roundtable: Slaying the "Monster Model"

roundtable: Slaying the "Monster Model"

Slaying the "Monster Model"

Vigdor Schreibman - FINS (fins@access.digex.net)
Thu, 27 Apr 1995 13:03:02 -0400 (EDT) 

Date: Thu, 27 Apr 1995 13:03:02 -0400 (EDT)
From: Vigdor Schreibman - FINS <fins@access.digex.net>
To: telecomreg@relay.doit.wisc.edu
Subject: Slaying the "Monster Model"
In-Reply-To: <Pine.3.85.9504241718.D12556-0100000@ba.com>
Message-Id: <Pine.SUN.3.91.950427123216.9829F-100000@access5.digex.net>


========================================================================
FINS SPECIAL REPORT                                       April 27, 1995 
========================================================================

BELL ATLANTIC PULLS BACK ON HOME VIDEO SERVICE
The "Monster Model" of Telecommunications Under Attack by FCC

The day following the message attached below sent to the telecomreg list
by Bell Atlantic's Link Hoewing, that company "delayed indefinitely" their
proposed entry into home video service.  Mark Wegleitner, Bell Atlantic
VP, suggested that the decision was made because of the need to upgrade
their technology.  It appears, however, that the real reason was a
decision by the FCC to slay the "monster model" by rejecting Bell
Atlantic's plan to control the programming it puts over its network.  FCC
Chairman Reed Hunt has indicated in a statement following Bell Atlantic's
announcement that the FCC would not alter the common carrier approach. 
"We think it is very important for the country to have ultimately a common
carrier of video, voice, and data in the digital world," Chairman Hunt
stated. 

Hurray, for "We the People," and for the Clinton administration that
seems, at long last, to be facing the light of reality.

Vigdor Schreibman
Editor and Publisher
Federal Information News Syndicate
<fins@access.digex.net>

-------------------------------------------------------
On Mon, 24 Apr 1995, Link Hoewing wrote:

> You ought to read "Being Digital" by Nicholas Negroponte.  If he is even 
> half right, the conduit is becoming so irrelevant as a constraint that 
> all of us will wonder why we ever argued about such things in the not too 
> distant (i.e. ten years) future.  Orwell got it almost all wrong.  The 
> "monster model" fears of domination almost always do prove to be wrongin 
> a dynamic economy such as ours.
> 
> Link Hoewing
> Bell Atlantic				|   Internet:	hoewing@ba.com
> 
> 
> On Wed, 12 Apr 1995, Vigdor Schreibman - FINS wrote:
> 
> > This duet is priceless; both critic and supporter of the Telco "monster
> > model" combining content and conduit sustaining the worst that we can
> > have.  The original proposal to allow the the Bell Companies into the
> > cable business was predicated upon the need for that market to support
> > Bell investment in a fiber optic infrastructure.  The current legislative
> > proposal sees an advantage in allowing cross ownership of telephone and
> > cable facilities for exactly the opposite reason, namely, to save the
> > money fostered by using one wire instead of two.  The argument about
> > competition has also taken the same mutually exclusive twist, and the
> > current claim advanced by Hane below that the Bell Companies cannot make
> > enough money to warrant investment in fiber optics based on the common
> > carrier model is directly contradicted by the argument offered in support
> > of the repeal of cross ownership restrictions: avoidance of that 
> > investment.
> > 
> >    In short, we are being offered a full dosage of doublespeak that is
> > utterly bereft of serious content.  We must see through this nonsense. 
> > There simply is no serious argument to sustain the "monster model," 
> > combining content and conduit, and we must do all in our power to avoid
> > that appalling outcome. 
> > 
> > Vigdor
> > 
> > ----------------------------------------
> > On Wed, 12 Apr 1995, Hane, John K. wrote:
> > 
> > > 
> > > 
> > > On Tue, 11 Apr 1995, Hane, John K. wrote:
> > > 
> > > >
> > > > In a sense, the analog offering is responsive -- because at the time of
> > > > deployment, and for several years until digital set top boxes reach
> > > critical  *  *  *
> > > 
> > > Sam Simon replied:
> > > 
> > > >        I've read several arguments that are intended to force the
> > > >VDT/Telco model into the Cable and not the Common Carrier model, and
> > > >frankly I'm puzzled at the sudden affinity for the cable regulatory model.
> > > >
> > > >        Historically, the ideal concept for diversity has been common
> > > >carriage. Unfortunately, we have found no way to implement common carriage
> > > >for media delivery.  The result has been first the broadcast model ---
> > > >public interest/public trustee ---- and then cable, which is a modified
> > > >newspaper model.  Under both, the owner of the conduit has total control
> > > >over the content, with some level of concomitant responsbility.  In
> > > >Broadcast, we used to have fairness doctrine obligations and requirements
> > > >for meeting the information needs of the community.  In cable, we have PEG.
> > > 
> > > >        While the historic reason for video dialtone described above is
> > > >essentially correct....a regulatory response to the cable act
> > > >prohibition, that seems irrelevant to the opportunity it presents.  If we
> > > >would get quick approval and encourage deployment, we have the possiblity
> > > >of (1) a serious competitor to cable and (2) a common carrier platform to
> > > >boot!
> > > >
> > > >---------------------------------------------------------------------------  
> > >  --
> > > >Samuel A.  Simon
> > > >IDI (Issue Dynamics Inc)        |   Internet:   samsimon@idi.net
> > > >901 15th St. NW Suite 230
> > > >Washington, DC 200005                   "Building Bridges"
> > > >(202)408-1400 (v/tdd)
> > > >(202)408-1134 (fax)
> > > >(202)408-1163 (IDI BBS)
> > > >---------------------------------------------------------------------------  
> > >  --
> > > 
> > > Sam --
> > > 
> > > I couldn't agree more with your underlying thesis:  that common carriage is 
> > > the best theoretical world for video delivery -- a world in which the 
> > > enormous capital costs of video delivery don't impede smaller speakers like 
> > > you and me.  I give all my votes to video common carriage.
> > > 
> > > But I've closely watched the telco's ramp-up of video capacity, and I don't 
> > > believe for a minute that they see huge profits -- justifying the huge costs 
> > >  -- in providing a common carrier platform, at least not a common carrier 
> > > platform alone.  The real money is still in content and ancillary services 
> > >  -- and they (at least BA) intend to be horizontally and vertically 
> > > integrated to a degree that most people don't yet recognize.  The familiar 
> > > refrain, that "the telco culture doesn't allow the creativity" is a bunch of 
> > > bunk.  Creativity is not a commodity but it can be bought, and I certainly 
> > > believe that forward thinkers (like Howard Stringer, the 
> > > intellectual-engine-of-CBS-recently-signed-by- the-BA programming-affiliate) 
> > > see both great financial rewards and an irresistibly fascinating challenge 
> > > in breathing life into telco/video services.
> > > 
> > > So to take my point a step further -- you can't be a common carrier of 
> > > yourself.  Delta can't devote 50, 60, or 70 percent of its capacity to its 
> > > own use call itself a common carrier.  Even if you disagree, you must agree 
> > > that if Delta uses the majority or a plurality of its own capacity on a 
> > > regular basis THAT portion of its capacity is not "common carrier".
> > > 
> > > But that is exactly what BA proposes -- to set up a so-called common carrier 
> > > "video dial tone" platform but allocate much of the capacity to itself -- 
> > > paying the tariffed rates to itself.  But even if the tariffs are 
> > > non-discriminatory, in the sense that the same rates are available to all 
> > > comers, the potential for curbing real, full service competition on the 
> > > platform is enormous.  (Why shouldn't Nynex, for instance, set tariffed 
> > > rates fairly high, since they are paying them to themselves?  I don't think 
> > > cross-subsidization accounting rules are sufficient to prevent this.)  In 
> > > any case, the telcos have a huge headstart and BA in particular has a 
> > > physical plant and software infrastructure that is years ahead of what 
> > > anyone else can muster.
> > > 
> > > All of this is to say that I think (regrettably) a real, free marketplace of 
> > > video information is not the major promise of telcos entering the video 
> > > business (although it may eventually emerge as costs fall).  It would be 
> > > very unwise to assume otherwise.  We need to be practical about the telcos' 
> > > plans and adjust policy appropriately.  It's simply wrong to regulate 
> > > someone whose using his own wire to deliver his own programming as a common 
> > > carrier just because he is ALSO in the entirely different business of 
> > > providing common carrier capacity.
> > > 
> > > A quick look around shows that many different telecom players are entering 
> > > each others' markets.  Broadcasters want to use excess digital capacity for 
> > > a host of services.  Cable systems want to provide telephone and broadband 
> > > data links.  The list goes on.  It seems silly to regulate a company that 
> > > enters a new business on hybrid regulations growing out of its original 
> > > business.  If we try to regulate telco provision of cable-like services in a 
> > > Title II model, shouldn't we apply broadcast regulation to television 
> > > stations that provide common carrier-like data delivery services?  
> > > Obviously, that does not work.  With companies in many different businesses, 
> > > you've got to apply regulatory models to the businesses themselves, not the 
> > > companies.  How can cable and telcos compete fairly with each other in the 
> > > video programming and telephone businesses if telcos have less stringent 
> > > video regulation, and cable systems have less stringent telephone 
> > > regulations?
> > > 
> > > Therefore, to the extent that a telco offers cable and cable-like services, 
> > > those services ought to be subject to Title VI regulation.  To the extent 
> > > that it provides additional video capacity on a common carrier basis, THAT 
> > > portion of its video capacity should be regulated under Title II.  (Whether 
> > > both titles could stand some deregulatory reformation is another matter!)
> > > 
> > > Again, I'm a big fan of what the telcos, BA in particular, are doing.  Its 
> > > unrealistic to think that this redundant broadband video capacity (and the 
> > > new, incredibly sophisticated switching)--which entail mind-boggling costs-- 
> > > an be built (at least today)on the meager hope that sufficient takers will 
> > > come forward to pay tariffs.  We've got to accept -- even encourage -- BA 
> > > and the other telcos to invest this money and hope the common carrier video 
> > > platform itself eventually becomes a vital business.  But we've also got to 
> > > call a spade a spade.
> > > 
> > > John Hane
> > > NBC
> > > hanejk@dc.corp.ge.com (office)
> > > hanejk@atl.dgsys.com (home)
> > > (202) 637-4535 voice
> > > (202) 637-4548 fax
> > >

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