Cause To Piracy? Cable Channel Blackouts Are Only Going To Get Worse In 2018

[Len]

The last few years, cable TV customers have faced a growing number of obnoxious carriage fee blackouts, which occur when broadcasters and cable operators can't agree on new programming contracts. Such feuds usually go something like this: a broadcaster will demand a fairly obnoxious price hike for the same content, to which the cable provider (already awash in complaints about higher rates) will balk. Instead of negotiating their differences like adults, this content is subsequently blacked out for paying customers to force a settlement. Customers never see refunds for the inconvenience of being used as props.

For weeks, consumers are bombarded with PR missives, new websites and on-screen tickers all trying to amplify public outrage and drive greater pressure for one side or the other to buckle. After a while, the two sides strike a new confidential deal, and the higher rates are then quickly passed on to consumers. In a letter to lawmakers last year, Dish Network argued that consumers have faced 750 such broadcaster blackouts since 2010, with the retransmission consent fees that broadcasters demand growing a whopping 27,400% between 2005 and 2016.

It's an idiotic cycle of dysfunction that's unsustainable and only acts to drive consumers to alternative video options (like piracy). The fact that these costs are only driving users away from the traditional pay TV ecosystem is irrelevant to many cable and broadcast executives, who seem inclined to believe that they'll be able to nurse this dying cash cow in perpetuity.

The annoying phenomenon shows no sign of slowing down in 2018. Frontier customers in Seattle this week lost access to CBS after the company says it was told it needed to pay 80% more money for the same exact content:

"Cox’s bullying and heavy-handed blackout tactics hurt consumers,” said Steve Ward, Frontier Senior Vice President Video Technology and Content. "Their demands for an outrageous price increase would have to be passed on to customers in the form of higher monthly service rates. It’s time for Cox to agree to a fair and reasonable solution."

Meanwhile, Suddenlink and Optimum (formerly Cablevision) customers woke up to the new year with the news that they'd no longer be able to access Starz after their cable provider and the broadcaster failed to strike a new deal. For now, customers of those cable providers are being told that if they want access to Starz content, they'll need to pay extra to access it via Starz online streaming platform:

"Given that Starz is available to all consumers directly through Starz' own over-the-top streaming service, we don't believe it makes sense to charge all of our customers for Starz programming, particularly when their viewership is declining and the majority of our customers don't watch Starz," Altice said in its statement. "We believe it is in the best interest of all our customers to replace Starz and StarzEncore programming with alternative entertainment channels that will provide a robust content experience at a great value."

Of course with regulatory capture and the death of net neutrality, it's likely that this is one of several problems in the telecom and cable world that will only get worse before it gets better. Regulators from both parties were already inclined to dismiss this problem as just "boys being boys," wary of getting involved in what they believe are simple business disputes. And while there have been occasional talks about banning these blackouts as an act of bad-faith negotiations, nothing much ever appears to come of them. The hope was that the threat of regulatory intervention would be enough.

And while it's certainly true that this behavior will only drive customers to new streaming alternatives, broadcasters still dictate licensing for (or outright own) those services as well, meaning it's only a matter of time before this problem expands to hamper access to online content. There have been several different times where broadcasters blocked user access to their online services as well (usually by ISP IP range); behavior that only ceased due to companies being worried that they might run afoul of net neutrality (since many ISPs are broadcasters, like Comcast) or adult regulatory supervision.

With both of those concepts on the chopping block, expect carriage fee bickering (and the subsequent blackouts) to get both worse and more sophisticated in the new year.