‘One Piece of the Puzzle’

Addressing regulatory issues from a narrow perspective has dangers, Carol Wilson, editor-at-large at Telephony, reminds readers in an on-line perspective this week. Wilson, has covered the industry for some 20 years (and, in the interest of full disclosure, is a former colleague of mine) and has reported on policy through numerous political cycles. Wilson does not always come down on the free market side, but she has consistently urged regulators to see the big picture and to be careful about forcing the industry to maintain service frameworks that market forces are aggressively breaking down. Her latest e-mail commentary from Telephony OnLine looks at the outcry over a la carte programming, and she gives several reasons, including trends in the advertising market, to argue that long-term, the concept will be a non-starter.

But although consumers view a la carte programming as a way to pay only for what they want and not for what can seem to be an overwhelming amount of programming, I think in the end, they will wind up paying more for less. And less is not where the video entertainment industry is headed–with the growth of video-on-demand titles moving into the thousands from cable companies and from Verizon via its FiOS TV, a dumbed down cable offering hardly seems to be the ticket. In the meantime, the fundamental means of support we’ve all taken for granted during years of viewing high-quality programming at low cost–advertising–is under attack from all sides. As TiVo-like services such as digital video recorders gain popularity, fewer consumers actually view ads, choosing instead to view programming when they choose to, rather than when it is broadcast. The delivery of TV programming to iPods, cell phones and other devices creates additional means of revenue, but it’s not clear that these will replace billions in ads. At the same time all this is happening, advertising revenue for Internet companies such as Google and Yahoo! is on a sharp incline and is expected to overtake basic cable ad dollars. Rather than try to address one piece of the puzzle, it would make more sense to view the big picture. A la carte cable offerings and family tiers are likely to be a short-term option that is more politically correct than market friendly.

The delivery of phone, Internet, TV are becoming so integrated that legislation affecting one service has a ripple affect in other sectors that at one time, would have not been part of the equation. This means that, in the end, barriers stymie innovation in ways unforeseen and consumers are hurt, not helped. Wilson’s comments illustrate the reality that telecommunications policy no longer exists in an industry bubble of a handful of companies.