Here’s an interesting twist to the claim from cable companies that since broadcasters provide their signals over the air for free, the cable companies shouldn’t have to pay for them. 

U.S. Senator Bernie Sanders (I-Vermont) is about to introduce legislation requiring cable, satellite, and other paid TV companies to provide local TV signals by offering a “lifeline service”, similar to that offered by telephone companies.  The basic service would be at a reduced cost and provided indefinitely to people who lose over-the-air TV service as a result of the digital transition next February. Sanders sought support for the bill in a letter last week that was circulated to other senators.

The Vermont Independent isn’t pushing the carriers to charge nothing to the customers, but he is pushing for a nominal amount.  The bill calls for pricing at $10 a month or less, similar to Comcast’s recently announced DTV transition promotion that expires after one year.  “We may go lower,” a Sanders aide said.

By having the bill require a cheap basic package “indefinitely,” Sanders would mean “until the end of time, a long period of time,” his aide said.  “There’s no point in going and doing the legislation if we’re just going to match what Comcast is already doing,” the aide said.

“Regardless of one’s ability to pay, it is unfair to ask consumers who lose their TV reception to pay for what they previously received for free,” Sanders said. “Because the federal government was responsible for mandating this DTV transition, I believe it is the federal government’s duty, along with a wide-range of industry partners, to ensure that our constituents are held harmless.”

The Sanders aide said the bill would establish the criteria for determining who had lost free TV signals and is thus eligible to buy a lifeline service that consisted solely of local TV signals. Money remaining from the federal government’s $1.5 billion converter box coupon program might be used to cover a portion of equipment installation costs, the aide added.

A spokesman for the National Cable & Telecommunications Association declined to comment.  No kidding.

Survey Says: “The Family Feud” between Channel 8 and Bright House Networks is over.  Actually, it ought to be called “Dysfunctional Family Feud.”  

The TV stations and the cable system, warring for the past four weeks, made up today.   And, Channel 8 aka WISH-TV, as well as co-owned WNDY-TV, WIIH-TV and the LWS cable channel are back on some 125,000 homes in Central Indiana. I say “some 125,000″ as Bright House lost customers to the satellite companies and AT&T’s U-Verse.  The stations were pulled from Bright House’s lineup on October 2 in a dispute over consent for Bright House to “retransmit” the stations.

All apparently were restored to their former positions.  I’m not privy to the agreement worked out between Channel 8’s parent company, Lin Television, and Bright House.  Those deals are kept under wraps.

But, I’m sure both sides felt pain.  And the threat of not being able to watch the 3-4 Indianapolis Colts made the stick in Lin’s hand look a lot smaller.

As I write this, the battle between LIN Television and Bright House Networks continues into its second day.  The parent company of WISH-TV (Channel 8), WNDY-TV (Channel 23), WIIH-TV (Channel 17) and the LWS Cable Channel is at odds with the company that provides cable television service to around 135,000 customers in Indianapolis’ center city and outlying northern suburbs.

Neither side could agree to terms moving forward on carriage of the television stations and cable channel, so all of them are no longer being provided to Bright House’s customers, of which I am one.  No CBS.  That means no CSI…no David Letterman…no Katie Couric.   (OK, two out of three ain’t bad.)

At issue, is the request from LIN that Bright House pay a small fee to carry the popular channels.  Under Federal law, the TV company has the right to be compensated for the product that Bright House takes and resells to their customers.

LIN is seeking less than a penny a day per cable customer.  Small change in WISH-TVs case for one of the most important channels on Bright House’s system.

I know my biases are showing, big time.  But, I’m a strong believer that anyone who takes a product and resells it should compensate the rights holder, in this case, LIN-TV.   It would be akin to someone renting a DVD at Blockbuster and charging people to watch it in a theater.  That’s illegal.

Bright House pays for a lot of its less popular programming.  The monthly cost for a channel such as ESPN is in the two dollar/subscriber/month range.  Sure ESPN is popular but it’s no CBS, which is only looking for a fraction of what ESPN costs.

I’ve been involved in these “retransmission consent” negotiations for years.  I understand that the cable giant doesn’t want to add to its costs.  I hate it when the program suppliers we use, such as Paramount Television, are able to raise the license fees for  programs such as Judge Judy.  But that’s business.

The cable guys claim that if they have to pay for the ability to carry WISH et al, they will have to pass along the cost to customers.  That doesn’t make sense.  Our costs go up.  See Judge Judy example above.  But, using that as the basis of raising our commercial rates, falls flat.  I have to find the expense savings elsewhere or make the decision to tell Judge Judy good-bye.

And other resellers do have deals to pay the broadcast stations.  I’m not privy to LIN’s deals, but am guessing the satellite guys have no problem realizing the value of having CBS and their other offerings available to satellite customers.

Bright House and other resellers have to wake up and realize that the broadcast stations, such as Channels 8 and 23, make up a huge amount of the viewing on their systems.  Think of the half dozen favorite channels you watch.  I’m betting at least three or four are the local stations.

Bright House and its brethern could get away with this when they were monopolies and carved out exclusive territories.  No, they didn’t collude but the cost of “overbuilding” on a competitor’s territory didn’t make sense.  So we got quasi-monopolies who were only regulated, to some extent, on price by the cities that controlled their franchises.

But those days are long gone.  With two major satellite providers and others such as AT&T and Verizon offering similar services, they are in real danger of losing customers.  Actually, not in danger.  They are losing customers.   Each month, data is released on the number of television households subscribing to cable, to alternate delivery systems (ADS) which includes satelliteand phone companies or receiving local stations over the air.   The trend is a decrease in cable penetration.  Current subscribers and new residents are turning to ADS and the percentage of homes using antennas to get their TV for free is increasing.

Customers get angry with both parties.  They could care less about the business end of things.  They want their CBS, My Network and Univision programs.  And, carriage of the Colts game on CBS this Sunday at 1PM has the telephone lines to DirectTV and DishTV humming as Bright House’s customers look to a way to see the game.  I’m guessing the sports bars will be packed if they don’t come to an agreement.

I’m also betting Bright House is losing customers.  Channel 8 is playing a gutsy game.  Their faithful viewers may stray and find other favorites.  Their advertisers may seek a rebate for undelivered Bright House households.

I doubt it. This is a temporary blip.  Unless it goes for a very long time, Channel 8 won’t lose its long-time fans.  And the effect on ratings by not counting Bright House households will be pretty minimal.

But, Bright House, in my opinion, is driving its customers to seek other alternatives.   And, the loss of those customers is permanent.

An interesting study was released today showing that cable TV continues to erode as the way television viewers receive service.

According to data from Nielsen, the penetration of Alternative Delivery Systems (ADS) reached 28.0% of television households in November 2007, up from 24.5% in November 2006. That is, 28% of all households get their television service by a means other than cable or over-the-air. You may remember over-the-air. It was free. Actually still is and some people choose to not pay for something a simple antenna will pick up in most places.

ADS now represents 31.6% of subscription television customers (those paying for video delivery). November to November, national wired-cable penetration of television households fell from 62.1% to 61.3% — the last time wired cable was lower was nearly two decades ago- February 1990.

Direct broadcast satellite (DBS) delivery, the largest component of ADS, is now estimated at 27.6% of television households, up from 24.0% in November 2006.

Fifteen Designated Market Areas are now majority-ADS markets, where more viewers are watching via satellite than over wired cable, including the first Top 50 market (Albuquerque-Santa Fe). In 56 markets, ADS penetration is at 40% or more.

Indianapolis homes with ADS are 30.1%; that’s 35.2% of the homes that pay for video delivery. Fort Wayne has nearly 36% of their homes getting TV via ADS; only 44.1% have cable. In both markets, as well as many around the area, TV viewers are turning to satellite and phone companies for their TV delivery and cancelling cable.