Current Telecommunications Issues and Their

Current Telecommunications Issues and
Their Impact on Sports Broadcasting
A presentation at the
Fall 2014 Symposium of
The Mississippi Sports Law Review
University of Mississippi School of Law
October 17, 2014
Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law
Penn State University
[email protected]
Web site :
Blog site:
Sports and the Last Vestige of
“Appointment Television”
Live video programming constitutes the only type of content that still has both
consumer demand and tolerance for significant limitations on access.
Consumers increasingly expect to have content access any time, any where, via any device
and in multiple distribution and presentation formats.
Incumbents have to address technology agnosticism and cord cutting. Expect a growing
population of “cord nevers,” video consumers that have never subscribed to monthly
service from traditional Multichannel Video Programming Distributors, e.g., cable, satellite,
fiber optic and hybrid coaxial/fiber optic operators.
Internet Protocol Television (“IPTV”), sometimes
called Over the Top (“OTT”) television, combines software
defined platforms that use broadband conduits to access live
and stored content.
Incumbents have responded with on demand, television everywhere, provided one
maintains an MVPD subscription.
Sports Access Constraints
Sports Blackout: Professional sports contests not available for local broadcast
and MVPD carriage unless tickets sell out. For NFL games, broadcasters
transmitting a signal within a 75 miles radius of a stadium may only broadcast
the game if a sellout occurs 72 hours in advance of the game. In Dec. 2013 the
FCC proposed to eliminate the rule in light of declining importance of ticket
sales vis a vis broadcast rights.
Retransmission Consent: MVPDs must negotiate with local broadcasters for the right
to retransmit the signal. Revenues increased from $28 million in 2005 to $2.4 billion in
2012, a nearly 8,600 percent increase in seven years. The total is expect to more than
double to $6.05 billion by 2018 amounting to about 23% of total TV station revenue.
The FCC has a rather open-ended statutory mandate to ensure “good faith” negotiations,
but won’t prescribe rates, mandate binding arbitration, or ongoing carriage during a
No Ala Carte Requirement: MVPDs have no obligation to unbundle content tiers and
offer single channels/networks. ESPN benefits when almost all MVPD subscribers pay
about $5.54-$6.04 a month instead of only sports tier subscribers paying much more.
Sports Access Constraints (cont.)
Network Non-duplication/Syndicated Exclusivity: MVPDs cannot
“leapfrog” the local broadcaster and import distant network feeds; they must
black out other game broadcasts. The FCC recently proposed to eliminate
these rules despite a heritage of supporting “localism.”
Reliance on Definitions and Mutually Exclusive Classifications: The FCC
interprets the Communications Act of 1934 as containing mutually exclusive
service categories: common carriage telecommunications, broadcasting, largely
unregulatable information services and cable television.
Static definitions of what constitutes a cable television operator, signal
retransmission and fair use favor status quo technologies and conventional
windowing of content: linear and sequential access based on willingness to pay
and the passage of time since initial release.
Sports Access Constraints (cont.)
Regional Sports Networks/ Sports Program Access Complaints: Mixed results in applying
Secs. 616 and 628 nondiscrimination requirements both in terms of fair dealing on the terms and
conditions for access to programming by a competitor and the decision whether and how to carry
an unaffiliated network. Courts likely to prevent absolute refusal to deal , e,g, Verizon Fios access
to Madison Square Garden network content, but less likely to mandate carriage of content
arguably not like that offered by a vertically integrated venture (Weath TV).
Channel Placement: The FCC cannot mandate channel placement or programming tier for
specific networks, e.g., Tennis Channel. However the Commission has secured “voluntary
commitments” in a merger review, e.g., if Comcast creates a neighborhood of similar content, it
must locate both affiliated and unaffiliated networks there, e.g., Bloomberg News must be placed
near CNBC.
Proliferation of Non-Broadcast College Networks: Unlike the EU which mandates broadcast
availability of “must see” sporting events, nothing precludes the migration of many college sports
conference games to pay television. Even individual universities, e.g., Notre Dame and Texas,
have created their own network.
Incumbents Overstate the Status Quo Benefits
Television broadcasters control 6 MHz of valuable spectrum used by less than 10%
of all video consumers. Concepts like localism, diversity, 4th estate and the First
Amendment support incumbency.
Disruptive technologies, such as Aereo broadcast signal retransmission and IPTV
in general, risk becoming treated as piracy media. Aereo used customer assigned
antennas to receive “free to air” broadcast signals. The company then used the
Internet to deliver live and stored content. The Cablevision case considered as fair
use subscriber directed storage and manipulation of content located at cable
operator premises. The Supreme Court rejected this precedent instead
concentrating on whether Aereo operated as a cable television operator entitled to a
compulsory copyright license for signal retransmission.
50 years ago cable television operators supported enactment of the 1984 Cable Act
that provides a compulsory copyright license in exchange for payment. This law
reversed case precedent that considered broadcast signals as freely available. Aereo
could not or did not want to pay and suffered the consequences, but does this
decision impact cloud storage and what constitutes fair use?
Sports and the Network Neutrality Debate
Most consumers favor Internet Service Provider (“ISP”) neutrality and the
application of “best efforts” routing protocols. In the absence of congestion, the
status quo provides a level competitive playing field between content providers
and distributors in terms of “access to eyeballs.”
New bandwidth intensive applications, such as IPTV and OTT increase the
probability of congestion and degradation of service quality, even in the absence
of deliberate efforts by an ISP to “throttle” bandwidth hogging subscribers, or to
disadvantage competitors by creating artificial congestion.
IPTV consumers have a quick pain threshold for QOS degradation; full motion
video cannot become a slide show, or lose packets.
IPTV consumers welcome QOS enhancements, including ones that offer “better
than best efforts” prioritization of “mission critical” bitstreams, e.g., live
programming such as sporting events and award telecasts.
Companies, such as Akamai, Limelight Networks and Level 3, have generated
no controversy when they enhance traffic delivery from the Internet cloud to the
“retail” ISP for final delivery. The debate has focused on the “last mile.”
Can the FCC prevent unfair QOS and price discrimination but allow mutually
beneficial “Most Favored Nation” treatment that provides faster downloads?
Future Cases and Controversies
IPTV as a “Disintermediator”—the potential for major video programming
sources, e.g., NFL, MLB, ESPN and HBO, to offer OTT access in lieu of,
or in addition to MVPDs.
Role of the FCC in carrier and compensation disputes outside of Local
Broadcast-MVPDs, e.g., Regional Sports Networks.
Impact of Aereo on cloud storage of content and use of devices to “sling”
content from one location to another.
Impact of data caps on wireless IPTV; lawfulness of “sponsored data”
arrangements that exempt certain content from debiting monthly data
Industry concentration, e.g., Comcast-Time Warner Cable and AT&TDirecTV.
Sports programming costs trigger more carriage disputes (and temporary
shut downs), a migration of more content to pay channels and more MVPD
surcharges and programming tiers.
Rising Sports Content Costs
 In 2012, the LA Dodgers negotiated a 25 year carriage deal worth $8.35 billion, $335 annually,
Time Warner wants to charge $4-5 per month, per subscriber for access to this and other So. Cal.
Sports content.
 According to Sports Business Journal, the SEC network will cost cable companies $1.40 per
subscriber in states inside the SEC footprint; 25 cents per subscriber outside.
 In the average market, sports channels such as ESPN and regional sports networks account for
19.5% of fees paid by cable and satellite operators, according to media-research firm SNL Kagan.
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