The Convergence of Traditional and Internet TV

Michael Petricone, SVP, Government Affairs Consumer Electronics Association
Ned Sherman, CEO Digital Media Wire Inc
Todd Weaver, Founder & CEO ivi Inc

There are several policy and legal issues with the convergence of TV and Internet.

ivi TV

Todd Weaver’s ivi is the first online cable provider. They turn your computer into a set top box vs. running coax to your home/tv. They have been fighting for a few years for the right to carry content. They were sent to FCC because they are not governed by the FCC. Sept. 13th, they launched anyway. They got C&D letters from content providers, and counter-sued to try and clear the way. They are paying the same royalties required by law as all the other true cable companies. They are caught between some bad policy that hasn’t been updated for the internet.

At one point ivi had 75 channels pulled from traditional feeds in certain markets. they had to drop many after the lawsuit (preliminary injunction), and now down to 15 channels.

Pricing is $4.99 for just broadcast channels. Broadcast content is the most popular channels out there (sports and news definitely most popular).

Question: Why not go the long-tail route and take the niche channels instead of taking on the broadcasters
A: It’s about growth and trajectory, ESPN brings a lot more people and subscribers. A known brand has a massive audience already, and the long-tail channels get more eyes via discovery.

Question: Is there any presidence for this lawsuit?
A: Satellite had the same arguments and set presidence. ivi is trying to define what a "cable system" is. There is already a royalty system set up for "cable systems" and ivi wants to be part of that. They meet all the required points for this royalty system as a "cable system."

The situation ivi is in is very common in this field. Copyright law is still based on physical media – it has not caught up. We have a content industry is very reluctant to change and update. It is hard to see what is lost here with what ivi is trying to do. The broadcast industry should see these types of new mechanisms as more eyeballs on their content and figure out a way to monetize it instead of trying to block it.

Question: Two front war for ivi –
1. change the definition of the cable system
2. geographic exclusivity (rights are only paid for certain #’s or markets)
Why fight both wars?
A: The battle is copyright law (what ivi is being sued for) retransmission and royalty and FCC (other arm) retransmission consent.  The legal battle is only copyright law, with the FCC deciding on governing the internet.

Google TV

What is the status? The holy grail is TV + Internet experiences. Nobody has really figured out bringing the internet experience to the TV in whole. Google TV brought this closer, and it’s getting better.

The problem is that Google doesn’t have the content and are being blocked by networks. This is short-sighted on the network’s part. They’re basically saying you can’t watch content on a computer connected to a TV, but you CAN watch on a computer connected to a monitor. If you make it easy to access legal content, you remove people going to illegal content.

There is a battle between consumer electronics manufactures and consumers wanting content wherever they are and the content providers blocking content based on the screen they’re watching it on.

Google has teamed up with many other consumer electronics to try for "pro-vid". FCC requires that cable devices be available everywhere. Cable companies want you using their boxes. History: AT&T using only their own phones on their own networks. Similarly the cable box should work the same way (as long as it doesn’t harm the network). You can hook up the devices of your choice. Google TV would like to jump in on this and become a cable box.

Google vs. Viacom – Google was protected by DMCA, but up for appeal. There really is no clear winner in this. Google gets views, and Viacom (content owners) get promotion.

Final Comments

Content providers are concerned with non-authorized content on the Internet. COICA could shut down websites if they are considered as infringing copyright. There is no due-process.

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