Tuesday, January 11, 2005

"Breaking Free of Cable's Stranglehold"

The New York Times story "Breaking Free of Cable's Stranglehold:" opens with these scene-setting remarks:
"Cable television companies are not among the exhibitors here at the Consumer Electronics Show. But their influence is everywhere, as equipment makers seek to work with - or bypass - the cable industry's bottleneck control over the way most Americans watch TV."
This is a subtle story with a smple but not immediately obvious moral: The cable companies don't only want monopoly control over their own network. They want to extend that control as far into the home as they can.

They'd like to sell you the only Digital Video Recorders (DVRs) that work with their networks. They'd like to make sure that you rent their TV guide and don't use the widely available free ones. They want to make sure that any interaction that you have with your TV makes them a little extra profit. The tool? The ubiquitous digital settop box. They want to make sure that all these funcions are only available if you rent their (expensive goes without saying) proprietary settop box. In fact, if they have their way--and some electronics makers are beig seduced, they'd like to get their claws embedded in the TV itself. So you might buy a Panasonic/Time-Warner TV and could get some advanced services without renting that expensive box. But only as long as you lived in the Time-Warner footprint.

The FCC has tried to control this unhealthy extension of monopoly-based control by requiring the cablecos to support inexpensive card-based devices that could be programed to directly interface between a TV set and external services provide by 3rd party machines, the cablecos, and internet-based services.

The New York Times story that this entry links to focuses on the backend of this story: the delaying tactics the cable companys use to keep card-based technology at bay, the danger that delay it presents to particular 3rd party electronics companies and the other electronic companies that are cutting deals outside this neutral technology to gain access to the markets captured by the cablecos.

It is, I know, an obscure story. And it may not visibly effect you today. But it is a piece of the worsening story of consolidating monopoly control of the telcommunications sphere. The cabelcos and the telecos that control their monopoly networks want us all to believe that, somehow, that monopoly goes away if satellites and wireless technologies provide some services that that are similar to those that they provide. It most emphatically does not. We need to learn to deal more honestly with the fact of monopoly power in portions of our economy and to deal with the consequences.

This problem will only get worse when the different kinds of wired monopolies owned by cable and telecom companies (whose technology can almost be matched in capacity in narrow market segments by other technologies like satellite or wireless) collapse into one mighty fiber-optic network. The days of separate teleco and cableco networks are numbered. In the end there will be only one in any region. That network will have an unchallangeable advantage in capacity. All other technologies will have to depend upon it for the necessary backbone to maintain their narrow market segments. They will have to cut deals ceding control of their services to the master of the network much as some electronic companies feel compelled to do today.

No, this little story from a CES show is the canary in the mine. It alerts or should alert us to the subtle but real ways that monopolies reach out into their surround and control the bottlenecks that they create. The pattern that is emerging that makes independent DVRs produced by many competing companies a breed endangered not by competition or superior technology but by the determination of the owners of monoply networks to own the market segment is an auger of the future.

If we can't find the courage to effectively regulate or transform into citizen-owned utilities these huge monopolies then our last best hope is to shield ourselves by developing small, locally-owned networks that can isolate us from the malign effects of the monopoly networks.

In the end, that might well be the greatest service that citizen-owned networks like the one LUS is fighting to develop could deliver.

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