Policy implications of "free-on-demand"(2)

Wed, 03/31/2004 - 7:00pm
Jeffrey Krauss, President of Telecommunicationsand Technology Policy
By Jeffrey Krauss,President of Telecommunicationsand Technology PolicyI don't usually write about marketing–I write about technology, policy and the policy implications of new technology. But occasionally, there are marketing innovations that have important policy implications. Free video-on-demand is one of those. VOD technology was initially installed for pay-per-view movies. Viewers can rewind, fast-forward, pause or stop, just like watching a DVD or videotape. And they can watch any selection any time they want, not limited to the times in the channel guide. Next came subscription VOD, where subscribers to pay services like HBO can watch previous episodes of "Sex and the City" or "The Sopranos" any time they want. Then Comcast started up free VOD in Philadelphia. It put basic tier programming on a VOD server, and began offering 750 hours of free on-demand programming each month, including news programming, entertainment, children's programming and sports– including high school football games. And with that, a light bulb should light up. Up until now, high school football games were the mainstay of the public, education and government (PEG) channels, also known as access channels. In most franchise agreements, the cable operator is required to provide channels for this purpose. Where I live, there are two public access channels, five education channels and four government channels. Eleven 6-MHz channels are dedicated to public access. I hardly ever watch any of them, partly because they don't publish channel guides, and I can never find out what programs are on. And even when I can find out, the scheduling conflicts with something else. What a waste. Comcast didn't go so far as to propose the idea of free PEG-on-demand. That's my idea. But the company did include programming on its VOD server that was not already carried on its cable system. Any program that can be stored on the server can be made available this way. Free PEG-on-demand solves both the efficiency problem and the schedule problem for PEG access channels. VOD technology allows viewers to customize their viewing. I could watch the county council meeting when I want to, not just when it occurs. Moreover, VOD technology supplies the channel resources only when there is demand, instead of a 6 MHz channel 24x7. The result of free PEG-on-demand would be a significant increase in the public interest benefits of the cable system, partly because of convenience, and partly because of efficiency. And freeing up those 6-MHz channels will allow them to be used for something else. According to cable attorney Paul Glist, the idea of public access to cable television developed as part of the franchising battle for the Borough of Manhattan in New York City in the mid-1960s. Potential franchisees offered a "soap box" channel on which anyone would be able to appear on the medium and communicate his ideas to the system's subscribers. Cable systems were first required to provide free access channels in a 1972 FCC decision that established a comprehensive regulatory regime for cable. There was a requirement for one public access channel, one educational channel and one government channel. This was in the days of 12-channel systems. In 1976, the FCC repealed this requirement because it was so burdensome, and then a 1978 court decision found that the FCC didn't have the authority to require access channels. Since then, PEG channel requirements have been governed by local franchise agreements. In the 1984 Cable Act, Congress recognized that many franchise authorities demanded more PEG channels than they actually used, and allowed cable operators to carry other programming on unused PEG channels. Cable and telecom legislation in 1992 and 1996 covered PEG channels only with respect to cable operator responsibility for obscenity on PEG channels. And that's the way things stand today. There is no FCC requirement for free PEG access channels. The requirement comes from franchise agreements. But before you rush out to renegotiate your franchise agreements, there is one important technical consideration. On-demand programming resides on a server–a server is a digital storage device. It doesn't work with analog programming. And in fact, the whole VOD concept is only practical with digital programming. A digital program takes up only a fraction of a 6 MHz channel. So, in order to implement free PEG-on-demand, you will need to outfit your PEG studios with digital cameras. You will need to supply any subscribers who have NTSC TV sets (nearly everyone) with inexpensive digital-to-analog converter boxes, boxes that aren't available yet. In short, your cable system must go all-digital. That will take a few years. But it isn't too soon to evaluate the costs and benefits of free PEG-on-demand; it isn't too soon to start your franchising authority thinking about it; and it isn't too soon to start thinking about the necessary changes to the franchise contract. It isn't too soon to start planning ahead. Have a comment? Contact Jeff via e-mail at

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