For more than 20 years, Boston residents have watched NBC for free on WHDH-TV Channel 7. But if Comcast gets its way, at least four million Beantown viewers may have to subscribe to pay cable television service to keep watching.

This morning, WHDH filed suit against the cable giant in federal court in Boston alleging Comcast broke federal and state laws and an agreement it signed with antitrust regulators when it announced it would not renew WHDH’s affiliation contract with NBC. Comcast acquired NBC in 2011, after agreeing to conditions preventing the cable company from engaging in anti-competitive behavior.

Media observers say Comcast has made no secret of its desire to buy WHDH or another Boston over the air station, to build its network of affiliates directly owned and operated by the cable company. Station owner Ed Ansin isn’t selling, at least not at Comcast’s current asking price. But eyebrows were raised when Comcast announced it would end its affiliation agreement with WHDH – a well-known, high-powered television station – and move NBC programming to New England Cable News (NECN), a low-rated Comcast-owned cable channel.

Unless something changes, NECN will disappear on Jan. 1, 2017, replaced by a new “NBC Boston” cable channel. The decision will also strand WHDH without a major network affiliation, which is likely to significantly cut the station’s value and ratings.

“Comcast has a reputation for pushing the envelope wherever they can but they’ve just done an awful lot of things wrong here,” said Ansin.

In an effort to limit the damaging optics of Comcast forcing free network television programming to pay cable, Comcast announced it would also relay its NBC Boston cable channel over a UHF channel in another state now showing Telemundo programming. Those without cable will have to adjust their antennas carefully to receive WNEU-TV Channel 60, in Merrimack, N.H, the new home of NBC for Boston-area cord-cutters and cord-nevers.

WNEU’s coverage area only reaches 50% of the Boston television market.

That may be good news for New Hampshire residents in Concord or Nashua that may have had trouble watching NBC shows over WHDH, but very bad news for about four million people inside Greater Boston who live where WNEU’s signal doesn’t reach, including those in primarily minority communities like Roxbury, Dorchester, Mattapan, and Brockton. Those residents, along with other areas in southern Boston, will likely have to call Comcast and buy cable TV to keep watching NBC starting this January.

WHDH’s lawyers have now pushed back:

When Comcast, the largest cable company in the world, acquired NBC in 2011, there was widespread concern about the impact this unprecedented accumulation of power in the television industry would have on viewers and other market participants. Particularly in markets like Boston, where Comcast is the dominant cable provider, citizen groups, industry participants and government agencies expressed concern that Comcast would seek to leverage its cable holdings and in the process degrade its broadcasting presence and diminish the important public service role that broadcast television stations historically have played.  To address those concerns, Comcast promised its NBC affiliates (including WHDH) that it would negotiate affiliate extensions in good faith such that over the air access would be maintained, and cable interests would not influence those negotiations.  As part of the FCC’s approval of Comcast’s acquisition of NBC, the FCC adopted these same conditions in order to protect the public interest.

WHDH believes that Comcast has violated these conditions.  It also believes that Comcast’s actions violate Massachusetts law prohibiting unfair and deceptive business practices.  Finally, WHDH believes that Comcast’s actions violate federal and state antitrust laws because they have enabled Comcast to increase its monopoly power in the Boston television market, and the resulting decrease in competition will harm consumers, advertisers and other broadcasters.

In its suit WHDH is seeking an injunction and an order requiring Comcast to comply with its obligations under its agreement with WHDH and the FCC order. WHDH will also seek damages.

WHDH also accuses Comcast of stringing it along on the renewal of its affiliate agreement, claiming they were told discussions about an extension would begin “when the time was right.” WHDH says Comcast was plotting to launch its own cable network alternative all along, and didn’t negotiate in good faith. In July 2013, NECN ad sales representatives began telling advertisers it would soon become the local NBC affiliate. After WHDH protested to Comcast, the cable company claimed NECN’s statements were untrue.

“No major national broadcaster has ever terminated its relationship with a successful independent affiliate in a major market to build its own local affiliate from scratch,” WHDH lawyers wrote.

[flv]http://www.phillipdampier.com/video/WHDH Boston Major announcement involving NBC and WHDH-TV 1-7-16.mp4[/flv]

WHDH in Boston informed viewers back in January that Comcast was not going to renew its affiliation agreement with NBC. Today, WHDH’s lawyers took Comcast to court. (3:27)

Mhaoilchiaráin and O’Reilly launch Irish TV (Image: Picture: Frank Dolan )

Irish TV, focused on the Irish diaspora, is in talks with Comcast and Time Warner Cable to add its online channel to the national cable television lineups of both companies.

The network, not affiliated with Raidió Teilifís Éireann (RTÉ) — Ireland’s public broadcaster, is a Mayo-based commercial venture that launched in May 2014, and can be viewed only in part on some PBS stations and via Sky and Freesat in Europe.

John Griffin, chairman of Irish TV, has committed to spend up to $18.9 million on the network. He has the money, having earned millions while growing London minicab company Addison Lee. He sold his interest in the venture to the Carlyle Group for $486.3 million dollars last year.

The vision behind the Irish channel, which features homegrown cooking, music, and sports entertainment, originated with its founders Pierce O’Reilly and Máiréad Ní Mhaoilchiaráin. They agreed to let Griffin run the network after concluding negotiations carried out in a London pub.

Each Irish county (North and South) will have its own half an hour slot on the channel called County Matters.

In August, the Broadcasting Authority of Ireland, the country’s telecom regulator, began talks with Irish TV’s parent Teilifís Mhaigh Eo Teoranta for a broadcast license. Currently, the venture only operates in Europe because of a license issued by Ofcom, the British telecommunications regulator.

An Irish television license will allow the venture to operate directly within Ireland and facilitate programming agreements with RTÉ that could bring more mainstream Irish television programming to American television.

Winning a carriage agreement with Comcast and Time Warner Cable would bring the network more potential viewers than there are citizens of Ireland itself.

You can still read a book instead of everything else.

Allowing Comcast to dominate New York’s cable television marketplace will deter future competitors from entering the market, particularly for television programming.

One of the arguments made by proponents of the merger is the possibility of decreased wholesale television programming costs won through volume discounts available to the largest nationwide providers. Unfortunately for consumers, Comcast has already declared customers will not benefit from those discounts in the form of lower cable bills.

A prospective new entrant considering providing cable television service will face competition with Comcast without any benefit of volume discounts on programming.[1] That makes it unlikely a provider will offer a competing television package.

This is not a theoretical problem.

In Ohio, independent cable company MCTV discovered that while large cable operators like Comcast were benefiting from volume discounts, it faced contract renewal prices more than 40 times the rate of inflation.[2] Cable ONE, owned by the Washington Post, had to drop more than a dozen Viacom owned channels for good because it could not afford the asking price.[3]

MCTV president Bob Gessner reminds us of just how concentrated the entertainment business has become, noting that nine media companies (Comcast is one of them) now control 95% of all paid video content consumed in the United States.[4]

MCTV’s survival plan includes membership in the 900-member National Cable Television Cooperative, the only way smaller providers can pool resources and win discounts of their own. It is no longer effective as mergers and acquisitions continue to consolidate the cable and telco-TV business. All 900 NCTC members serve a combined five million customers. Comcast has 21 million, DirecTV: 20 million, Dish Networks: 14 million, and Time Warner Cable: 11 million.[5]

AT&T confesses it cannot compete effectively with Comcast and other larger competitors for the same reason. AT&T’s solution, like Comcast, is to buy a competitor, in this case DirecTV.[6]

Frontier Communications faced a similar problem after adopting Verizon FiOS franchises in Indiana and the Pacific Northwest after purchasing Verizon landline networks in several states. When Frontier lost Verizon’s volume discounts on programming, Frontier’s solution was to begin a marketing campaign to convince its fiber customers to abandon the technology and switch to one of its satellite television partners.[7]

—

[1]https://www.fiercecable.com/cable/comcast-twc-deal-will-squeeze-programming-and-technology-vendors

[2]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/

[3]http://online.wsj.com/articles/viacom-60-cable-firms-part-ways-in-rural-u-s-1403048557

[4]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/

[5]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/

[6]http://www.bloomberg.com/news/2014-05-02/dish-or-directv-need-deal-most-in-at-t-love-triangle-real-m-a.html

[7]http://stopthecap.com/2011/08/16/frontiers-fiber-mess-company-losing-fios-subs-landline-customers-but-adds-bonded-dsl/

The House Energy and Commerce Subcommittee on Communications and Technology has approved a draft bill that could effectively render current CableCARD technology obsolete  by allowing cable operators to encrypt channels and introduce new security measures that only work with the cable company’s set-top box.

If you look closely inside your cable set-top box, chances are good a CableCARD similar to this is installed inside. But perhaps not for long.

With strong support from the cable industry, the House Subcommittee approved the reauthorization of the Satellite Television Extension and Localism Act (STELA) with language that would end the Federal Communications Commission’s ban on built-in descrambler set-top box equipment unavailable to competitors.

Section 629 of the 1996 Telecommunications Act requires that consumers have adequate access to alternative equipment to view multichannel video programming. In 2003, the FCC adopted the cable industry-developed CableCARD standard that would let customers view encrypted channels without leasing a traditional set-top cable box.

In fact, if you own a cable set-top box manufactured after 2007, chances are you already have a CableCARD without realizing it. It is built-in to your set-top box and decrypts and authorizes your cable television lineup. The cable industry never saw any need to incorporate CableCARDs into set-top equipment because it was designed to handle those functions without needing the extra card. But the FCC’s “integration ban” has insisted cable companies use the CableCARD with hopes it would stimulate universal support of the technology and help facilitate a breakup of the leased set-top box monopoly.

The cable industry has itself largely to blame for the FCC’s actions. Prior to 1992, some cable operators were notorious for saddling customers with expensive set-top boxes that were large and unwieldy. Cable companies regularly raised the rental price of the mandatory equipment in rate increase maneuvers and charged huge penalties when boxes were lost, stolen, or damaged.

Many cable customers never wanted the boxes, preferring “cable-ready” service, which let the television sort out the television lineup without any extra equipment.

But “Cable-ready” televisions were an impediment to the revenue-enhancing possibilities offered by digital cable television that became common in the 1990s. Existing television sets could not receive the digital channels without a set-top box and many customers avoided upgrading service because of the extra costs and equipment requirements. In other areas, signal theft pushed the industry towards encrypting more than just a few premium movie channels. In high theft areas like New York City, cable operators won permission to scramble most, if not all the cable television lineup. Customers needed boxes to receive those encrypted channels.

As early as January 2005, the National Cable & Telecommunications Association told the FCC that independent alternatives like the CableCARD were in direct “conflict with cable’s own market imperatives,” adding there was no economic incentive to support third-party equipment and adopting it would result in increased cable bills.

Powell

Now that CableCARD technology is with us, most cable companies rarely mention it unless customers directly ask. Even CableLabs, the industry engineering group that develops and markets a variety of cable industry technology, has also avoided the subject.

Without any significant backing from the cable industry, most customers never realized they had another option when the cable technician arrived with a leased set-top box in hand. Television manufacturers dropped support for the little-known technology as well.

Cable industry advancements like on-demand viewing don’t work with the standalone CableCARD, creating a disadvantage that further hurt the technology’s chances.

The cable industry argues times have changed and consumers don’t generally want CableCARDs.

NCTA president Michael Powell told Congress that more than 45 million CableCARD-enabled set-top devices are now sitting in customer homes, but only 600,000 of them were requested by cable customers for use in third-party devices. Powell argues supporting CableCARD technology means customers with a leased box are paying for redundant technology. One large cable operator claimed the average set-top box now costs an extra $40-50 to support CableCARD technology.

“Additionally, based on EPA figures, cable subscribers collectively foot the bill for roughly 500 million kilowatt hours consumed by CableCARDs each year,” said Powell. “By all measures, the costs of this misguided rule clearly outweigh its benefits.”

In the end the subcommittee agreed to a compromise by eliminating the “integration ban” that effectively keeps cable companies from switching on new security technology that might not work with CableCARDs but also gives the FCC the authority to create or authorize new independent set-top box technology ‘when needed.’

This means either the cable industry could develop a next generation of CableCARDs that work with advanced security measures or more likely the ongoing advancement of IP-delivery of television programming could make the matter moot. As the cable industry moves towards online streaming of cable channels, various third-party devices like Roku could be used to access much of the cable lineup without worrying about a CableCARD. Recording such programming for later viewing will likely require agreements with copyright-obsessed programmers, the cable industry, and manufacturers, however.

Time Warner Cable TV subscribers in Southern California can now access local over-the-air television signals on the company’s TWC TV app, expanding the lineup of hundreds of cable channels to now include the major network affiliates — a significant gap in the “TV Everywhere” app for most customers.

Residents in Los Angeles and San Diego join those in New York and Kansas City that can now receive local over the air programming on their home computer, tablet, game console, or Roku box. Time Warner Cable requires viewers to subscribe to both its television and broadband services to watch, and only from your home’s Wi-Fi network.

The service is designed to bring value to Time Warner’s cable TV package and offer subscribers the opportunity to watch cable programming without an additional set-top box. Current licensing restrictions keep Time Warner from offering most television programming while on the go, but the cable company is attempting to negotiate those rights when programming contracts come up for renewal.

The major networks are not waiting for cable operators to negotiate with them, however:

• ABC: The network’s Watch ABC app has been available since the spring and offers live streaming of the local ABC station in eight major markets including New York, Chicago, and Los Angeles. Viewers must live within the viewing area to watch;
• CBS: The network has purchased part ownership in Syncbak which specializes in digital content delivery, but the network has not announced plans for a streaming app;
• FOX: In addition to Hulu/+, FOX wants to adopt mobile broadcast technology using the Dyle Mobile platform, which allows device owners to receive over the air television with the use of a special add-on antenna;
• NBC: NBC will follow ABC and offer live viewing of local affiliates over an app starting in large cities early next year.