Fox Rebroadcast Standoff Illustrates Open Internet Problem With Bundling Content and Conduit

October 27, 2010

Were you planning to have some friends over to watch the first game of the World Series, or maybe Glee’s Rocky Horror episode?  Well, if you’re a Cablevision subscriber in New York, New Jersey, or Philadelphia, you may have to rethink those plans.  Cablevision customers in those markets have been without their respective Fox broadcast channels since midnight on Saturday, October 16.

Fox and Cablevision have been unable to reach an agreement on the terms for Cablevision’s retransmission of three Fox stations: (1) WNYW, Channel 5 in New York; (2) WWOR-TV, Channel 9 in New Jersey; and (3) WTXF-TV, Channel 29 in Philadelphia.

The blackout has gained the attention of federal legislators and regulators. Senator John Kerry (D-MA) has acknowledged the difficulties both companies face, but his primary concern is the effect on consumers.  He views the failure of the companies to reach an agreement as indicative of a need for legislative action.  On October 19, Senator Kerry sent the FCC draft legislation that would require broadcasters and cable companies to do two things before a signal can be pulled: (1) participate in an FCC-involved process that ensures good faith negotiations and (2) consider arbitration.

On the regulatory side, the FCC has created a consumer alert page for the dispute and has inquired as to the companies’ good faith negotiations.  On Monday, both Fox and Cablevision sent letters responding to the inquiry that outline the companies’ respective views on the negotiating process.  As expected, both companies point to the other’s acts as being the impetus of the problem.

Cablevision alleges that Fox violated the good faith requirement in several ways, including, demanding a “take it or leave it” rate rather than negotiating and deliberately timing the blackout during “must see” sporting events including the MLB playoffs and World Series.  Cablevision asks the FCC to intervene and order relief, such as requiring Fox to allow carriage pending resolution of the dispute.  Fox, while not making explicit accusations of good faith violations, alleges various acts of Cablevision that served to delay negotiations, thus resulting in the current blackout.

The current blackout of Fox programming on Cablevision, which has now been going on for over a week, is not the first time Fox has pulled the plug on programming for MVPDs.  Just over three weeks ago, Fox blocked DISH Network’s access to 19 Fox Regional Sports Networks, FX, and the National Geographic Channel resulting from another retransmission dispute.  Fox also made headlines late last year and early this year when it pulled the plug on its broadcast networks from Time Warner Cable.  In that dispute, Fox was demanding $1 per subscriber, per month.  The parties ultimately resolved the dispute with Time Warner agreeing to pay News Corp. an undisclosed fee for retransmission.

As it stands, millions of consumers in the New York, New Jersey and Philadelphia areas are currently blacked out of the Fall Classic and many other popular television shows.  If Fox and Cablevision are unable to come to an agreement, maybe Glee fans can still use their Google TVs to watch that episode on Fox’s website the next day.  Unfortunately, as “How I Met Your Mother” showed us, waiting to watch the big game is nearly impossible, and hopeful watchers of the World Series may be left to box scores and online highlight clips.  That is, unless the FCC decides to tweet another play-by-play.

From a public policy standpoint, perhaps the most troubling aspect of this saga is that at first on October 16th, Fox was actually blocking broadcast content for all those with a Cablevision IP address.  That is, even those customers who buy only Internet access (not cable service) from Cablevision, and subscribe to some other video service, such as Direct-TV, were denied access to the Fox content.

As Congressman Ed Markey has pointed out, Internet access customers should not be denied access to free content available to other Internet end users, because of who their Internet Access Provider is and the status of its commercial dealings with powerful media outlets. Internet access subscribers should not be held hostage in situations such as these.  Content and conduit should not be inextricably bundled if we want to preserve the open Internet.

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