Networks Versus Google TV -- Just Another Name for Net Neutrality

Last Updated Oct 25, 2010 1:42 PM EDT

As we recap the brewing Google (GOOG) TV saga, CBS (CBS), NBC (GE), and ABC (DIS) had all blocked the search giant's new television product and service from gaining access to programming they normally offered on their web sites. As I said on Friday, it was about the dumbest move they could have made.

That's strictly from a programming view. As my BNET colleague Ben Popper points out, there seems little logic for the networks to expect Google to pay for material that is freely available on the web. Pay for what someone gives away? Hardly sensible if you're Google. However, there is something more going on. This isn't about access to free web material so much as it is a three way battle between Google, and similar Internet interests the company represents, television content carriers like cable companies, and the content companies, in the body of the networks.

Some, like Jon Orlin at TechCrunch, argue that Google TV, Apple (AAPL) TV, Hulu, and other factors herald the true death of cable on the horizon. I disagree, because this isn't a simple up or down vote on cable. Even if programming is readily available on the web, consumers still need robust Internet connections. Do you think most will really be able to turn to highly metered bandwidth plans from AT&T (T) and Verizon (VZ)? No, when a lot of video has to go from point A to point B, wireless is not a cheap way to do it. Cable and telephone fiber optic links remain because the same companies control much of the available wireless connections, and they don't want to undercut themselves.

What the current fight shows is an example of the practical implications of the net neutrality fight. Consumers have only so much money and time to spend watching any given entertainment programming. The various forces -- Internet, carrier, and producer -- want to maximize their revenue potential. Each wants to manipulate the overall delivery model to its own end.

  • Google favors advertising-supported service models. It needs to maximize as much freely-available content as possible to give to consumers and, as a result, drive its ad revenue opportunity. Google wants the chance to present ads everywhere, whether on mobile devices, on televisions in someone's living room, or
  • Producers pay money to create the content and traditionally used a combination of subscription revenue through carriers companies and advertising viewed by consumers. Because their business models developed with a dual revenue model, they can't back away into an ad-only model, especially as advertising spending has taken such a beating.
  • Carriers want to get a piece of any business done over their physical networks. That means subscriptions from users, part of which goes to the producers, and advertisements.
The fight is far bigger than between Google and the studios. If Google becomes a conduit, it cracks the business-as-it's-current-done hegemony. People wonder why they need to pay cable companies for content that isn't available on consumers' schedules. That threatens the volume of money the carriers get (consumers still want Internet access, but that's been priced separately from television content and so has a market value). Such a reaction also disrupts an important revenue source for the producers.

You can see another aspect in the fight between News Corp. (NWS) and Cablevision (CVC), which has gone beyond News Corp. taking Fox programming off the cable company, but also blocking consumers that use Cablevision for Internet access from seeing such shows as Glee or House on Hulu. Everyone is feuding with each other as they jockey for proximity to consumer wallets.

What we see is nothing more than a collection of aliases for net neutrality. Although normally associated with the practices of carriers, it extends up and down the chain from programming to consumer. The networks' actions are conceptually the same as a cable company that charged Google or Hulu more for its traffic, claiming a bigger burden, even though, as I've pointed out before, this is simply rhetorical rationalization for a double-dipping scheme in which they might charge twice for the same traffic and, at the same time, blame someone else for their lack of adequately upgrading their networks.

The networks are concerned that they being too available on regular television sets whenever consumers want programming will undercut their big revenue streams from broadcast and cable distribution. Advertising on the Web only brings a fraction of television ad rates.

The connection to net neutrality is also why the programming networks are moving quickly. If they can't iron out agreements with their business sparring partners, the FCC might step in, and then the analogies between discriminatory traffic practices by the carriers and restrictions by the networks become too clear. If they can't break Google now, they may never be able to. Google, on the other hand, needs quick access to programming to get its TV product in high gear as it races with Apple for that connection to the consumer market. It's why Google and the networks are reportedly in talks to resolve the issue. Chances are they will, because none of the parties can afford for this issue to remain outstanding for long.

Related:

  • Erik Sherman On Twitter» On Facebook»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.