sold this asset to Al Jazzera, which had struggled to get placement.
