One cord for telephone, one cord for cable, and another for the internet. Why do we all have so many cords when it's all just internet in this modern day and age?
The short answer is, in fact, very short: money. The ability to bill you multiple times for the same product is a boon for cable and telephone companies. A consumer they can bill four times is a jackpot for these industry players. The quadruple sale of cable, phone, internet and wireless is commonly known in the industry as the "quadruple play". It's not clear whether the origin of this term derives from the baseball triple play, or from the fact that the consumer gets played -- four times.
All four of these services are simply an exchange of digital bits. I don't mind paying a reasonable fee to send and receive my 0's and 1's over the internet, but paying for different costly cable infrastructures that do the exact same thing is ridiculous. In this four-part blog series, I will discuss what's holding back the convergence of these services into one pipe. I will also discuss the available options for cutting the cord today. First up: cable television.
The Present Predicament
If you think that hefty cable bill you received last month was justifiable to pay for all the content you watched, think again. Under a basic cable package, you weren't paying for the content. Rather, you were paying for the distribution of the television signal. You paid the cable company to send you the cable signal down a coaxial cable, even though the internet could have sent you it just as well.
In fact, cable companies pay no more than a whopping $0.71 cents per subscriber to content providers for the rights in the basic content they send you (based on 2008 figures). The broadcasters providing the content have no choice but to license their broadcasts to the cable companies at this rock-bottom rate. Under the regime set out in the Copyright Act, this low royalty fee is set out by the Copyright Board (as the Retransmission of Distant Radio and Television Signals tariff).
Having to pay only this low fee, cable companies install receivers to pick up over-the-air signals which they then retransmit to their subscribers. They, of course, place many near the U.S. to pull in the coveted U.S. channels that us Canadians love. The cableco pays their $1, sends the signal to you for many many dollars, and walks away with a pocket full of money.
Normally, the marketplace in a capitalistic system corrects these market failures. However, in this case the cable companies have a natural monopoly. The cost of installing coaxial cables into every home is tremendous, creating a barrier to would-be market entrants.
Of course, there is no such barrier to internet distribution. You'd think that the grand monopoly of the cableco's would collapse under internet competition. You'd think quick-thinking entrepreneurs would pay the $1 content fee, stream television to internet users for $2, and collect a dollar from every single Canadian as they make the switch.
Well, entrepreneurs did just that. Back in 1999. In fact, these entrepreneurs didn't even charge their customers any money at all, but rather chose to support this low-cost operation through internet advertising.
The first of these, iCraveTV, became ensnared in legal battles in the U.S. and soon closed shop as a result. The company was unfortunately reckless about putting in place any safeguards to localize access to within Canada (the $1 royalty doesn't cover U.S. subscribers).
Next up, JumpTV came on the scene. Trying to avoid iCraveTV's mistakes, they proceeded to do everything by the book. However, before they could get off the ground, the legislature stepped in to put a stop to all this internet funny business. This was the kicker and the real set back for convergence and innovation: Parliament effectively banned use of the internet as a broadcasting pipe.
Parliament accomplished this ban in 2002 through a Catch 22 that's a devious mind would find quite beautiful in its circular form. With amendments to the Copyright Act by Bill C-11, An Act to Amend the Copyright Act, the low $1 content fee way snatched away from any broadcaster that transmits over the internet through reliance on the CRTC's New Media Exemption Order. That is, in simpler terms, Parliament told internet broadcasters to go ask the CRTC. The CRTC replied that they don't do internet licensing (they have still not created any new license categories for internet rebroadcasters nearly ten years later).
This may not be true for too many more years. The CRTC is once again taking a look at New Media in its current OTT ("over-the-top" video) hearings. Perhaps, in time, we'll see an end to the New Media Exemption in the next while and the establishment of new license categories -- though a much better solution would for Parliament to reconsider the door it slammed shut with its Copyright Act amendments.
For now, although regular broadcasts are off-limits for internet users, you can still cut the cable and partake in the over-the-top and internet video goodness that the CRTC is immediately discussing. Netflix reports to the CRTC that there is currently virtually no evidence of Canadian cord cutting. It's time for this to change. Let's cut 'em.
While Netflix is the cord-cutting option that immediately comes to mind for those looking to cut the cord, the offerings of their Canadian version isn't exactly stellar or scissor-inducing.
However, there are other options. A surprisingly strong alternative (or a Netflix companion) is Boxee. On the plus side, it's also free (you can either buy the set-top box that the company offers, or simply download the software and install it onto any old computer or laptop with a tv-compatible output).
A couple weeks ago, I tried installing several other applications such as XBMC, but it appears only Boxee caters to Canadians. This software works by aggregating the many online offerings of websites that make videos available, such as CBC and CTV. Here are a couple screenshots demonstrating a few of the shows available:
Over-the-air is an another alternative not to pass up, especially now that Canada's digital tv transition is finally a go for August 31. For hi-definition lovers, keep in mind that over-the-air digital television is even better quality than it's HD cable counterpart (cableco's compress the signals a lot so as to fit them all down their one little pipe).
I get great over-the-air quality from a $50 Hauppauge WinTV antenna that I plug-in to the same old computer system on which I run Boxee. With the combination of the two, I get all the television I need.
While I'm admittedly not a television addict by any stretch, this setup is great if you only want a few basic channels and a reasonable selection of on-demand shows. Cutting the cable is a real option, right now.
For those television viewers that require more, you'll have to wait until the CRTC and Parliament stop protecting an obsolescent monopoly.