cable operators, satellite companies and phone companies. By design, this plan will excludedisruptive new entrants and result in fewer choices and higher prices for consumers.This business plan, which transposes the existing cable TV model onto the online TV market,can only exist with collusion among competitors. As a result, TV Everywhere appears to violateseveral serious antitrust laws. Stripped of slick marketing, TV Everywhere consists of agreements among competitors to divide markets, raise prices, exclude new competitors, and tie products. According to published reports and the evident circumstances, TV Everywhere appearsto be a textbook example of collusion. Only an immediate investigation by federal antitrustauthorities and Congress can prevent incumbents from smothering nascent new competitorswhile giving consumers sham “benefits” that are a poor substitute for the fruits of realcompetition.
Building the Case
This paper has three parts. The first provides background on the current marketplace andchronicles the previous tactics of cable TV distributors to thwart online TV’s disruptive potential. The second part details how the existing cable competitors forged agreements to createTV Everywhere, largely through closed-door discussions and industry conferences. The third part provides a detailed antitrust analysis.To tell the story of how the existing providers came together to formulate “TV Everywhere,” onemust set aside the consumer advertisements and review the trade publications, statements byindustry executives at trade shows and panels over the past year, as well as the comments thoseexecutives made to the press. Such a review shows how cable executives deliberately attemptedto avoid a paper trail, crafting the plan with conversations in person, on the phone, and at tradeevents.The evidence, including statements by leading cable TV executives, makes clear that, under thecircumstances, TV Everywhere cannot work without collusion. Executives recognize thatcompetitive pressures should force programmers to make more and more content availableonline — and to compete with one another. That is, Comcast’s Fancast Xfinity should becompeting online
with the offerings of other cable operators, like Time Warner Cable, andthose of programmers like Hulu, owned (for now) by Disney, Fox, NBC and others. OneComcast executive described the online TV situation as a classic “prisoner’s dilemma,” in whichtwo criminals are collectively better off by colluding but worse off by following their individualself-interest.Competitive pressures should require existing cable TV distributors to meet consumer demandfor online TV, rather than resist the demand by tying programming to inflated cable TVsubscriptions. Recently, when the newspapers sought to implement an industry-wide “pay wall”on the Internet, the papers sought an antitrust exemption from the Justice Department to holdtalks. The cable industry did not seek such an exemption for TV Everywhere, but went ahead andimplemented an industry-wide agreement anyway, in apparent violation of the law.Government oversight, antitrust law and competition policy exist to ensure a fair marketplace for all business interests to the benefit of consumers and the economy. This paper calls for