FCC Approach to Net Neutrality ‘Right Answer,’ Says Liberty Media CEO
The FCC approach to net neutrality is the right one, said Liberty Media CEO Greg Maffei, hoping there’s no reclassification of broadband as a common-carrier telecom service. What some high-technology interests back in Title II or other more regulatory approaches isn’t the best way to proceed, he told executives and lobbyists for mostly old media Tuesday. “Very delicately the FCC has tried to balance between these interests.” The plethora of challenges faced by traditional media companies including cable operators mainly involve tech innovation, embraced more readily and successfully by upstarts that have bloomed into tech titans like Google, said Maffei in Q&A: Regulation hasn’t been a major hurdle.
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"I actually give a lot of credit to the FCC,” Maffei told a Media Institute luncheon. “What they've done is the right answer.” Thursday by a party-line vote, FCC members approved a net neutrality NPRM exploring the potential for what some call fast lanes for Internet traffic generators that have preferential deals with ISPs (CD May 16 p1). The commission has “done a pretty good job” of balancing competing interests, Maffei said. His company, chaired by cable pioneer John Malone, has at one point or another owned major stakes in many media companies, including currently Charter Communications, which unsuccessfully pursued Time Warner Cable before Comcast agreed to buy it earlier this year.
Regulation isn’t generally what hampers traditional media companies, Maffei said in Q&A with us and other attendees. The issue is those companies have been beaten innovation-wise by newer firms. He cited the example of Netflix, which he noted has changed from its original inception in a way regulators probably couldn’t have predicted. The company also shows how cable failed at tech innovation. “Things like Netflix are largely the failure of the cable industry,” said Maffei: “Netflix would have a heck of a lot less attractive future” if TV Everywhere were more ubiquitous across more devices. TV Everywhere, which programmers use to stream content to pay-TV subscribers, has been slow to congeal, industry executives have said before and said again after the lunch.
Things like slow innovation are bigger challenges to traditional media than regulatory issues, said Maffei. During his prepared remarks, he showed a slide of what he called a digital Godzilla eating the King Kong of media, saying that had happened with print media including newspapers and magazines. He cited a 64 percent decline in ad sales at papers, to $24 billion last year from 2000.
"There’s no traditional media company that has that kind of scale” such as Google’s YouTube video-sharing website, with 1 billion unique user visits and 6 billion hours of video watched monthly, said Maffei. “The scale at which this thing is expanding is mind-numbing” and faster than any U.S. cable network, he said: “There is no kind of traditional media company that can claim those kinds of statistics.” Nor could a traditional media company “get away” with paying $19 billion for WhatsApp, as Facebook did, said Maffei, who noted elsewhere during his remarks that he previously was Microsoft’s chief financial officer.
Maffei said some see a future where cable operators face bigger programming cost increases, more demands on their networks for data from the likes of Netflix and alternatives to watching pay TV or getting broadband from a traditional ISP a la Google Fiber. Those newer companies could get the best broadband and video customers, said Maffei, saying he wasn’t necessarily endorsing that forecast. Eventually without usage-based broadband pricing by ISPs, the “problem of the commons” may arise with a few users clogging ISP pipes “for everybody,” while Google Fiber and other alternatives “skim off perhaps the best of the customers on the data side,” said Maffei. “I'm not saying this is the future, but this is a future” as forecast by what digital Godzilla did to other businesses, he continued.
Maffei’s guess is that Google Fiber expands to about five more cities rather than 50, while virtual reality improves so much so that it’s no longer just the province of kids and gamers. Google may decide its fiber foray isn’t a core business and pull back, he said. “They have enormous success” as a company and “can do anything they want,” said Maffei. “But the ability to manage that breadth becomes difficult over time.” He said he saw such challenges firsthand at Microsoft.
Google Fiber, now in Austin, Kansas City, Missouri, Kansas City, Kansas, and Provo, Utah, is “exploring the possibility” of expanding the service to 34 more cities, said a spokeswoman in an interview. All 34 have requested the service (CD May 1 p5). That potential expansion is “what we're focused on right now,” said the Google Fiber representative.
It seems inevitable virtual reality applications will improve, as their needs for massive computing power are balanced with improvements to optics and microprocessor speeds and other tech, said Maffei. “All of those things create a better virtual reality.” Facebook agreed to pay about $2 billion for Oculus VR, which a Media Institute audience questioner asked Maffei about. Facebook CEO Mark Zuckerberg has called Oculus VR a “long-term bet.” (jmake@warren-news.com)