The Only Thing I Don’t Predict is the Future… of Television…
January 14, 2009
I confess to being delighted with President-elect Obama’s naming of Julius Genachowski to Chair the FCC. I’ve gotten to know Julius through a board on which we sit together– and found that all the things that folks like VC Fred Wilson and (even) The Wall Street Journal are saying about him are blissfully true– he’s *very* smart, terrifically open-minded and curious, deeply grounded in both the issues of telecom/broadcasting and in the ways of Washington, and (as Wilson puts it) “an honest, decent guy.”.
Still, the occasion begs the question of the new Administration’s priorities– which issues will move up the priority ladder; which, down… what the thrust will be. A couple of thoughts:
Over the last few years, there’s been much discussion at the FCC and in the entertainment industry of “A La Carte,” the notion– a favorite of out-going FCC Chair Kevin Martin– that all cable channels should be offered for individual purchase, not bundled as they currently are. A La Carte advocates argue that it’s unfair for consumers to pay “cross-subsidies” to support channels they don’t watch. As another A La Carte fan, John McCain asked, “why should my 92 year old mother have to pay for ESPN in her cable package?”
Understandably cable system and network operators feel differently. Eliminating bundling would, they argue, eliminate the opportunity to develop new channels, and would ultimately mean that consumers would pay the same total for cable ($60+ per month) or more, and receive fewer channels. FWIW, while I find the democratic urge of A LA Carte enticing, I tend to agree with the operators. (Disclosure: I was in the past a cable network operator myself, and consult on occasion to both network and system ops… still, of course, I think that I’m right.)
Which way will the Obama-Genachowski FCC go? Consider a theme that runs through the Journal’s piece:
Mr. Obama pledged in his [technology] plan [which Julius basically wrote] to revamp government programs to expand the reach of high-speed Internet service. Mr. Obama also expressed support for “network neutrality,” which prohibits carriers from moving some Internet traffic faster at the expense of other traffic…
The Obama tech plan called for the U.S. to increase its definition of “high speed” Internet and reform a $7 billion federal phone-subsidy program to help cover the costs of offering broadband in rural areas. It also called for encouraging diversity in media ownership, a signal that efforts by big media companies to expand their empires could face tougher scrutiny.
More high-speed internet, more broadly available, more “democratically”… the good news for the cable incumbents is that this probably takes the heat off of A La Carte as it’s been recently discussed– the unbundling of cable networks– for at least several months. The other news is that, to the extent that it succeeds, it sets up the infrastructure for “a la carte on steroids”: IPTV, television over the internet… in which case it won’t matter whether a la carte cable channels were a good idea or not; a la carte programs will be a reality.
Folks in the entertainment business are fond of observing to each other that no one voluntarily watches shows on computers or phones when TVs are an option… But in fact viewing on “computers”– likely terrific monitors that are effectively TVs (only better than most, and connected to the web)– is steadily rising. And one of the few newsworthy items out of CES last week was the proliferation of internet-enabled televisions.
In the same way that we can look back at Jimmy Carter’s naming of Alfred Kahn to head the CAB as an early indicator that, within several years, the airline industry would be almost unrecognizably different (see here), so we may look back on today’s announcement in the same way, as a harbinger of a home entertainment and information landscape about to be undergo a sea change.
So, all of us “civilian” viewers had better limber up our clicking fingers. And at the same time, it seems to me prudent for incumbent companies to accelerate their thinking (and modeling/simulating/experimenting) about how they would play in a world in which IPTV is the organizing principle, not just the novelty side show it is today… and to ponder how to play current distribution relationships and rights agreements in a way that’s robust against that possibility in the meantime.
An IPTV future will be an astoundingly profitable one for some– it’s a great time, economy be damned, to be pioneering for the new IPTV platform. The question is whether the incumbent players can adjust fast enough and effectively enough to be among those winners.
In any event, IPTV can have some happy side effects for both providers and viewers/users… By way of example, the Journal also noted this:
Mr. Obama’s plan advocated using technology to help “protect our children while preserving the First Amendment” [c.f. Common Sense Media, the organization of which Julius and I are both directors-- at least until he's confirmed, and may well need to resign from that Board]…
One way to “use” technology is to multiply consumer choice and control so that age-appropriate alternatives co-exist with inappropriate ones in a way and at a scale that make it easier and easier for parents to say “yes” to entertainment they feel is right for their kids. An IPTV future (abetted by a ratings system like Common Sense’s) can deliver that– and in so doing, reduce the pressure to censor distribution.
Another potentially happy side effect: In a fully-distributed high-speed internet/IPTV future, the Customer Relationship Management (CRM) systems in which media companies are busily investing will be effectively inverted. As the emphasis shifts (as it will have to) from “Management” to “Relationship,” these new systems will become ways in which viewers/users can have more direct and more effective impact on the services they receive– in some cases, even contribute to them.
And so on and so on…
In any case, that Julius is a close advisor and an old friend (law school classmate and basketball teammate) of the President-elect, along with the simple fact of Julius’ own powerful competence, suggests that the goals sketched in the Obama Technology Plan will have some real priority in the new Administration.
These are simply my deductions (my motto remains the quote from Yogi Berra in the title of this post). Still, if there’s anything to them, they’re sure to be mirrored in similarly smart, forward-looking, and (small “d”) democratic moves across the telecommunications landscape.
That’s probably going to be a good– a very good– thing. And it’s for sure going to be interesting. Very interesting.
