OPEN MIKE BY JOHN HANE

What You Should Know About iPad App Flap

The controversy over Time Warner Cable’s plan to distribute cable programming on tablets has implications for broadcasters. Like many cable programmers, most broadcasters don’t have all the rights needed to distribute programming on the Internet. Also, viewing on tablets is unmeasured. Do you want your station’s viewing shifting to unmeasured devices?

Ever since Time Warner Cable released an app that allows users to watch two or three dozen cable channels on iPads we’ve been barraged by press reports of litigation and plans of other multichannel providers to launch similar services. Cablevision has announced it’s launching a similar app that lets subscribers watch their entire channel lineup on an iPad. 

Suddenly cable and satellite companies are rushing to review their programming and retransmission deals to figure out what rights they have obtained, while programmers frantically review distribution agreements to see what rights they may have given away. We can find a few lessons about retransmission consent agreements in the App Flap, but let’s save those for another day. 

What this really comes down to is whether the iPad apps qualify as “cable system” distribution, Internet distribution or something else. Most programmers (and a few careful broadcasters) specifically carve out Internet distribution when signing carriage agreements — existing deals cover distribution for in-home viewing over cable and DBS systems. Internet distribution rights are negotiated separately, if at all. But many broadcasters who signed MSO form retrans agreements may have given away a lot more than they intended to.

So do the iPad apps get their programming from the cable systems or over the Internet? Depends whom you ask. Although the providers (especially Cablevision) have been murky about how the apps work, it seems pretty clear that the apps ride over the broadband portion of the cable plant. They aren’t encoded at the headend with the same technology used to encode traditional cable channels, and they aren’t decoded in the home by a set-top box. Based on the scant available information, it appears that the iPad programming is encoded just the way it would be encoded for delivery over the Internet. And it is received in the home, not through a cable connected to a set-top box, but by the same cable modem that sends and receives Internet content. 

So how do cable operators claim this is part of the cable TV service? Well, although the app programming rides on the broadband portion of the cable pipe, it arrives in the home over the same cable that carries cable TV. But of course, you can say the same thing about any iPad app (and all other Internet content) accessed over a cable broadband link — and they aren’t “cable TV services.” But these apps only work when the subscriber is home — a trait shared by the lowly set-top box. 

For better or worse, most people seem to wonder what the big deal is. Joe Flint of the Los Angeles Times uses a peanut butter analogy to argue that if he buys peanut butter in a jar he should be able to transfer it to Tupperware at home without paying an extra fee. I don’t like that analogy (and I told him so). To Joe’s credit, he also mentioned my analogy: If I have the right to sell the print edition of the Times on the street, that doesn’t give me the right to put it on the Internet. Those are two different deals. 

BRAND CONNECTIONS

In media, packaging matters a whole lot more than it does in commodity trades like peanut butter distribution. 

Programmers and broadcasters are worried about the iPad apps for a whole bunch of reasons. Yes, most want to be paid separately for Internet distribution, if they want to allow that at all. Many cable programmers and most broadcasters don’t even have the rights needed to distribute all of the programming on their linear channels on the Internet. So if they are deemed to have inadvertently given those rights to cable operators in their program carriage and retransmission agreements, they may get sued by their own suppliers.

There are other problems too. Right now, viewing on iPad apps isn’t measured. That’s a huge downside, especially for broadcasters, who rely disproportionately on ad revenue. Unmeasured viewing is as good as lost — the broadcaster doesn’t get paid for it. Do you want your station’s viewing shifting to unmeasured devices? While the consumer at home may think he’s just putting the peanut butter into Tupperware, the peanut butter supplier (in this case, the broadcaster) is rightfully concerned that he isn’t getting paid for most of the peanut butter at all.

Another problem (and another clue that this is a whole lot more like Internet distribution than cable distribution) is that, at least today, I am being told that the iPad apps don’t respect syndex and network non-duplication restrictions. As cool as they may be, until they can do that, they literally aren’t ready for primetime. Savvy broadcasters may want to be honest about their feelings with their partners.

From some perspectives (not including mine), the first generation iPad apps look pretty benign. It’s in-home viewing, after all, and it arrives over the same cable that brings TV. But how long before those apps include DVR functions? You can bet viewing will slip out of the home then. Maybe that’s a good thing for broadcasters who lack Internet and out-of-home rights. But will that viewing be measured? And where else could this lead? Once the peanut butter is out of the jar, it’s hard to get it back in.


John Hane is counsel in Pillsbury’s Communications practice group in Washington. He speaks and writes frequently about emerging electronic media issues, especially retransmission consent, mobile video, Internet video and spectrum re-allocations. He can be reached at [email protected].


Comments (7)

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Katie Reese says:

April 5, 2011 at 8:38 am

I think it’s good that companies are starting to come out with apps that will give their subscribers more value for their money but at the same time, I don’t think anything is comparable to DISH Network’s DISH Remote Access app. I work and subscribe to DISH Network and I use the DISH Remote Access app to watch live and pre-recorded shows. I don’t have to pay an extra monthly fee and with the help of the Sling Adapter, I am able to access any content on my DVR and I don’t have to be at home in order to do so. The video quality is great and it definitely caters to my lifestyle because I’m always on the go and I can enjoy my TV the way I want to and I love it. I am always recommending that people check out DISH Network and experience a value that no other provider can offer at this time.

*Danielle

Doug Alden says:

April 5, 2011 at 9:42 am

I think you are confusing INTRANET distribution with INTERNET distribution.

    David Adams says:

    April 5, 2011 at 10:18 am

    Not really. I don’t think programmers want their programming distributed on an intranet or on the Internet. The intranets are interconnected to the Internet and the TCP/IP streams can be routed to the Internet with a little spoofing. The cable television system itself is not interconnected — it’s a closed system and programming it carries isn’t routeable. When I authorize cable television distribution, that’s what I mean to allow. And that doesn’t include intranet distribution.

    Patrick Commane says:

    April 5, 2011 at 6:01 pm

    John, you are simply mistaken, on multiple levels.

    For starters, when you say that that the “streams can be routed to the internet with a little spoofing” you are assuming facts not in evidence. Even assuming, arguendo, that such is a true statement, you are incorrect in suggesting this would distinguish it from traditional cable television carriage. It has forever been possible for a customer to illicitly route their service outside of the home, by something as simple as stringing a cable from their house to a neighbor’s. And for years, systems like slingboxes have made it easy to route conventionally-delivered cable television over the internet. By your argument, programmers would validly object to even conventional cable tv!

    Furthermore, your dismissal of Skymax’s point about the distinction between IP as a technology and the Internet as a distribution medium is completely off-base. The fact is, IP as a technology has been widely used in this business, for close to a decade. Video transport within programmer and distributor facilities, alike, is almost universally over IP. A provider like AT&T delivers all of their content via IP, and a provider like Verizon delivers a subset of their content via IP. All of the new MoCA-based multiroom DVRs move content through the home using IP, and AT&T even delivers IP directly to end user devices (XBox 360s). (And none of these use the Internet.)

    It simply is not plausible to suggest that there is no distinction between the use of IP technology to deliver service through an operator’s private facilities (to the home), vs. the use of the Internet to deliver service (and particularly, outside of the home). Nor is there any validity to the argument that choosing a different transport technology requires new distribution rights, any more than choosing a new codec (e.g., switching from MPEG-2 to MPEG-4), or switching from ASI to IP transport in the headend, required new distribution rights.

Ellen Samrock says:

April 5, 2011 at 12:45 pm

Most content producers want their product seen however and wherever it can be seen. The problem is lawyers who have talked producers into splitting agreements into a myriad of rights, such as broadcast and online streaming rights. This makes it difficult for broadcasters to use the content in whatever venues they have or will develop, forcing them to go back a re-negotiate contracts. It’s better for all concerned if a comprehensive contract is negotiated upfront in which a producer’s work can be freely used by the broadcaster (within reason, of course).

    Linda Stewart says:

    April 5, 2011 at 4:43 pm

    Agreed. Why do stations have to make a separate deal to broadcast their programming via mobile DTV?

Patrick Commane says:

April 5, 2011 at 6:07 pm

Programmers do have valid concerns if content is consumed in a fashion that doesn’t get measured for advertising purposes. But this is not a new problem, and trying to block such new consumption pending a measurement mechanism is not a solution. This is no different than when consumers started using DVRs. Initially, DVR playback was not measured. Once it became clear that DVR consumption would be a significant use case, it was added to the measurement process.

But nobody ever seriously suggested that distributors should be disallowed from delivering content to DVRs, simply because DVR consumption wasn’t measured, and nobody should suggest such regarding new consumption devices, like ipads. The fact is, measurement mechanisms will NEVER get created until there is demonstrated, significant consumption to be measured. The delivery of content to new devices will ALWAYS precede measurement. To suggest that new devices should not be enabled until measurement mechanisms already exist, is effectively to say that no new devices should ever be served.

Furthermore, logic along these lines produces inane results. If measurement is the test, does that mean that identical technology used to deliver content to connected TVs, or to devices that connect to TVs (e.g., game consoles, Blu-ray players, etc.) are valid, while unmeasured devices such as ipads are not? If an HDMI output of an ipad (assuming it were enabled) were connected to a TV, would that render use of the device valid, only to be rendered invalid when disconnected?

While programmers may have valid concerns about measurement, having some consumption, using new devices, run under the radar of existing measurement methods has been, is, and will continue to be, simply a fact of life they must live with. Programmers should concentrate on broadening measurement methodologies, rather than on trying to quash delivery of existing services, within the home, to devices of their own customers’ choosing.


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