Now that Google, Sony, TiVo and Best Buy have created the AllVid Tech Company Alliance, some powerful interests are pushing the FCC to follow through on requiring pay-TV providers to conform to the same set of technical video interfaces. Cable is worried about AllVid, and for good reason: It’s just the latest initiative that could potentially turn the entire pay TV business model on its head. And there’s no telling what could ultimately shake out of this radical experiment in supposed consumer liberation.
At first glance, AllVid sounds logical and consumer friendly: We’ll all be able to hook up cable to any number of boxes from the likes of Sony, Samsung and Panasonic—and just seamlessly watch endless variations of TV brought to us by the elegant interfaces of Google, Apple, Netflix, etc. No more clunky VOD systems. No more slow channel surfing. No more cable tyranny!
It would be one thing if AllVid proponents simply wanted a way to port pre-existing cable packages into their third-party boxes and then add their own accoutrements. But they want something far more radical. They want the ability to slice and dice those pre-arranged pay-TV content packages to their hearts’ content. This idea amounts to online a-la-carte, and the same economic limitations that the FCC once reported wouldn’t work in linear TV (before ex-FCC chmn Kevin Martin ordered the study redone to his liking) are the same exact reasons it wouldn’t likely work over broadband either.
Now, let’s admit one thing: Someday broadband could be so cheap and plentiful—and people’s viewing habits so fragmented—that distributors will have no choice but to let content owners simply go direct to consumers. Those who own the pipes could charge for use of those pipes, either as flat-rate or metered-rate ISPs—and depending on how the net neutrality debate ultimately shakes out—either charge consumers directly or get fees from the content owners themselves, or a combination of both. The irony is that distributors may ultimately end up getting paid by programmers, not the other way around as is the case today. The dual-revenue stream for content owners may eventually go away. But if we want those content providers to stay in business and keep producing content, we need an economic model to replace it. And none yet exists.
Because this dumb pipe/direct-to-consumer world has no economic model upon which to thrive, those who would benefit from it are pushing for government intervention. You can’t blame them. They have shareholders too. But the idea that the FCC could step in and simply void thousands of licensing deals between content owners and distributors seems a bit far fetched. It’s difficult to imagine a situation in which the courts would allow it. The NCTA has put it this way: “In a nutshell, Sony/Google are asking the Commission to ignore copyright, patent, trademark, contract privity, licensing, and other legal rights and limitations that have been thoroughly documented in [the AllVid] proceeding.” That’s cable’s take on this. The other side has a loud megaphone as well. Now it’s up to the FCC.
(Michael Grebb is executive editor of CableFAX)