What Do Uber, AirBnB and Telecommunications Have in Common?

October 09, 2014
By: Gary Kim

Disruption of existing business models tends to generate high opposition. The amount of opposition ride-sharing services such as Uber and lodging sharing services such as AirBnB are encountering provide some recent examples.

Existing industries, ranging from the taxi industry to the hotel and lodging business, see direct threats to their business models and economic fortunes. And, as always is the case, contestants seek legal and regulatory protection when they believe they can get such support.

The communications business is no stranger to such opposition or tactics. Virtually every proposed change to communications rules generates huge amounts of opposition from industry segments that are harmed and equal support from segments who benefit from any particular change.

It hardly matters whether the proposed rule changes affect prices, terms and conditions, reimbursement rates or bigger policies such market entry rules or the degree of regulation contestants or services might face.

Network neutrality and common carrier regulation are the issues currently roiling the U.S. telecommunications business.

But the U.S. video entertainment business faces many key issues as well.

Dish Network’s plan to launch a streaming video package costing perhaps $30 a month might be running into the same problem other would-be providers have encountered, namely resistance from content owners who worry about granting rights to lower-cost streaming services that could directly cannibalize existing linear video services.

So far, Dish has content deals with Disney (News - Alert) covering linear and video-on-demand content from ABC-owned broadcast stations.

ABC Family, Disney Channel, ESPN and ESPN2, A+E Networks and Scripps Networks Interactive also have been secured.

How attractive that is remains to be seen.

Sony, planning to launch a streaming service of its own, now is talking about a monthly price of $80 for its 100-channel over-the-top streaming video service. That means it will not have much, if any, price advantage over a linear video subscription.

None of that should come as a surprise. Content owners know their business, and are not in any hurry to damage the lucrative business they now have with cable TV, satellite TV and telco TV distributors.


 




Edited by Stefania Viscusi