C|Net News reports that Major League Baseball is having difficulty getting a premium for internet "broadcast" rights (MLB throws high heat at Web portals). I put the term "broadcast" in quotes, because the internet doesn't really support broadcast. As Dana Blankenhorn writes on Corante blog Moore's Lore, MLB wrongly expects the internet to recapitulate television broadcast (Prove It).
The problem for MLB is not simply that broadband adoption rates aren't great and streaming video is pretty weak, but that the internet reduces (though it has not yet eliminated) distribution bottlenecks. Under today's regime, each of the television networks is a government telecomm regulations created portal. Because there is such a limited number of these television portals, they receive more traffic than they would in a more open distribution system. Consequently, the networks are willing to pay MLB more than they would otherwise be willing to pay under an efficient, open system.
On the internet there are portals, of course, but there are many fewer limitations on distribution. Thus, there aren't "networks" and most attempts to create them have pretty much failed. Remember go.com? Sure, MSN and AOL still have network-like elements, but as tools that help people aggregrate their preferred content (such as RSS) develop, the idea of a network of content determined from the top down begins to look a bit silly. MLB will be able to charge for their content (how much I'm not sure), but they won't be able to get subsidies from a top down network. If MLB is smart they will work on ways to ease the aggregation of their content with other content their audience will like.
However, I'm not really all that interested in how the MLB can thrive on the internet. What strikes me in this story is how inefficient broadcast television is. The lesson here is not that MLB doesn't get it. The lesson is that we have massive ineffiencies in our telecommunication regulation policies when it comes to broadcast television. The strange (though not unexpected) thing is, the FCC seems blind to them. In a recent speech, FCC Chairman Michael Powell came out strongly against regulating the internet and protecting the open nature of the network (Preserving Internet Freedom: Guiding Principles for the Industry [PDF]).
There is much to praise in these principles. Too bad there is no mention of applying them to broadcast television.
Here are some of the principles:
- Freedom to Access Content - Not if you are trying to get that content on broadcast, cable or satellite. I'm not talking about a right to free content, but open access. My local cable company doesn't carry G4TV and I can't get it. I can get G4TV.com, but not the broadcast version. Why does the broadcaster/cable/satellite company get to make this choice? Why not let consumers (i.e., the market) determine more directly what is available than allow the existing gatekeepers to make the choice?
- Freedom to Use Applications - Two words: Broadcast flag. Rather than allow the development of all sorts of new applications to take advantage of the existing network (such as TiVo), the FCC would rather give the broadcasters effective veto power over developing new technologies. The economic growth, uncertainty of "killer" apps and technological development are arguments for letting creativity run riot on the internet. Why is this not applicable to broadcast?
- Freedom to Attach Personal Devices - Two words again: Broadcast flag. Creativity must be stifled in order that broadcast will thrive, apparently.
The broadband providers argue that without the ability to control access as well as determine what applications and personal devices may be used, they will be unable to make sufficient profit to continue rolling out broadband. Indeed, they won't roll it out. However, these arguments are bogus, and Powell is right to reject them. Of course, these are the same arguments used by the broadcasting industry with regard to HDTV. There, apparently, these arguments make sense. Of course, it would have been nice to call the bluff of the existing broadcast networks. If they didn't want to use the HDTV frequencies (afeard o' piracy), the FCC should have offered to transfer the frequencies to someone who would use them without forcing additional ineffiencies on the market.
It is great the Powell wants to preserve freedom on the internet. Too bad he is not consistent when it comes to broadcast television.