Now that “Fast and Furious” is under control, the Department of Justice (DoJ) is probing whether cable TV is quashing online video competition from the likes of Netflix. Cable sometimes wants both cable TV and Internet access subscriptions before it tolerates wide-downloads from non-cable movie sources. As with bandwidth-confiscating Net Neutrality rules, DoJ and FCC are ready to ignore the capacity depletion that Netflix customers inflict on cable companies and customers. Other Internet access competitors may have enough bandwidth to haul Netflix movies to the home, but they are slower than cable, and forget snail-mail delivery — movie fans’ time is too valuable for those.
Cable started with capital investments sometimes through junk bonds. Cable franchise contracts gave the community recurring fees, private networks, broadcast equipment for schools, town council and community buildings, carriage of PEG channels, and guarantees of offering cable TV service to specific percentages of the community. In return for those costly “giveaways” early in development, cable was given the right to build its network and pass-through public “rights of way.” Gradually and at great expense, cable upgraded its capacity from coax cable/analog channels to fiber-optic/digital bandwidth so that it could offer more channels, telephony and Internet access. Revenue from these services pays interest on the upgrade financing. Tragically, cables’ investments in bandwidth have made it the latest target of the “chronically entitled” and DoJ thinks downloaders deserve the very best from what others have paid for.
Cable has often found ways to annoy people, but it deserves latitude on how it prices the most expensive investment it owns — high speed bandwidth. As some customers see it, they paid Netflix to see the content, and now it’s cables’ duty to haul that movie to their couch within the pricing of their regular internet access. Hauling gigabit slugs of content depletes bandwidth available to everyone else. Cable should be able to price for that degradation in service and for the continual investment in capacity upgrades it requires.
Unfortunately, the free-lunch crowd regards cable bandwidth as an entitlement in an election year. We saw this before with net neutrality in general, and we’ll see soon DoJ’s piracy aimed at mobile wireless services. The industry needs to worry less about the technological half-lives, and more about the political half-lives of their investments. Consumers need to worry about government actions that suppress investment and ultimately impair their Internet services.
Alan Daley is a retired businessman living in Colorado and following public policy from a consumer’s perspective.