The Daily Caller

The Daily Caller
              FILE - In this Thursday, Aug. 23, 2012, file photo, a Netflix envelop containing a DVD to be returned by mail is clipped onto a mailbox, in Springfield, Ill. Netflix won’t miss Saturday mail delivery, even though the weekend service helped keep its DVD-by-mail subscribers happy. The U.S. Postal Service’s planned shift to five days of home delivery a week instead of six may even make Netflix Inc. slightly more profitable. (AP Photo/Seth Perlman)

America’s private video market success

Photo of Scott Cleland
Scott Cleland
Chairman, NetCompetition

It’s hard to be a “public interest” group when private interests better serve the public.

Free Press, which effectively defines the “public interest” as being against private interests in media, communications and technology, just issued an anti-cable diatribe, apparently out of frustration that so few people are listening to them.

In classic Free Press fashion, their new white paper is a solution in search of a problem. They seek stricter neutrality regulation and bans against usage-based broadband pricing. At core, they dream of a ‘public’ Internet largely devoid of any private (corporate) influence.

With that agenda in mind, they try to manufacture a problem in their white paper: “Combating the Cable Cabal: How to Fix America’s Broken Video Market.”

Free Press’ problem is reality. The facts show America’s video market is the most vibrant and successful in the world. It’s nothing like the selective, out-of-context, fact-challenged monstrosity Free Press attempts to paint.

America has more and better video content available, on more technologies, from more providers, in more ways, on more devices, with more viewing time options, than any other country by far.

America’s entertainment dominates the world market and is a leading U.S. export. America also dominates virtually every dimension of the Internet video marketplace.

If anything, America’s video market is among the most vibrantly competitive, innovative, and value-added in the economy and the world. Like every industry, it is far from perfect, but it certainly is not “broken” by any objective measure.

Remember a few years ago, Free Press’ Save the Internet coalition was peddling the bogus charge that America had fallen behind in broadband in hopes of inciting government to intervene broadly in the competitive broadband market.

Then, like now, Free Press’ claimed broadband “problem” was devoid of reality.

Free Press selectively ignored that America is the only nation in the world with a second national wire line network – and that cable in many ways was much easier to upgrade to fast broadband capability than the more regulated public telephone networks that are standard around the world.

Free Press also ignored that Europe’s early broadband speeds were destined to hit a wall because European price regulation left no money for long term capital investment in fiber optic networks.

And Free Press ignored that America was investing more in 4G LTE wireless broadband service than any other country, making America the world leader in mobile broadband speeds.

Another bogus Free Press charge is that America’s private industry is not working hard enough to promote universal broadband service. The reality is that cable offers wire line broadband service to 93% of the country; wireless offers it to 94%; and satellite extends the reach of cable and wireless availability to 98% overall.

Recent NTIA numbers confirm that Free Press’ assessment here is way off-base. NTIA recently reported that 98% of Americans have access to >3Mbps, 94% to >10Mbps, and 75% to >50Mbps.

Free Press also ignores how technological change and competition have transformed the American video marketplace and created a vastly superior value proposition for the American consumer than ever before.

Free Press focuses on cable programming costs going up. However, this ignores the natural competitive trend of quality programming migrating to secure pay TV platforms, because of the decline in free over-the-air broadcasting, rampant video piracy and the deep decline in DVD sales. Thus this is a natural technological and business evolution to protect valuable property, not an exercise of market power.

Free Press also selectively looks at cable bills increasing in excess of inflation while ignoring the vast increase in value American consumers are enjoying. Consumers are getting: more video choices, better quality content, more conveniently, over more devices, in more places.

Compared to the high total cost of a family attending sports contests, concerts, or plays; going to the movies in a theatre, or going out to eat, the entertainment value Americans enjoy from their home pay TV provider, whether it be cable, satellite or telco, is relatively the best available entertainment value for American consumers.

In sum, Free Press and others who want public networks and media to replace private networks and media over time have to recognize reality.

American consumers have spoken loudly with their hard-earned dollars. Property-based, for-profit video models are vastly outperforming public not-for-profit models in the video market. It isn’t even close.

Scott Cleland is Chairman of NetCompetition a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration.