Bipartisan Skepticism Seen on Need for More Video Mandates
Members of both parties were skeptical about the need for congressional intervention in the wholesale market for pay-TV programming during a House Communications Subcommittee hearing on video competition Thursday. Chairman Rick Boucher, D-Va., and ranking member Cliff Stearns, R-Fla., asked whether program-access rules need to change to allow new providers, including Verizon, to compete better with cable incumbents such as Cablevision. “We should act as a last resort,” said Rep. Bart Stupak, D-Mich.
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Members and witnesses discussed how broadband is changing the market for video (CD Sept 16 p5). Some Republicans used the hearing as an opportunity to criticize the FCC meeting, taking place at the same time, where a net neutrality rulemaking was approved. (See separate report in this issue.)
Boucher said he approached the hearing without “preconceived” ideas about a need for legislation beyond the 1992 Cable Act. Lawmakers asked whether, once current carriage contracts end, telcos could sign deals for sports programming that cable operators have withheld from them. “A company that’s well financed like Verizon … could finance the creation of your own content, and that’s a situation very unlike the situation that direct broadcast satellite was in in 1992,” Boucher said. “Why should we be concerned about this? Why shouldn’t we just let the market operate?” Cablevision, which owns sports teams and channels that distribute their games, “contract with themselves,” said Verizon Vice President Terry Denson.
Joe Barton, R-Texas, ranking member of the full committee, questioned the premise of the hearing, when cable operators and telcos can work out their disagreements. “I'm trying to figure out why we're having this hearing,” he said. “It looks like we're having a food fight between some folks who at some point in the past decided to buy a sports team” and “the people who don’t like it.” Denson said he couldn’t say that view was entirely incorrect. But with sports programming “there is certain baseline content that is unique in a community,” he said. “And without it we can’t compete.”
Cablevision Chief Operating Officer Tom Rutledge said his company provides Verizon all games from New York sports channels MSG and MSG Plus in standard definition. Cablevision has done fine when it has lost access to Yankees games during contract disputes, and Dish Network chooses not to carry MSG and MSG Plus in HD, he said. “Program access rules are no longer appropriate” and attempts to narrow the terrestrial exemption “should be dismissed out of hand,” Rutledge said. Barton’s suggestion: “My advice to the witnesses is go have lunch together and work it out.”
Members of both parties expressed the hope that the increasing availability of video online means consumers can get more programming without having to subscribe to pay TV. “More and more consumers are relying on their broadband connections to access Web-based video services,” said Commerce Committee Chairman Henry Waxman, D-Calif. That may “offer great hope to many in the creative community,” but “the advantages of historic incumbency can be hard for new entrants to overcome without government intervention.” Rep. Christopher Murphy, D-Conn., pointed to the likes of Hulu.com and ZillionTV but said Internet piracy “has hampered many of our efforts to promote the expansion” of programming online.
Having recently seen mobile broadcast video demonstrated, Stearns said there may come a time where consumers don’t need to pay for TV separately “because I might just get it from the Internet.” In the future, “everything is going to come through the broadband Internet,” he said: “It will be high definition, it will be high speed.”
Stupak asked whether ESPN360.com -- a Web site that ISPs buy access to for their broadband subscribers -- will sell individual subscriptions. “If the content was so compelling, I'd think you'd want to get it out there” by “going directly to consumers,” he said. Ben Pyne, Disney Media Networks’ president of global distribution, said he doesn’t expect that. There’s no evidence that ISPs have raised broadband service prices because of deals to carry ESPN360, he said. “The subcommittee should not get involved in the private negotiations between programmers and distributors,” he said earlier. The American Cable Association wants “the FCC to empirically examine and review programming to determine at what level price discrimination occurs,” said Sunflower Broadband COO Patrick Knorr, testifying for the group. The information available now is mainly anecdotal, he said.