By David S. Isenberg 
From America's Network, March 1, 2000
http://www.americasnetwork.com/issues/2000issues/20000301/20000301_edge.htm
In 1961, FCC chairman Newton Minnow saw the future of television. He called it a "vast wasteland," and he said, "When television is bad, nothing is worse." He was perhaps the first person to notice that broadcasting spawns lowest-common-denominator programming.
Broadcast video business models today include the infomercial model, the familiar ad-supported programming model and pay-per-view. Of these, pay-per-view would have the best shot at quality, except that even pay-per-view demands eyeballs to meet return on broadcast infrastructure. My house just got 100+ digital channels from Comcast; I expected that we’d find a little Internet-style, random, risky zaniness. Instead we get twenty-four convenient times to watch "The Spy Who Shagged Me." No matter how many channels, there’s still nothing on.
Imagine a future in which every
player must make "private
commercial arrangements" with
AT&T.
Contrast this against the narrow-band Internet, a forum for wonderfully chaotic cascades of Web pages flowing from every enthusiast’s cause, where content gains meaning from passion, and expression is not necessarily tied to the bottom< line.
Now TV over IP is on the horizon. Tens and hundreds of megabits to the home will soon be affordable, but if artificially constricted access dictates< broadcast-like business models, television’s wasteland will persist.
That’s why I’m bothered by a December 6, 1999 letter from AT&T to the FCC addressing choice of Internet service provider. It says AT&T is "prepared to negotiate private commercial arrangements with multiple ISPs … [covering] pricing, billing, customer relationship, design of start page, degree of customization, speed, system usage, caching services, co-branding, ancillary services, advertising and e-commerce revenues, and infrastructure costs."
If there were multiple competing ways to deliver tens of megabits to the home, an open marketplace would arbitrate access. But AT&T’s stance is a problem if AT&T (with TCI and Media One, and resulting ties to Time Warner and AOL) controls the main means of U.S. broadband access.
Imagine a future in which every player must make "private commercial arrangements" with AT&T to send or receive TV over IP. AT&T would be able to extract what economists call ‘monopoly rents.’ In this future, scale matters. The players would be AOL-Time-Warner, ABC-Disney and their ilk. In this future, AT&T would need ABC-Disney at least as much as ABC-Disney would need AT&T. We’d expect sweetheart deals among giants; a "big three" of TV over IP could emerge.
People who weren’t part of a commercial endeavor would be frozen out. Creative kids, expressive enthusiasts, musicians who aren’t swimming in the mainstream, freedom-fighters and fringies under every government, and most importantly, the video makers among them (as PC-based digital video technology emerges) could find AT&T prices insurmountable, AT&T bureaucracy impenetrable and AT&T sweetheart deals unbreakable.
When sweetheart deals between railroads and their content providers paved the road to vertical monopoly in the early 1900s, the U.S. Government brought railroads under common carrier regulation. This made railroads publish fair rates for transport services and open those services to all comers.
Today, U.S. telcos are common carriers but U.S. cable companies are not. This frees AT&T to declare its intent to make "private commercial arrangements." The reason is historical; until recently, cable companies were not in the business of interstate transport. (The ‘CA’ in CATV means ‘community antenna’.) Canada has been more vigilant; as cable’s function changed, so did Canadian regulations. Today, Canadian cable companies fall under common carrier rules, and Canada is fast becoming the scene of a vibrant, competitive broadband revolution.
It is important to note that an AT&T-owned broadband future is but one of several plausible alternatives, and that common carrier regulation is not the only antidote. Perhaps AT&T will fail in its ambitious cable buildout. Maybe another player riding another technology will predominate.
My favorite future scenario features multiprovider, multiaccess broadband. Perhaps low-cost broadband wireless techniques will emerge. Maybe a U.S. municipal fiber movement will take off. Perhaps DSL will grow mightier. Possibly (but don’t hold your breath) power-line carrier technology will prove in. If there were two or three technologies and four or five providers in each region, a robust competitive market would be ensured.
The narrow-band Internet will remain a forum for every enthusiast’s interest because there are too many ways to connect for it to be otherwise. Common carrier regulation ensures this multiplicity.
In the near future, some form of TV over IP is inevitable. When it arrives, I hope there’s something to watch.
David Isenberg can be reached at www.isen.com.
Copyright 2000 Advanstar Communications.