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Group alleges that MSOs and programmers may be colluding on 'TV Everywhere' in an attempt to kill off Internet-fed video competition

Consumer Groups Want 'TV Everywhere' Probe

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
1/4/2010
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Free Press and a handful of other consumer pressure groups are urging Congress and the Justice Department to investigate "TV Everywhere," alleging that the cross-platform project is seeking to kill off Web TV competition and tantamount to "collusion" between major MSOs and programmers.

Free Press, Media Access Project , Public Knowledge, and Consumers Union of U.S. Inc. outlined their concerns in a letter to Congress along with a 40-page report claiming that the business plan of TV Everywhere, "which transposes the existing cable TV model onto the online TV market, can only exist with collusion among competitors."

In June, Time Warner Inc. (NYSE: TWX) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) partnered to develop what they called "broad principles for the TV Everywhere model," which included a tenet that it would be "open and non-exclusive," meaning other cable, satellite, and telco TV video distributors would be free to enter into similar agreements with other programmers. (See TW, Comcast Cast 'TV Everywhere' Principles .)

Comcast followed up with a tech trial and subsequent national launch of the PC-centric iteration of that vision -- "Fancast Xfinity TV" -- starting off with about 2,000 incremental, additional hours of content, including content from subscription services HBO and Starz. Time Warner Cable also is testing its own version, and at least three non-cable TV providers -- AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), and DirecTV Group Inc. (NYSE: DTV) -- have all indicated interest in developing a TV Everywhere-like service of their own. (See Comcast's 'Xfinity' to Go Mobile in 2010 , Comcast's 'Xfinity' Goes Live , and Verizon, TW Cable Join 'TV Everywhere' Bandwagon.)

Although the TV Everywhere concept aims to bring subscription-TV content to multiple screens without requiring the subscriber to pay for that same content multiple times, it's more generally viewed as a preemptive strike against "cord-cutting," a still-nascent trend whereby consumers get rid of their traditional cable or satellite-TV subscriptions and instead rely on high-speed Internet connections and free over-the-air broadcast feeds to take care of all their video needs. (See What Fights Cord-Cutting? and Cable Downplays 'Cord-Cutting' Threat .)

The Free Press group is asking Congress and the Justice Department to probe TV Everywhere agreements between operators and the content providers, claiming those deals stymie competition, limit consumer choice, and serve to protect an existing cable TV model "that gouges consumers."

The report, meanwhile, tries to show that the TV Everywhere project itself "rests on an illegal agreement among competitors -- and that the initiative would not be possible without this illegal collusion."

NCTA: Call for investigation lacks facts, legal basis
Comcast and Time Warner Cable Inc. (NYSE: TWC) declined to comment, but National Cable & Telecommunications Association (NCTA) president & CEO Kyle McSlarrow countered that the call for an investigation of TV Everywhere "has no factual or legal basis no matter how many times Free Press and its allies repeat the words 'collusion,' 'cartel,' and 'illegal.'"

As for the specific allegations of collusion between MSOs and programming partners, McSlarrow stressed that the TV Everywhere concept involves a multitude of competing program networks, including many that distribute content on competing cable, satellite, phone, and online platforms.

"As publicly announced, TV Everywhere envisions separate, bilateral agreements between one content company and one or more individual distributors. It is purely vertical in nature -- like any arrangement between a content company and a distributor," McSlarrow noted, adding that distributors don't have the ability to unilaterally decide how content is distributed.

Time Warner Inc. -- the media giant that owns HBO, CNN, and a stable of other networks, and spun off its cable division last year -- noted in a statement of its own that it's pursuing "many other ways to distribute in a safe and secure way over the Internet our content to people, whether or not they subscribe to a video service." (See Time Warner Cable Leaving the Nest.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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