Dish Network and Directv questioned by DOJ for raising rates
- Thread starter Stargazer
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Most favored has been part of the contracts for years and everybody knows it.
If the start-ups are somehow at a disadvantage because they lack bargaining power, that's not the government's problem to solve. The fact that the IPTV start-ups don't have to pay for physical distribution is a pretty huge advantage over CATV and satellite that have their wire plants and satellite fleets to maintain.
It is kind of odd that DISH is involved in that Charlie is clearly headed for IPTV in a huge way.
If the start-ups are somehow at a disadvantage because they lack bargaining power, that's not the government's problem to solve. The fact that the IPTV start-ups don't have to pay for physical distribution is a pretty huge advantage over CATV and satellite that have their wire plants and satellite fleets to maintain.
It is kind of odd that DISH is involved in that Charlie is clearly headed for IPTV in a huge way.
The investigation is not targetting Dish or Direct, it is just gathering info to use in their investigation of some of the pricing the content providers are doing.
It is not really the pricing but the bundling requirements. If an IPTV provider was lets say able to offer the USA channel all by itself, then Dish would demand the same ability, essentially breaking up the cartel approach of all my channels or none. Dish would claim that its most favored nations clause would let it do a la carte if they offered the ability to do a la carte to anyone.
The DOJ is investigating because essentially the programming providers are forcing bundling, and with all the most favored nations clauses in effect, they cannot allow a la carte to get lose, or their business model collapses.
I can see this in rural America, where they are the only two options. But why not also go after these local governments and cable companies who tag team on people. Just before the towns and cities in Northeastern Massachusetts got FiOS and RCN, it was common to get this crap from local cable. About 15 years ago a paper printed a quote from the person in charge of these matters in the town of Methuen, part of county I'm from. The guy basically told the people that pay tv is a commodity and if they didn't like the raising rates then to cancel, while he was getting some nice benefits from the then MediaOne, now part of Comcast. This was all over the people wanting to drop MediaOne for either Adelphia or TCI (I forget which one) due to raising rates. My brother lives in fabulous New Hampshire where the only options (due to LOS issues for either Satellite company) is Comcast and Comcast.
I imagine what the DOJ is interested in is any back room dealings between the networks and the cable companies to force their competitors into raising prices by driving the cost of the contracts up. I.e. It would not be legal for a Cable Company to negotiate a rate with a distributor with any sort of agreement (written or wink..wink) that says the provider can not sell their services to anyone else for the same price. Such behavior would be illegal, and I think that is what Dish and DirecTV may feel is going on. Dish in particular has a long history of negotiations with distributors and should be able to easily note where the game changed. Where distributors began to refuse to negotiate in good faith.
