U.S. Launches Antitrust Probe of Cable and Online Video Practices

It is perhaps not a surprise that the Department of Justice is "investigating" whether there are antitrust implications to cable TV operator retail packaging policies, as they might pertain to restraint of trade. Those questions are bound to emerge.

Lots of people might ask whether a cable operator can create an extension of a video subscription service that includes some of the content a customer already has paid for, and make it available on other screens, then exempt the Internet usage from the consumer's bandwidth cap. Some might say it is obvious a retailer can do so. Others would say it stifles rival streaming services.

Some might ask whether it should be lawful for a service provider to require a "sell through" purchase at all, where cable TV service has to be purchased before some or all of that content can be purchased for Internet delivery. Again, some would say this is done for all manner of products, all the time, and that it is not, in and of itself, restraint of trade.

But I find this one passage, in a Wall Street Journal story about the antitrust probe, one of the most-ironic passages I've ever read in the Wall Street Journal: "Having invested billions of dollars building their networks, some pay-TV companies have shown little inclination to get out of the business of packaging television channels and become mere conduits for other companies' data. Some major entertainment companies also have an interest in preserving the current model of television viewing because they want cable companies to take bundles of their channels, rather than just cherry-picking the most popular ones."

What I find so ironic about the story is the blinding "duh" element. Of course cable operators, having invested billions and decades building their businesses, do not want to voluntarily relinquish that business to become low-value "dumb pipes."

Of course content owners do not want to change a lucrative distribution model that creates advertising value and helps them launch new channels.

Let me be clear: as a consumer I would prefer to have a choice, either to keep buying video subscription services they way they are, or to buy only some channels, or to buy only some programs and have them delivered over the Internet.

But that doesn't mean I expect those entities to voluntarily, and without compensation, agree to have those businesses destroyed. The Wall Street Journal passage reads like something written by people who have no idea about how business operates, or worse, written by people who actually think it is unusual for a business or industry to want to hang onto a successful revenue model.