Cablevision and Scripps Networks; Fox and Time Warner Cable Deals Have Implications for Telcos and App Providers

Cablevision and Scripps Networks Interactive have reached an agreement that paves the way for the return of the Food Network and HGTV programming to the cable operator’s system. Inability to come to terms meant HGTV and Food Network disappeared from Cablevision after the old contract expired on Dec. 31, 2009 and the two sides could not agree on terms for a new contract.

Separately, News Corp and Time Warner Cable managed to agree on a new deal without a service interruption. That deal meant no service interruption for viewers of the Fox television stations, Fox, Fox Cable Networks and Fox’s Regional Sports Networks.

That deal also covers Bright House Networks sibscribers in Florida.

DirecTV and Versus have not come to terms and Versus has been dark on DirecTV since Nov. 11, 2009.

Contract disputes between programmers and cable operators are not new, and the precedent likely applies to telcos and their application providers and handset providers as well. Which is to say that although all the value chain or ecosystem partners rely on each other to create end user value, each participant has a specific role in the value chain and distinct financial interests that have to be accommodated.

The same sort of thing exists in the online video and music and e-book reader spaces as well. The point is that there is a temptation to see application providers and Internet access providers as enemies with little in common. In fact, applications make networks valuable, and without networks, the increasing number of valuable network-based services cannot work.

Of late there are signs some of the former tension between Google and some ISPs, for example, has melted. Google and Verizon are working together on creating applications and optimizing Android device operation on the Verizon network, for example.

That isn't to deny that some amount of tension always will exist between ISPs and application providers. As the cable, music (Apple and music companies) and online video examples illustrate, each participant always will seek to maximize their own value and revenue within the overall value chain and ecosystem.

Financial interests are distinct, not identical. Ultimately, though, a stable ecosystem producing end user value will benefit from some stable understanding that key value chain participants all must profit, if the widest use of new applications and maximum end user experience are to be supported.

It won't be easy. Skype is a contributor to the declining value of basic voice revenues, for example. App developers obviously want to secure a place in the revenue and value chains. ISPs want to continue restructuring their own revenue models away from voice and towards new services based on IP networks.

Over-the-top app providers often believe they "don't need the ISPs." But over time, as the cable example shows, and as music, video and print content value chain participants will have to continue to work out, the best outcome is a flourishing new value chain where the key participants all win. That's best for providers and best for end users. Though it certainly will not be easy, it is the best way forward.