Consumer Video Choice Coalition member Public Knowledge hosted a briefing on Capitol Hill on December 15 titled “Empowering Opportunities for Diverse Media Voices in a Digital Age.” Moderated by Public Knowledge’s Vice President of Government Affairs, Chris Lewis, the panel discussed issues facing programmers and content creators from minority communities and consumers from those communities who are seeking new ways to access content. The panel included Michael Scurato from the National Hispanic Media Coalition; Brad Love, chief technologist for device manufacturer Hauppauge; Clifford Franklin, the founder of GFNTV, an online video programmer of minority content; Brian Woolfolk, an attorney who represents numerous minority programmers; and John Bergmayer of Public Knowledge.
Lewis kicked off the discussion by explaining the new opportunities for diverse voices in the online video marketplace. However, Lewis also pointed to a crucial obstacle for programmers and content creators seeking to find new audiences – the cable providers’ firm control over how consumers access pay TV. Bergmayer explained the historical and legal background of the problem. Congress began considering this issue in the 1992 Cable Act, and this resulted in “Cable Ready” TVs. However, subscribers increasingly needed to use set-top boxes to access programming which was being encrypted. Thus, in the 1996 Telecommunications Act, Congress included Section 629, which mandates that the Federal Communications Commission (FCC) “adopt regulations to assure the commercial availability . . . of converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming . . . from manufacturers, retailers, and other vendors . . . .” In the two decades since, competition in the video navigation device marketplace has remained elusive as 99% of consumers rent a set-top box from their pay TV provider, costing the average consumer $232 per year. Recognizing the lack of effective competition in the retail marketplace for set-top boxes, last year, Congress tasked the FCC with establishing a working group of technical experts to find a way to develop a technology that would foster innovation in this market, which is the only area of consumer electronics that has been closed off to significant competition. The FCC solicited public comment on the recommendations in the working group’s report, and now consumers are waiting to see if the FCC will act on those recommendations and ensure that consumers can choose how they want to access content.
Although consumers can take advantage of more ways to access content through over-the-top (OTT) delivery of content over the Internet, cable and pay TV remain critical ways that consumers can access content. Scurato pointed out that the Latino population has some of the highest rates of viewing OTT content. However, 90% of Latinos still subscribe to cable. Scurato also explained how for consumers, this issue is about “Cost, Innovation, and Convenience.” If there were a truly competitive market, consumers would have more options for video navigation devices, they would save money as prices would drop, device makers would be forced to innovate and distinguish their products, and it would be easier for consumers to find new options.
Woolfolk discussed the different business models available to creators online, but one of the biggest challenges facing creators is distribution. Franklin explained the difficulty he has as a programmer trying to reach new audiences. As a programmer looking for wider distribution of content, pay TV is still one of the most effective ways to reach new audiences. However, many of the channels that focus on minority audiences are located in channel ranges that are difficult to find. Often artists who can’t get on cable and pay TV channel lineup won’t be able to attract viewers and subsequently advertisers who can support them.
As pay TV providers have maintained control over the set-top boxes consumers use, they have also limited consumers’ ability to find new programming. With 99% of consumers leasing set-top boxes from their cable providers, there is little incentive for the cable providers to innovate, offer new products, or develop new features. Love highlighted some of the new features and search functionalities that third party retail devices could offer and discussed how the “virtual head-end” proposal is easy to support and is based on existing, low-cost, and widely-deployed technologies . Enhanced searches would make it easier for consumers to find content, which would attract more audiences to independent and diverse content.
Bergmayer explained that this is not just a cable or video issue – it’s a broadband access issue. To be competitive Internet Service Providers, even in smaller markets, have to offer some sort of video service. Most consumers still use a set-top box to access content, which is increasingly linked to Internet usage.