Technology isn’t holding back Internet TV—the structure of the media industry is.
Rumors of Intel’s and Apple’s interest in launching some kind of online cable service have been circulating for months. Years, even. It’s clear that major tech companies have the technology ready, and they’ve been making phone calls and taking meetings. People talk, reports get written. Now, we can add Google to the mix. As the Wall Street Journal first reported, it’s interested in launching some kind of online TV service, too—one that is intended to actually substitute for a traditional pay TV subscription by having current, popular shows from both cable and broadcast channels, and not just supplement it with on-demand access to a back catalog or user-generated content.
So with all these rumors, and all these giant tech companies involved, why haven’t we actually seen a service get launched? The technology’s ready. Other countries already have online cable TV–Sweden’s Magine, a company that outright says “We’re meaning to replace your cable network,” is expanding internationally. Why doesn’t the US?
Well, the Journal’s report explains why: “There is no guarantee Google, or any of the technology companies, will be able to strike licensing deals.” And as the New York Times writes, “No deals are imminent.”
There are no technology barriers to launching an Internet cable service at scale. High-quality video is being delivered reliably over the Internet every day. It doesn’t require re-engineering the Internet, tiered plans, or Internet fast lines. I’m sure, too, that the experience of using the prototype services Apple, Google, Intel, and who knows who else has worked up is great, and much better than your run-of-the-mill cable set-top box experience. By and large the technology issues have been solved.
The barrier is the deals—incumbent video providers are not about to let themselves be “disrupted” without a fight. Through their buying power, they can prevent content from going online. The media marketplace is so concentrated, on both the production and the distribution side, that just one or two companies can veto new entrants.
The company that ends up launching a true Internet cable service will not be the company with the best technology or the brightest engineers and designers. It will be the company that is able to come up with a business plan that doesn’t scare the incumbents. That’s too bad.
There are solutions, of course. New technologies have entered the video marketplace before, though not without a little help from public policy. In the 1990s lawmakers made it so that satellite TV providers could begin offering complete pay TV services, regardless of incumbent objections. Telco providers like AT&T and Verizon, when they got into the pay TV market, took advantage of these pro-competitive “program access” rules and were able to start providing service as well. The exact program access rules may or may not be the best model for Internet video policy but they do show that solutions exist to this kind of problem, and have worked before–not perfectly (nothing works perfectly) but well enough to allow new entrants to compete.
People who want to see new pay TV competition, and fancy new Internet “cable” services should pay more attention to how the structure of the media industry keeps them from happening, and think about what can be done to overcome it. Siri isn’t going to save us.
Original image by Flickr user Tom Mooring.