Martin Says Raising Cable Ownership Cap Might Not Help Consumers
Lifting nationwide cable system ownership caps might not benefit consumers, making the action hard to justify at first glance, said FCC Chmn. Martin. Speaking on a UBS teleconference, he renewed pressure for the industry to sell subscribers individual channels. Further consolidation might not reduce cable rates, which rose over the past decade while prices for other telecom services declined, he said. Many of the comments responded to investors’ questions.
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“It would be very difficult to justify any raising of the cap” if cable fails to pass along programming savings to consumers, Martin said: “They would then have greater leverage in negotiating with programmers.” Undertaking a broadcast ownership review, Martin hasn’t yet acted on a 30% limit remanded to the agency 5 years ago by the U.S. Appeals Court, D.C., in Time Warner vs. FCC. Parts of a 2-month-old broadcast ownership rulemaking could be voted on separately if commissioners can’t “reach consensus,” said Martin.
Cable got heat as not offering enough bundles of channels, which were touted in a Commission report (CD Feb 10 p2) backed by Martin but called flawed by NCTA. Pay TV subscribers who don’t want a channel shouldn’t have to pay for it, he said. Shutting off all programming from networks a customer wants blocked isn’t enough, Martin said: “If they should be able to block that channel, why should the consumer not be able to be reimbursed at least for the per [subscriber] fee?”
The video market is “working,” said an NCTA spokesman, responding to Martin’s remarks: “We remain opposed to unnecessary government intrusion into a competitive multichannel video marketplace… The products and services that cable offers today are immeasurably better than 10 years ago.” NCTA doesn’t have a position on whether the caps should be raised, but thinks a cable ownership attribution formula should be tweaked if the FCC reviews the rules, the spokesman said.
Bells’ video entry probably hasn’t created enough competition for the FCC to stray from precedent set in blocking the merger between DirecTV and EchoStar, the chairman said: “There are not widespread offerings by telephone companies today that would actually change that landscape… [and] our analysis of the nationwide video market, which is what we did in the DBS context.” Asked whether the FCC would consider a satellite radio merger to affect a market beyond that industry, Martin signaled he wouldn’t, saying: “I think there has to be some significant change in the marketplace, and the service offerings for us to look at it differently.”
The financial benefits of an XM-Sirius merger “are kind of obvious,” said Sirius CFO David Frear separately at the Merrill Lynch conference late Wed.: “They'd be enormous.” But a deal isn’t on the table, Frear said: “If XM wants to do that, their board and their shareholders have the ability to make that known.” XM and Sirius will have 14 million subscribers between them by year-end if both reach their guidance figures, Frear said. Sirius aims to add 3 million subscribers this year, almost doubling the 3.3 million tally it began 2006 with.
Aiming to spur video competition, the FCC could act on a franchise rulemaking (CD Feb 13 p2) this year if Congress doesn’t pass telecom reform, Martin said: “I would hope we could be able to address it by the end of the year, but that is pretty fast for the Commission.” The agency aims to act on notices of proposed rulemaking in 12 months, but that doesn’t always happen, he said: “Absent any change in federal law, I think the Commission will conclude its proceeding.”
The FCC must balance broadband users’ right of access to all online content against hindering Web investment by imposing net neutrality rules, said Martin. Customers have no right to use more broadband capacity than they have paid for, he added: “We've said that the network operator needs to manage his network.”