Monday, August 12, 2013

Can FCC Lawfully Do Anything; Should it Do Anything, About Time Warner-CBS Feud?

"I am ready to consider appropriate action if this dispute continues," said U.S. Federal Communications Commission Acting Chairwoman Mignon Clyburn about the Time Warner-CBS contract dispute.

But it isn't clear what actual authority the FCC actually has about a contract dispute between two entities. Some might question whether the FCC should act, even if it had any actual authority. 

Some might see an analogy to binding arbitration for two parties to a major industry contract dispute, with a strike. But it isn't clear the analogy actually applies. 

As inconvenient as it might be for some consumers to miss CBS programming for a period, such contract disputes are just that: contract negotiations. 

Nor is it actually so clear that consumer welfare, if that were viewed as the grounds for intervention, and were lawful, is necessarily best served by such intervention.

As odd as it might seem, consumers already are starting to vote with their wallets that the current value-price relationship for video subscription services finally is moving past irritation to abandonment. 

And nobody disputes the notion that Internet delivery is coming, and appears to be what consumers might prefer. 

As a practical matter, a widespread shift to Internet delivery will only come when the current product is so broken there is massive resistance to buying video subscriptions.

In that sense, even an extended blackout would ultimately provide more value to consumers by perhaps allowing the current distribution method to become even more unpleasant. 

It is logical for content owners to want to maximize their revenues, and it is rational for a retailer to take action about price hikes it knows its customers eventually will refuse to pay. 

Maybe the best long term policy, in terms of consumer welfare, is to allow the ecosystem stresses to play out. Eventually, the business is going to change, in any case. The only issue is when, and how. 


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