Telecom: Content Competition

1
Telecom Content Competition

• "The Future of Competition and
• the Evolution of the Marketplace
• Insight Conference 7th Annual
• Telecommunications Forum
• Nov 9, 2010
• David Keeble
• www.davidkeeble.com

2
Vertical Integration
3 - play
OTT
Wireless
Shaw
Quebecor
Telus
Rogers
Bell
Incumbents
Telephony
New Entrants
Mobility
ISP
Online Aggregator
BDU
Broadcaster
Producer
3
New entrant competition

• New entrants can compete in content IF
• They become BDUs,
• Regulated, facilities-based
• or
• An open Internet/mobile platform becomes the main
  video delivery means.

4
The Baseline according to Nielsen
Each week the typical American consumes almost
35 hours of TV, 2 hrs of timeshifted DVR TV, 4
hrs of internet, 22 minutes of online video and 4
minutes of mobile video.
June '99
5
And yet

• Right now, internet/mobile video usage is quite
  low, compared to other platforms
• 1.5 of all video usage
• And yet video delivery is said to occupy over 50
  of the total capacity of the Internet
• Partly because on-demand is a very inefficient
  delivery method compared to broadcast.
• Prediction
• Linear TV will survive, because the industry is
  not going to expand the capacity of the Internet
  by 30x to provide the same services consumers are
  already paying for.

6
Usage Prediction

• Aggressive scenario
• Internet-delivered VOD business model improves
  because
• piracy is discouraged by ISPs,
• content providers make more content available,
• encouraging growth of internet-delivered VOD
• 4x growth over 5 years
• Is there enough to pay for this, given other
  on-demand platforms?

7
The Value of Vertical Integration

• Vertically integrated incumbents can create a
  unique consumer value deal via
• The 4-play bundle
• Ownership of many robust networks
• Serving home, mobile, car
• Note DTV mobile
• Many forms of on-demand, not just one
• Exclusive rights to unique content
• Consumers buy content, not pipes

8
The CRTCs Role

• Canadians do NOT want to subscribe to two content
  bundles to get a complete service.
• NHL playoffs available only on Carrier X is
  acceptable when usage is small, and other
  platforms dominate, but .
• Can CRTC afford to allow content to be held
  exclusively within proprietary delivery systems?

9
Exclusive Content?

• TV services use exclusive program rights
• but TV services must be generally available to
  all BDUs.
• Category 2 services may not be carried on all
  BDUs.
• When BDUs themselves obtain content directly for
  VOD, they do so non-exclusively.
• But there is no regulation of Internet or
  mobile delivery.
• OTT Netflix, Google unregulated
• Suspicion that telecom content plays are designed
  to create exclusive content deals for their
  portals
• Or better bargaining cross-silo

10
Defining the internet!

• Services delivered and accessed over the
  Internet are exempt from regulation
• Reckoning that the Internet was an open platform
  that could not be regulated
• But it never defined the Internet?
• If content is only available to subscribers to
  one proprietary delivery network, is it still
  accessed over the Internet?
• Commission must decide what Internet means.
• Federal Court ISPs are not broadcasters - as
  long as they have no control or input over the
  content made available to Internet users.

11
Exclusive Content on an ISP?

• Joining Rogers on Demand Online
• Everyone
• Can watch hundreds of full length TV shows and
  movies for FREE.
• All Rogers Customers
• Can access exclusive content simply by joining.
• Rogers Cable TV Customers
• Can watch shows from their specialty channels by
  joining.

12
CRTC Proceedings

• Exclusive content is not specifically raised in
  the vertical integration proceeding (2010-783)
• Indirectly, via
• General possible anti-competitive behaviour by
  BDUs
• How to define when a BDU has conferred an undue
  preference on itself.
• The conditions of licence for VOD proceeding
  prohibits exclusive rights for VOD
• Possible amendment exclusive content allowable
  if service is available to all BDUs.
• But neither proceeding deals with Internet
  providers e.g. the ISP portals, Netflix or Google
  TV.

13
Conclusion

• As telcos move into content area, the competitive
  environment will depend in part on the regulatory
  treatment of exclusive content rights.
• Stay tuned, CRTC may have to re-engage
• if the market does not encourage
• Cross-silo provision
• New entrants.

David Keeble www.davidkeeble.com