Lauren Frayer

Devoncroft Partners' Joe Zaller is reluctant to make predictions about the media technology marketplace, even though he is a expert analyst of it. However, one thing he sees clearly is the inexorable movement of TV media from baseband video to IT files and IP infrastructure. The reasons for it, he believes, are many and compelling. Zaller draws his insights from the two principal sources: The Global Market Valuation Report, a joint venture between him and the International Association of Broadcasting Manufacturers, which tabulates the sales of more than 2,500 tech vendors, and his own annual Big Broadcast Survey of media companies, which tries to ascertain technology trends and their technology spending plans.

In Q&A, Zaller said, "What we’re seeing is that there is this shift that’s coming with the move to IP, with the move to software. At the same time, there’s a lot of uncertainty around ATSC 3.0, HEVC, 4K and other technologies. If you listen to the comments on the conference calls [of publicly traded vendors], some of the CEOs talk about a pause in spending ahead of the next wave of investment, whatever that might be...The customer wants to buy software not hardware, which is inherently less expensive, so the vendors, who have been making hardware forever, have to find a way to transition what they’re doing into software and then it has to run on something which may be datacenter architecture -- you know, a room full of servers. Some people are moving very quickly to a data center architecture and can’t get there fast enough. They need to wring out the inefficiencies and they need to be able to have flexibility and agility. They have said that they think that IP is the best way to achieve that because there is an enormous economic leverage that comes from the IT industry and there’s a huge innovation cycle. You can move much more quickly in software."

[Commentary] State and local governments are starting to play an important role in getting broadband Internet access to the American public. And that’s highly commendable considering that many people still do not have access to high-speed connections at affordable prices. For most Americans, broadband is quickly becoming a must-have utility like water and electricity. That’s why it makes sense for cities and states to get involved.

Over the last few years, the FCC has made significant progress modernizing its universal service programs to make broadband available to all Americans. Importantly, the FCC in 2011 unanimously voted to transform the USF high-cost program for the large “price cap” carriers into the Connect America program, which supports rural broadband networks. This program is now moving into its second phase, in which $1.8 billion will soon be offered to expand broadband in price cap areas where deployment would not occur absent subsidies. At the same time, however, another part of the universal service program that provides $2 billion annually in support for smaller rural carriers -- called rate-of-return carriers -- requires modernization.

On April 16, we took another important step as my staff, Commissioner O’Rielly and his staff, Commissioner Clyburn’s staff, and staff from the Wireline Competition Bureau met with associations and others representing rate-of-return carriers to ask for their creative cooperation in getting this job done for rural consumers. I share Commissioner O’Rielly’s vision that we can get this done if we are prepared to roll up our sleeves and work together. We have to close the rural digital divide so that all Americans, regardless of where they live, can be equal participants in the social and economic life of the 21st century United States. We all share this goal, and modernizing this program is something everyone should be able to get behind.

The war over network neutrality is about to see its fiercest fighting yet. Groups representing virtually every corner of the cable and telecom industry have unleashed a barrage of lawsuits against the Federal Communications Commission’s new Internet regulations, in what has all the makings of a heavyweight bought destined to go all 12 rounds. For supporters of the tough rules, it’s either win in court or go home empty handed. “There are no guarantees,” said Matt Wood, the policy director at Free Press, which has advocated in favor of tough Web rules. “So I would never say it’s a slam dunk or a fait accompli, but we think the FCC has made the best choice it can on the law.” “It’s better to go in fighting on your strongest argument rather than on a weaker one that you kind of make up as you go along,” he said.

Apparently, Comcast and Time Warner Cable are preparing to meet with Department of Justice officials April 22 to negotiate possible concessions that could ease regulators’ concerns about the cable giants merging. The meeting would mark the first time the cable behemoths have sat down with regulators to try to hash out potential remedies in the more than 14 months since the $45.2 billion deal was announced.

Staffers at both the Justice Department and the Federal Communications Commission remain concerned the combined firm would wield too much power in the Internet broadband market and give it unfair competitive leverage against TV channel owners and new market entrants who offer video programming online. he Justice Department, which evaluates antitrust concerns, and the FCC, which must decide if the deal is in the public interest, are nearing the final, crucial stages of scrutinizing the acquisition. Discussions on potential remedies would be an indication that the agencies haven’t yet made a firm or final decision on the merger. But this meeting could be the first of many, and it’s also not clear whether the companies can offer concessions that will satisfy regulators.

Comcast’s bid to win state approval to purchase Time Warner Cable could hinge on whether the company becomes a generous corporate citizen.

California officials -- who are considering whether to approve the merger of the nation's two largest cable companies -- have been prodding Comcast to use its vast resources to help expand Internet access and provide phone service for disabled residents. As conditions to move the deal forward, state officials have tentatively asked the Philadelphia company to roll out faster Internet speeds for its customers and provide phone service and affordable Internet plans for low-income families. The state also wants Comcast to upgrade Internet connections for schools and libraries. If the merger is approved, Comcast's broadband Internet service area would cover 84% of the state's population -- up from about 35%. Comcast currently serves San Francisco, Sacramento and other regions in Northern California. The California Public Utilities Commission is scheduled to vote on the merger in late May or June. The deal also needs approval from federal regulators, who have spent more than seven months probing potential antitrust concerns.

The potential collapse of Comcast’s merger with Time Warner Cable wouldn’t just be a setback for those two companies. It would also unwind other pending deals and have a wide-reaching impact on the cable industry.

Another company has a lot at stake: Charter Communications, the No. 4 in the industry. Charter, which counts billionaire John Malone as its largest investor, has agreed to take control of 3.9 million Comcast cable-TV customers to ease approval for the Comcast-Time Warner Cable merger. If that fails, Charter won’t get those customers. Another Charter deal, the recent agreement to purchase of Bright House Networks, would also be in jeopardy. Comcast has plenty of other options, according to Rich Greenfield, an analyst at BTIG Research. The cable giant could seek to buy T-Mobile US to enter the wireless business or bolster its online video offerings with a company like Time Warner.

For months, senior intelligence and law enforcement officials have been calling for built-in access to consumer devices in the name of national security. But Sen Ron Wyden (D-OR), a key senator who oversees intelligence programs from his perch on the Intelligence Committee, says he and other members of Congress will fight hard against government "back doors" into encryption. In fact, he calls the government's push for access to encrypted devices "a very, very bad idea” for both consumers’ security and American companies’ business.

For sports fans, the new slimmer packages being offered by Verizon FiOS starting won't include one of the most popular networks in entertainment: ESPN.

Disney-owned ESPN said that it hasn't agreed to license its ESPN or ESPN2 channels in Verizon's new "Custom TV" skinny bundles. The two channels, which run exclusive games including college and NFL football and basketball events, are only available in Verizon's much bigger bundles of hundreds of channels. “Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements," ESPN said. "Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.” Verizon had said its genre-oriented slim packages of channels would include sports channels such as ESPN, Fox, the NFL Network and regional sports networks.

Netflix is planning 320 hours of original programming in 2015. That is about three times what it offered in 2014. That expanding range of original programming available on Netflix signals how CEO Reed Hastings wants to position the company as the entertainment world undergoes a digital revolution.

Traditionally, television networks needed to stand for something to carve out an audience, he said, whereas the Internet allows brands to mean different things to different people because the service can be personalized for individual viewers. The emphasis on original content is an extension of Netflix’s long-term view that the Internet is replacing television, that apps are replacing channels and that screens are proliferating, Hastings said.