The question of how cable operators manage their networks always has been sensitive. It goes back to the birth of the industry, in the 1970s and 1980s, when entrepreneurs essentially were awarded franchises that gave them de facto monopoly power over the regions they served.
That laid the groundwork and, since then, the treatment of tenants on operator networks has been a touchy subject. The issues in one way or another focus on whether those second parties are being treated like second-class citizens and if operators’ technical and business decisions are being made for the benefit of all concerned or to further the operator’s agenda.
If anything, those questions become even more relevant in an era of over-the-top (OTT) video — services such as Netflix and YouTube that are not owned by the cable companies but rely on their infrastructure — and generally exploding network use. There is a lot of money at stake, and a company acting as a gatekeeper is not going to avoid close scrutiny, as this piece in the San Antonio Business Journal suggests.
Those tensions were evident in an article and the reaction it elicited this week. On Tuesday, The New York Times ran a piece focusing on the cable industry’s adoption of metered services. The story, written by Brian Stelter, focuses on Time Warner Cable’s south Texas region. The story describes the drivers of billing folks based on how much broadband data they consume as opposed to “all-you-can-eat” plans — a set monthly fee for unlimited services — or simple limits in which one price is charged to a certain consumption level and penalties assessed beyond.
The story was eviscerated by Susan Crawford, who is the co-director of the Berkman Center and a visiting professor both at Harvard’s Kennedy School and Harvard Law School. Essentially, Crawford takes the piece apart almost paragraph by paragraph to illustrate her skepticism (to put it mildly) of the cable industry.
Here is one example. The first sentence is from The New York Times article. It is followed by Crawford’s interpretation. The bold type is Crawford’s:
"Our network is not an infinite resource, and it is expensive to expand it," David L. Cohen, a Comcast executive, said. There is no empirical connection between any of the pricing involved in this story – the monthly prices, the overage prices, any of it – and the cost of actually providing data service and responding to consumer demand. The major cable distributors can charge whatever they want, however they want, for whatever services they define. There is no oversight of any of this and no visibility into what is actually going on.
The bottom line is that reporters (especially in this day and age) are called on to cover many topics. An analyst who is focused more narrowly (especially one brilliant enough to get two gigs from Harvard) is going to see the situation more deeply and, if she disagrees with the reporter’s take, pick his position apart fairly easily. That’s what happened in this case.
The bigger picture, though, is the tension will grow between the cable industry and increasingly viable businesses that have a legal right to use its infrastructure. The precise lines of demarcation between the two types of business is complex. We’ve seen this movie before: In the 1990s, competitive local exchange carriers (CLECs) fought tooth and nail for every inch of access on the incumbent local exchange carrier (ILECs) systems. It is possible that this fight won’t get as technical since passing video through is inherently less complex than completing phone calls. It is likely, however, that the situation will be as contentious.