April 2007 - Net Neutrality

Order Taking

By Bill McClellan

It continues to amaze me when I hear someone in the DRTV community suggest that net neutrality isn’t a big deal. That the 40 percent of industry sales generated online are merely a function of traffic driven from other DR channels-an order-taking mechanism. Frankly, I can’t argue with that as the numbers back it up. But here’s the thing-it’s not the issue.

The deal is that the telecom and cable companies are betting the farm on broadband deployment. Their offering to the consumer consists of cable television and the Internet. Not the Internet as you and I currently know it, but one that has the capacity to deliver real-time HDTV-quality video.

As this broadband rollout gathers speed, providers changed the rules and developed the technology that allows them to decide whose video gets delivered. They then went to Congress and spent $100 million, saying that consumer demand for other companies’ video offerings would be so massive that it would clog their systems. And to manage the demand, they needed to create a video “fast lane” and charge businesses to guarantee delivery. In effect, to make video work on the Internet they needed to make it look like the cable model.

Well, we are all familiar with that. Most of the capacity is dedicated to entertainment and news broken up by spots of brand advertising. Remnant short- and long-form time is then made available to the DRTV community. Oh yeah, I almost forgot. To play with the big boys and have your own dedicated channel you have to go negotiate with each regional cable provider. Each of these providers has the ability to deny access and determine where you are placed. It is all a game of how many eyeballs you generate. If you are ESPN, you get paid big bucks. If not, you are blackmailed.

Contrast this with your online presence today. You are treated equally with ESPN and consumers decide what to consume at any given time. That is all about to change, as the marketplace transitions into a more video-rich environment. The order-taking component of your website still will be there. What will be at issue is the video you will be forced to broadcast in the future to keep up with your competitors.

To ensure delivery of this new marketing channel, you will have to negotiate with each provider, which then has the power to determine your fate on its network. That’s if, of course, ESPN or YouTube doesn’t take up all the capacity beforehand to then sell you advertising space. Another scenario would be if one of your competitors negotiates a deal as a preferred provider and locks you out.
I can’t predict how video will evolve and be used to sell stuff in this new world. However, what I can state unequivocally is that the DRTV community is the best at using video to sell products directly to the consumer. In a neutral network that is a huge advantage. Close the system and the advantage transfers to those with the deepest pockets.

Why on earth would we as the experts in commercial video content ever concede carriage rights on the video distribution mechanism of tomorrow? Why would we give up our direct link to the consumer for a world in which we must negotiate with multiple broadband providers? Why would we relegate ourselves to merely DR advertising when we can do DR advertising and funnel it to our own DRTV (Internet) channel that has interactive capacity to take orders and upsells?

I don’t want to be an alarmist. Let me be clear, providers have promised that what you have today you will have tomorrow-our order-taking mechanism is safe and secure. So let’s all move along, there’s nothing to see here. I feel much better now, don’t you?

Bill McClellan is ERA’s director of government affairs.


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