Big Media or Big Losers?

Despite criticism, 20 years from now, media observers will recall FCC
Chairman Michael Powell's tenure as remarkable for its revolutionary fervor and
impact. In the face of a flood of technological challenges, Powell's
regulators, to their credit, have most often been the dogs who do not bark in
the night. In fact, far from anointing winners, this incarnation of the FCC has
ensured the fall of the media baronies in their present form.

The FCC was once necessary to police the access to radio and TV
channels. Now, however, comes broadband—and sending content as a stream of
packets breaks the old model. Many voices effectively time-share what used to
require silence from all except the sole authorized license owner. Geographic
proximity to the transmitter is meaningless. The final frontier—ubiquitous
Internet Protocol dial tone—is right around the corner. Get ready for an
Internet browser in your car.

How easy will it be to access (or share) this content? In the last
decade, the FCC's policies have greatly expanded the utility of frequencies
that require no licenses. Wi-fi technology applied to this meager slice of
spectrum already has had a profound, irreversible impact. This will balloon if
the FCC claws back spectrum now allocated to analog TV.

As media consumers get used to the idea of programming their own "mix,"
the old blowtorch economies of scale no longer add value. The corporate rush to
consolidate represents what private pilots call a "sucker hole" in the clouds.
While some content (breaking news, sports) needs to be seen in real time, the
dirty little secret is that little of any broadcaster's feed has time-sensitive
value; in geek parlance, it is latency-tolerant. TiVo and cable video on demand
(VOD) demonstrate that.

Further, the actual creators of content—the writers, editors,
musicians, videographers—now have an unprecedented set of very low-cost
tools. Blogging is merely the first wave. The sheer number of other data
streams coming together in just a few years will be a giant body blow to cable
operators and common carriers.

The black-helicopter crowd concentrates on whether the relaxation of
crossownership rules will mean the silencing of diverse voices and opinions.
Fine. They need something to yip about.

But, thanks in large part to the Powell FCC, the value proposition that
underlies all big-capital broadcast media bets is going the way of—well, the
way many uncompetitive oligopolies do when their foundations erode. (Think Erie

The Big Media response to this FCC-fostered environment of creative
destruction remains a version of the old studio system: Buy up as many stars as
possible and lock them into a closed distribution net. As a result, it is
likely to fail. The present dominant players are missing the boat. The success
stories will more likely resemble Google or a diverse directory of multimedia
blogs—where creative types create content and meta-programmers help drive
traffic their way.

So, far from presiding over a media monoculture, the supposed
beneficiaries of the FCC's actions may, in the future, end up a lot smaller,
poorer and less influential.