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Internet TV: The Empire Strikes Back!

What if popular TV shows are only permitted to be viewed over-the-Net by subscribers to conventional CATV, Satellite, and IPTV services? Such a plan seems to be gaining momentum among companies such as Time Warner, Direct TV, and Verizon. They want to discourage subscribers from “cutting the cord” to conventional TV and alternately watching the shows via broadband ISP service at websites like Hulu, Joost, and TV.com. Simultaneously they reason the plan provides added value to conventional subscribers because it gives viewers an alternate way to watch the shows. The answer to “what would happen?” depends upon a number of contingencies. The two most important are (1) whether it would be free or involve yet another monthly charge and (2) whether the broadcast networks would co-operate.” As to the first point, it appears that a number of popular cable programmers want to be paid an additional fee thereby requiring the operators to pass along the costs to subscribers. Alternately the operators could “eat” the expense themselves, but there’s not a Saint’s chance at a political convention that they would do that. Secondly, the broadcast networks (ABC, CBS, Fox, and NBC) are likely to be less co-operative because they generally don’t collect carriage fees from the operators as do the cable networks like ESPN. However, system operators may be able to “buy” broadcast network co-operation by paying them fees similar to those paid to the cable networks. The broadcast networks would argue, as a matter of parity with the cable networks, that such fees should be based upon the 80 million conventional TV subscribers instead of the nascent subscribers to a restricted “over-the-top” video service. In short, it appears that getting everyone to agree is like herding cats. Furthermore, the incentives needed for such co-operation may require the operators to pass along the expense in the form of an incremental monthly subscriber fee.