Some thoughts on cable companies, or why capitalism doesn’t always embrace innovation

One evening last week, I was trying to set up the latest episode of The Walking Dead to watch while I made dinner. The Walking Dead, unfortunately, is not available to watch legally in the UK, so I have had to get a bit creative in order to watch it. And so, after some failed googling of “Watch The Walking Dead Online Free”, I decided I would try the AMC website, hoping that Hola would allow me to circumvent any geographical restrictions and watch the episode. I was happy to find a “watch episodes online” link, but on clicking it, I was presented with the following message:

The Walking Dead - AMC - Full Episodes – AMC

This was a problem. I don’t have a TV provider, and even if I did, it would not be an American one.  So clearly I wasn’t going to watch my favourite zombie show legally. I was frustrated, of course, but I was more taken aback by the whole thing. Why on earth is this necessary? The internet has turned cable providers into useless middlemen, but instead of taking advantage of this, TV stations are actually asking for proof that their viewers are still plugged into an old-fashioned television network before they’ll allow anybody to access their content online. It’s about as absurd as asking travellers driving between two cities for proof that they had bought a railway ticket for the same trip before allowing them to depart

That analogy might sound silly, but it is not actually too far off the mark. In my research on the competition between road and rail transport in the UK, I’ve discovered that before the First World War, railway companies were actually quite excited about the development of cars, trucks, and buses. Railway lines would employ buses to make connections or to take tourists on sightseeing tours, and railway magazines would enthusiastically print articles about these practices while also adding their voices to the demands for good roads. In 1912, the editor of The Railway Gazette praised a “Good Roads Instruction Train” that was touring the United States, and deplored the fact that “The rulers in countries awaiting full development are apt to be satisfied with laying down a single line of railway through a virgin country, and to consider that all has been done for the encouragement of settlers and agriculturalists generally”(1).

This support for motor transport waned after the First World War, when railway owners realized that buses and trucks were eating into their profits. This belated recognition of the threat posed by motor vehicles is emblematic of a very common pattern in the history of technology: New innovations are primarily understood in terms of their role in old systems. It is only later that they are able to transcend these systems and create systems of their own. Transitions scholars have divided this process into two stages: The ‘fit’ stage, in which a new technology is used only as a secondary adjunct to the old technology, and the ‘stretch’ stage, in which the new technology supplants the old technology, creating new social, economic, and political relations as it does so (2).

Currently, AMC and other stations appear to be stuck within the ‘fit’ stage, in which the delivery of entertainment via the internet is just an extra perk for people who have paid to get it from their cable company anyway. But the success companies like Netflix and Hulu seem to be pretty clearly demonstrating that we are rapidly moving into the ‘stretch’ phase, in which online distribution will become the dominant system, likely remaking the entertainment industry as it does so. The problem is that the cable networks are resisting this change with everything at their disposal, potentially going as far as threatening to throttle netflix through preferential internet coverage.

It’s not surprising that entrenched interests are fighting against technological change. This has always happened when a new innovation threatens to change an old system. Railway companies fought against cars, and as I pointed out in an earlier post, record companies fought against internet distribution. But what is alarming about this is that the cable companies appear to have a great deal of power, and appear to be winning a few battles in this fight. The potential of the internet in the entertainment industry is being deliberately opposed. And with new developments, such as the proposed merger of Comcast and Time Warner, which will further facilitate the kind of monopolistic behaviour described in a recent South Park episode.

We have an amazing global communications network that can send virtually any kind of information from any part of the planet to any other part of the planet instantaneously and nearly for free, and yet the entertainment industry still seems hell-bent on forcing us to continue to use a fifty year-old distribution system based on expensive and restrictive cable services. What this tells us is that the profit motive does not always encourage innovation. While established business interests are happy to incorporate new innovations that offer to increase their profits, they will fight tooth and nail against any innovation that disrupts the status quo too much. This effectively shuts out all the most exciting technological innovations. And that, dear reader, is why, after being rebuffed by AMC, I simply pirated the episode.

References

(1) The Railway Gazette., 1912. “Good Roads Instruction on Trains”. Vol. 61. No. 16. p. 365.

(2) Geels, F.W., 2004b. “Processes and Patterns in transitions and system innovations: refining the co-evolutionary multi-level perspective.” Technological Forecasting and Social Change 72. pp. 681-696.