Each year in the spring, NCTA hold its annual conference, The Cable Show. We attract about 12,000 attendees, drawn from various aspects of the cable industry and from related fields.

Since 2006, I have blogged the events of our event, reporting on various session and detailing interesting things on the exhibit floor. This year, in order to augment our coverage, we’ve decided to bring in a fresh perspective, someone from outside, to contribute to our blog coverage.

Here are the parameters:

• The Cable Show runs May 11-13 in Los Angeles. If you’re located in California, that is a plus.
• We’d like someone with some knowledge of broadband technology, since the show will be featuring such things as place-shifted TV services like TV Everywhere, 3-D video, DOCSIS 3.0 and so on.
• You should be a good writer. We would need somebody to cover events and write them up in a timely fashion.

What will you see at the Show? FCC Chairman Julius Genchowski will be addressing the attendees, and we’ve got a number of big names on the General Sessions that we’ll be announcing soon. The My World exhibit will highlight a lot of cutting-edge applications and services. Wednesday, May 12, is the NBC Universal party, held at Universal Studios Hollywood.

This is a paid gig, so we’ll be looking for someone with the skills and moxie to carry it off. If you think you’re right for the job, drop us a line at blogforcable@gmail.com. We look forward to hearing from you.

[This has been cross-posted at The Cable Show blog.]

I don’t like to single out people for criticism. But Techdirt’s Mike Masnick is a high-profile tech blogger, he attracts a lot of traffic and he’s written a lot over the years about how content should be distributed online (For example, see here).

So I feel I need to respond to some of his arguments, particular his contention that television programming should be distributed for free over the Internet.

In this recent post, he writes, “It’s really stunning to see people who obviously should know better continually insisting that content can’t possibly be free to consumers.”

There’s a key point right there, because that’s not the argument. Obviously, someone can make content and give it away, whether it’s a video, a song, a novel, a comic strip, or whatever. Sometimes those people can give content away for free and still generate some income.

What we’re talking about is scripted television, shot on sets, with union actors and crew, and actual production values. Not a Flash video you made on your laptop, not a talk show with two guys in chairs, not a kitten playing piano. I’m talking Lost, House, Burn Notice, The Pacific, Battlestar Galactica. (Although, even reality fare like Top Chef isn’t necessarily cheap to produce.)

Analyst Dan Rayburn said, “Sorry, Video Content Can’t Be Free.” Masnick then replied that Rayburn “appears to be wholly unfamiliar with network TV,” since “advertisers have always paid the freight” in that business.

Again, we have to stop right there, because this is an important point. The history of broadcasting (first radio, then television) goes back almost a century. The business model was that the networks would sell advertising time, based on audience size. A popular show reaches a lot of people and becomes an efficient way for advertisers to reach customers.

But back in the old days, from the Fifties up to the Eighties, the broadcast television networks were the only game in town. There was only CBS, NBC and ABC, plus the independents in some markets.

Cable was able to build a business appealing to niche audiences, but it required a dual revenue stream, to offset the fact that any one cable network doesn’t generally attract as large an audience as a broadcast network might (Although on occasion, cable programs get broadcast-level ratings, such as here, here and here) . This business model has enabled cable to create quality programming that’s won both accolades and viewers (See this post from 2008).

When Masnick accuses the cable industry of “trying to turn the internet into cable TV with extra ads,” he’s ignoring the issue of the dual revenue stream. Or when he says, that TV Everywhere is designed “to keep you from cutting the cord from the cable company,” he’s failing to answer the question of how big television productions will recover their costs.

If an Internet outlet – such as Hulu, YouTube or Revision3 – could attract the viewership of broadcast or cable television that might be a different story. For example, as per Variety, last week’s episode of The Office garnered 7.2 million viewers, while Grey’s Anatomy got 11.4 million. What is the Internet content that hits these levels on a consistent basis?

According to NewTeeVee, “Three million people used the March Madness On Demand video player to catch the first round of the NCAA Men’s College Basketball Championship online” on March 18. Variety reports that last Thursday’s televised “tournament coverage [had] 11.1 million viewers overall.”

Masnick clearly thinks that the old broadcast television model proves that you can give video away for free and make money. And he doesn’t understand why the programmers don’t just do it. As he recently tweeted: “basic economic: if by giving away the content, you can increase the pie and put in place a better biz model, why not do it?”

So, let’s say that you could get those viewership levels online. Let’s also forget that giving away content for free, without realizing significant revenue from that distribution outlet, reduces the value of your other platforms. (Ask the newspaper industry about this strategy.)

As Mark Cuban recently argued (and I reported here), the Internet offers so many options you will incur significant marketing expenses in order to stand out. As he put it, “In an a la carte world, you’re one of zillions. Marketing is expensive.”

Things will likely change over time. But I don’t think Masnick wins this argument right now.

The National Broadband Plan has put the spotlight squarely on getting broadband service to the roughly 35% of U.S. households that don’t subscribe.  I don’t think anyone can disagree with this overarching goal, and it’s clear that it will take a multi-pronged approach to bridge this gap.

The good news is that we have significant research which shows why these households haven’t yet subscribed.  In some cases, challenges in reaching these homes have been facilities-based – finding new and innovative ways of getting broadband service to rural and remote areas.

But in many other cases, as Pew Research and other firms have pointed out, the challenges involve “barriers to adoption,” namely, the availability of affordable computers, digital and technical literacy, an understanding of the relevance of broadband service, or the ability to afford the service itself (For further details, see the FCC paper entitled "Broadband Adoption and Use in America.").

We’ve been concerned about these issues for a long time.  Cable ISPs have invested heavily in building out their networks, making broadband service available to 92% of American households.  We’ve also focused on elements of digital literacy to help families better understand how to manage the content coming into their homes.  And, we are sensitive to the affordability of broadband service.  Many cable ISPs have established tiers of broadband service which allow subscribers to buy whatever level of service makes the most sense for them.

Broadband access for the two-thirds of American households that have it wouldn’t have been possible without the leadership of the private sector.  So we strongly agree with the Plan that one of the best ways to help connect more homes is through partnerships in which both the government and private industry bring something to the table.

Last December, after consultation with federal policy makers and other stakeholders, we proposed the Adoption Plus (“A+”) initiative.  A+ is a proposed two-year, public-private partnership.  It’s designed to promote sustainable broadband adoption for a vitally important population, middle school-aged children in low income households that don’t currently subscribe to broadband service.  Under the proposal, cable ISPs are prepared to offer deeply discounted broadband service and equipment, in partnership with schools, companies, and digital literacy groups that could help provide – to households where students qualify for free or reduced school meals – a package of affordable hardware and software, and training in digital literacy (See more in this previous post.).

Our strong interest in this kind of collaborative approach is why we’re happy to participate in a new pilot program that includes broadband ISPs, computer technology companies, nonprofits and the U.S. Department of Housing and Urban Development (HUD) to help bring broadband service to low-income homes around the country.

Under the leadership of One Economy, a global nonprofit committed to stimulating broadband adoption efforts in the neediest households, several parties have jointly filed an application to the National Telecommunications & Information Administration for funding through the Broadband Technology Opportunities Program.  The coalition will work with HUD to increase broadband adoption efforts in public housing and multi-family assisted communities. If the stimulus application is approved, federal funding – combined with actual and in-kind contributions from the various members of the coalition – would help bring broadband service to families in up to 250,000 government-supported housing units nationwide.  This target group encompasses many of the same families we propose to reach with the Adoption Plus proposal.

The coalition built around this HUD initiative comprises a unique collection of seemingly strange bedfellows.  There are the non-profits – One Economy and Connected Nation.  There are the hardware and software manufacturers – Intel, Dell, and Microsoft.  Telco ISP AT&T is involved in supporting the application, as are 14 of our member companies – BendBroadband; Bresnan Communications; Bright House Networks; Cablevision Systems Corp.; Charter Communications; Comcast; Cox Communications; Eagle Communications, Inc.; Mediacom Communications Corp.; Midcontinent Communications; Sjoberg’s Cable TV; Suddenlink Communications; Time Warner Cable; and US Cable Group, covering some 85%  of households across the country. Two trade associations – NCTA and USTelecom – also are in the mix.

The concept is simple.  Each entity involved in the initiative plays to its strengths in helping low-income families overcome barriers to adoption.  HUD will identify eligible households for the service.  The computer companies provide affordable hardware – which would be partly subsidized by the stimulus funding – and software, to help make families broadband-ready.  The nonprofits then provide training in digital skills and literacy, to families that are new to broadband.  And once these pieces are in place, the ISPs would offer deep discounts on broadband service, reduced-price or free modems, and free standard installation.

If you have read the Broadband Plan or its executive summary, the rationale behind this coalition may sound familiar.  The Plan highlighted the importance of creating, “public-private partnerships of hardware manufacturers, software companies, broadband service providers, and digital literacy training partners to improve broadband adoption and utilization by working with federal agencies already serving non-adopting communities.”

We think that with the formation of this coalition, and our ongoing efforts around Adoption Plus, we have hit the mark.

Here at Cable Tech Talk, I generally try to keep it civil. I believe in a discourse based on facts, not emotion. I think that the best ideas win.

But I’m going to come right out and say it: The Atlantic’s Max Fisher has written one of the most uninformed articles I’ve ever seen on the cable industry. (It feels like he has inserted a vague reference to the just-released National Broadband Plan to increase his likelihood of getting page views.)

His thesis is “Cable TV Is Doomed,” which is fine. One could make a rational case that other competitors will eventually overtake cable or you could argue that consumers will eventually seek other entertainment choices over television. But I got as far as the second paragraph before the thing fell apart.

Cable TV was always a bad model for the consumer because, in a sense, you’re paying twice. When you watch The Daily Show, for example, you pay the cable company to bring Comedy Central’s programming into your home. But you also contribute to Comedy Central’s bottom line by watching its ads. However, the Internet allows you to connect directly to Comedy Central without the cable company go-between. You only pay once — either with your eyeballs on ComedyCentral.com, or with your wallet on iTunes. (Sure, you have to pay for Internet access, but if you consider it a necessary utility rather than an optional luxury, as the FCC’s national broadband plan clearly does, then that cost is incidental. That is, access to streaming TV shows isn’t the primary reason you buy Internet access. It’s a bonus.)

For thirty years, cable (and, more recently, satellite and telco providers) has been based on a dual revenue model. Currently, just over 100 million Americans are making a conscious choice every month to subscribe.  And the evidence shows that subscriptions keep increasing (300,000 new multichannel video subscribers were added in the last quarter) and the number of hours that people watch cable programming continues to climb.

Broadcasting is, by definition, “broad.” It reaches a lot of people and makes money from advertising, but now even broadcasters are looking at generating revenue from distributors since the ad market has been suffering.

Cable programmers are able to target niche audiences and collect carriage fees from operators for the distribution rights and advertising for delivering desirable viewers. Without the advertising, consumers would have to pay a larger fee for access. If a programmer went ad-free, (a few basic cable nets don’t have advertising) it would be tougher to produce compelling new content. Fisher seems to see this as some sort of scam, but then he goes on to immediately note that you don’t really get Internet content for free either, since you’ll first have to pay for broadband access.

Fisher thinks that Hulu (ad-supported) and iTunes (which he calls a form of “micro-payment,” which it isn’t) are “more cost-effective,” because you only pay for what you watch. Of course, content on Hulu has already made its money elsewhere and is being offered on a secondary basis; even with that, Hulu is not proving to be profitable and the company has already indicated it is considering moving to a subscription model. And as for iTunes, I recently pointed out on this blog, that you might pay $40 for a season of a single cable program. Fisher buries down in a footnote this admission: “Five hours of TV a day multiplied by $2 per hour-long show would means $300 a month on cable. That’s too much.”

But back to the programmers’ dual revenue approach. That’s how they can afford to produce the programming. Fisher says that the goal is to eliminate the “cable-bill middle-man,” and instead pay Hulu a subscription fee. But Hulu would then have to turn around and pay the programmer a fee for distribution rights and you end right back up with the cable model.

Mari Silbey at the MediaExperiences2Go blog addressed the issue that it’s a lot easier for cable operators to add Internet content than for over-the-top video providers (such as Hulu) to add “a full slate of premium TV content to their services.” She also hits the other key point: the “model is moving toward IP (not Internet) delivery.” A cable operator could use Internet Protocol to move the bits that make up your favorite TV show; that’s not the same as Internet content. What makes the difference between services like Hulu & iTunes versus cable is about what content you can offer. You either have to produce the content yourself or you have to be willing to pay for it.

Take a look back at my write-up of the Cuban-Ronen debate. You might also want to take a look at an article Fisher’s own Atlantic colleague Derek Thompson, who made the case against paying for individual shows.

I’m happy to discuss the future of video entertainment and how it will reach the home in the future. But the sticking point is almost always in how to recover the production costs.

(Even Lauren Weinstein, at the Network Neutrality Squad forum, acknowledges that “the concept of purely ‘a la carte’ programming (regardless of the delivery mechanism) carries with it the risk of a ‘race to the bottom’ of lowest common denominator programming that will appeal to the most people.”)

Consequently, I have a knee-jerk visceral reaction when I read things like this: “I’m thinking something bigger — like tens of thousands, maybe hundreds of thousands, or even millions of customers canceling their subscriptions or deciding not to pay their cable bill, meanwhile educating each other on how to find other ways to get the same programming.”

But you can’t duplicate your cable line-up online for free. Not yet. And I have difficulty seeing a future in which you will.

You might have read news coverage this week that the motion picture studios and cable companies are joining forces to “launch a $30 million marketing and promotion campaign touting the virtues of movies on demand” (See Multichannel News:” “Studios, Operators Team To Promote Movies On Demand“).

The three month, multi-media campaign titled “The Video Store Just Moved In” will shine a spotlight on the burgeoning movie on demand category, according to operator and studio executives. The campaign… will focus on the fun and ease of ordering and watching top theatrical movies at home as compared to trudging out to rent movies from the local home video store, according to campaign officials.

Developed in association with CTAM, operators participating in the campaign include Armstrong, Bend Broadband, Bright House Networks, iO TV, Comcast, Cox, Insight and Time Warner Cable. Studio partners include 20th Century Fox, Focus Features, Lionsgate, Rogue, Sony Pictures Entertainment, Summit Entertainment, Universal Pictures and Warner Bros Entertainment, Inc.

In an odd bit of timing, I was reading Edward Jay Epstein’s 2005 book The Big Picture, which looks at the modern film business and how it got to where it is. The section on Steve Ross, who built Time Warner, had some relevant background.

To Ross, cable was much more than an alternative to broadcast television. For one thing, since there was room on cable for hundreds of different channels, it offered the potential for creating cable networks that segregated audiences by their particular interests for advertisers…

Another major application of cable, in Ross’s view, was as a means of delivering Warner Bros.’ movies into homes. When he had first been briefed by Warner Bros. executives about the plan to sell his company’s films to independent video stores… he shook his head in disbelief… He asked: “Can we really expect millions of busy people to get in their car, drive to a store, pick out a movie, stand in line, fill out a rental agreement, pay a deposit, drive home, play it on their VCR, and then, the next day, repeat the procedure in reverse to return it?” …he saw video rentals as a stopgap measure.

Ross saw the cable system he was assembling piece by piece as a far more efficient way of delivering films into homes on demand… Unlike over-the-air (including satellite) broadcasting, cable wiring could be used to send as well as receive signals. it could allow viewers, while watching programming on one channel, to signal back on another channel by clicking on their remote controls.

Of course, home video rental did become a big business, for a time, but that time may have passed. At the VideoNuze blog, Will Richmond noted:

Aside from whatever else can be said about Blockbuster in recent years – vast over-expansion, poor financial management, slowness to respond to new competitors like Netflix and Redbox – the company’s potential bankruptcy is surely one of the most vivid reminders of how much the movie rental industry has changed in the last 10 years and how much it is yet to change in the next 10 years. Blockbuster will likely be remembered as a temporary player that drove wider movie access in the analog era, but then got crushed as rentals shifted in the digital era.

It’s a reminder that cable technology, originally built just to retransmit broadcast signals to consumers, has moved way beyond that.