The FCC Has A Plan That Might Finally Get You The Apple TV Steve Jobs Wanted
It's now more than 3 years since Steve Jobs' biographer Walter Isaacson recounted the story: 'I'd like to create an integrated television set that is completely easy to use,' Jobs told Isaacson. 'It would be seamlessly synced with all of your devices and with iCloud... It will have the simplest user interface you could imagine.I finally cracked it.' What Jobs didn't crack before his death, nor has Tim Cook since, however, has been the monopoly the cable and satellite companies have over the rights to most television programming. Without it, Apple's TV plans are just that: ideas for someday. If FCC Chairman Tom Wheeler has his way, however, that someday could be coming soon.
A modest proposal
Wheeler took to the FCC's blog to issue a missive suggesting that internet-based video providers could potentially provide consumers with choices they don't have today: different bundles, maybe even better pricing, but only if they are able to negotiate with content owners on a level playing field:
Consumers have long complained about how their cable service forces them to buy channels they never watch. The move of video onto the Internet can do something about that frustration - but first Internet video services need access to the programs. Today the FCC takes the first step to open access to cable programs as well as local television. The result should be to give consumers more alternatives from which to choose so they can buy the programs they want.
He notes that recently HBO and CBS announced plans to offer their programming directly to customers, outside of traditional cable offerings and that Dish Network is planning on a bundle of channels to be offered over the internet as well. Wheeler wants to see more of this. 'I'm asking the Commission to start a rulemaking proceeding in which we would modernize our interpretation of the term 'multichannel video programming distributor' (MVPD) so that it is technology-neutral. The result of this technical adjustment will be to give MVPDs that use the Internet ... the same access to programming owned by cable operators and the same ability to negotiate to carry broadcast TV stations that Congress gave to satellite systems in order to ensure competitive video markets.'
The result would be a regulatory framework similar to the one that allowed Dish and DirecTV to flourish in the 1990s and 2000s. Both entered a market dominated by cable systems that were also content owners. Protected by rules that required fair dealing, the two ended up with about 1/3 of the total market for multichannel video.
A long road to success
Skeptics should note that even with new rules in places, entrants would not be guaranteed a repeat of that success. It's unlikely FCC rules would prohibit the kind of discounting that makes the current bundles attract to cable companies. For example, Comcast might agree to carry not just ESPN, but also ESPN2, ESPN News, Disney, ABC Family and the local ABC affiliate as part of a broad agreement that results in those channels being sold for a package price. Pulling apart the package might result in a higher fee for any one of them, making the 'unbundled' version less appealing than it would be otherwise.
And while those that don't watch sports might be aware that the rights for ESPN are the most expensive of any non-premium channel, it's also true that parent-company Disney uses that high-ticket offering to make its overall suite look attractive otherwise. Even if it chooses to offer an all-but-ESPN bundle to an internet video provider, that package is likely to come with a smaller discount than the upstarts would hope.
Caveats aside, there is potential here to upset the current order. Dish, for example, is coming with its offering even absent FCC rules, using the negotiating power of its existing satellite TV base. Sony seems to be following close behind. With new rules in place, Apple, Microsoft, and Google are likely to follow. (Google has been making noise about a subscription version of YouTube lately.) Each has a presence in the living room already and each can reasonably expect to sign up many thousands of the millions that don't have traditional cable yet could find a smaller, less-pricey package of channels appealing - especially if they're able to pick and choose.