In last years battle over “open access,” Excite@Home representatives often defended themselves by noting that, while they had exclusive carriage contracts with AT&T, all web sites would be accessible via their cable modems.
Future open access battles will be more vital, because no such promises are forthcoming.
“Interactive TV,” a free service delivered alongside cable and accessed with a set-top box, is at the heart of this new battle. While todays free IP services make their numbers through targeted advertising, Interactive TV has a different business model.
The idea is to charge sites for carriage, the way cable networks charge operators today. By owning cable companies, firms like AOL-Time Warner, AT&T and Vulcan Ventures dont have to pay these charges. Their content has the advantage.
But it goes further than that. According to a recent Vulcan SEC filing posted at a Cybertelecom List, cable operators affiliated with Vulcan must take its Internet content, and must accept its verdict on what other Internet content they will or wont provide subscribers.
Does that make your blood boil? Does it seem unfair, unprecedented? It shouldnt Ive just described AOLs business model. Both media and stores that want to operate inside the AOL firewall must pay for the privilege, the former making it up on advertising and the latter on sales. Its a cost of doing business with AOL. And if you want access to its 19-20 million members, you pay.
This is the way the cable business has always operated. Cable operators are gatekeepers choosing among cable networks. To protect themselves cable networks have bought cable operators and local stations (which operators must carry under law). For example, Cox Cable and the Fox network are currently in a dispute because Fox is insisting that Cox carry Fox networks as the price of taking a local Fox station, which Cox is bound by law to carry.
Cox and Fox have bureaucracies filled with lawyers and lobbyists (some may indeed be named Knox and Box) to carry their fight forward. The small sites whose content built the Internet have none.
My point is that this is the future the cable monopolists have in store for the Internet. These are the kinds of agreements, and the kind of intrigues, behind the AOL-Time Warner merger.
Who are the small sites’ allies in this fight? Theyre the Bell companies, and thousands of Internet service providers (ISPs) who deliver service on phone lines.
Phone companies, unlike cable companies, are common carriers, required by law to provide service to all and protected by law from responsibility for the contents of that service. If “wireless cable” operators using MMDS frequencies, and “wireless fiber” operators like Winstar, are defined by law as common carriers, they will join the ranks of the allies, and the market will rule the day.
If laws can be passed requiring that all ISPs, including cable companies offering access to the Internet, operate as common carriers, then the second open access war will truly be over.
But if cable operators remain aloof from this responsibility, using the cost of upgrades and a limited free service to win the political struggle, then lobbyists for the other providers will demand it, and the only web sites available will be those the gatekeepers provide. And control.