MVPD Competition NOI Shows Cable Incumbents, LFAs Differ on Need for Regulation
Major cable operator and programmer incumbents remain at odds with municipalities and newer entrants over video regulation by the FCC. Also shown in replies to a commission inquiry for the agency’s next multichannel video programming distributor report to Congress, ABC affiliates and Comcast still differ on whether online video distributors (OVDs) should be considered MVPDs by the commission. Commenters generally agreed that OVDs have increased competition for pay TV. Local franchise authorities (LFA) want more competition, as companies including Comcast said there’s never been more rivalry. OVDs including Netflix, in a class of products initial filings agreed complement MVPD service (CD Sept 12 p7), aren’t a substitute for pay TV, Comcast said: They “nonetheless have had a significant impact on MVPD behavior and innovation."
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Google, seeking access to cable operator-owned channels, backed giving all wireline broadband and video providers rights of way to string lines on utility poles and also requiring fiber conduit be laid during road construction. President Barack Obama signed a “dig-once” executive order in June, Google noted. The Internet company said (http://xrl.us/bnto5z) such policies reduce fiber deployment costs by up to 90 percent, and “efficiencies” in attaching to poles was “critical” to the company’s Kansas City-area 1 Gbps service. This month’s FCC order sunsetting the ban on withholding cable-affiliated channels distributed to MVPDs by satellite (CD Oct 9 p1) still “recognized that access to must-have affiliated regional sports programming is critical to competition,” the company said. “Google Fiber and other nascent MVPD competitors need access to live regional sports programming."
A LFA association said the FCC should block state laws limiting or barring municipal-owned broadband networks, and a 2004 Supreme Court ruling that the Communications Act doesn’t prohibit such mandates doesn’t apply to Internet access. Nixon v. Missouri Municipal League only applies to telecom services, and the high court ruling has been “widely criticized on the merits,” said NATOA. “At the very least, the case deserves a fresh examination,” it said in docket 12-203 (http://xrl.us/bnto4m). If the FCC doesn’t preempt state barriers to broadband initiatives, which NATOA wants, the agency “can intervene on the side of communities in opposing” new bans and back “citizen-led efforts to repeal existing” ones, the group said. At least 20 states restrict public communications initiatives, the filing said, citing figures from the Baller Herbst municipal telecom law firm (http://xrl.us/bnto4h). Several of the 135 MVPDs owned by communities, which the FCC’s ignored, provide broadband service with transmission speeds above 1 Gbps or “are capable” of that, NATOA said.
Six owners of broadcast-TV and cable networks opposed attempts by AT&T, Cox Communications, OPASTCO and Public Knowledge to use the video competition report to “raise specific proposals or matters” like rules for a la carte networks and matters that are part of different FCC proceedings. The market for video programming is “the most dynamic it has ever been,” and a “key element” is the content industry can get “distribution agreements that address challenges” in the “dynamic environment,” said the six programmers, calling themselves the Content Interests. “The Commission must avoid any suggestion or implication that may restrain or otherwise impact the ability of programming vendors to package or otherwise structure their distribution agreements.” CBS, Comcast’s NBCUniversal, Disney, News Corp., Time Warner and Viacom are members (http://xrl.us/bnto7k).
The 170 ABC affiliates not owned by Disney want certain OVDs categorized by the FCC as MVPDs, to get retransmission consent contracts from TV stations. It’s an “indisputable” fact that stations need retrans fees and ad sales to compete with cable, satellite and OVDs’ “dual fee-based and advertiser-based revenue streams,” the affiliates said (http://xrl.us/bnto9a). Since the “highwater mark” in 1996 when broadcast-TV networks paid affiliates $607 million to carry their shows, “virtually all affiliates now pay reverse compensation to the more popular networks,” the affiliates association said. It said “virtually every dollar of the increase” of 58 percent SNL Kagan predicts ABC, CBS, Fox and NBC affiliates will get in retrans this year versus last, to $903 million total, goes “straight to the affiliates’ networks in program license fees.” NAB also said the FCC shouldn’t change retrans rules as some MVPDs seek (http://xrl.us/bnto84).
Comcast sees “serious legal impediments” to OVDs being MVPDs, it said (http://xrl.us/bnto9n). “Sound public policy provides compelling reasons” also to not allow the change, the operator said. “Online video has not had any of the regulatory complications associated with FCC regulation, and this has surely contributed to its dynamism and rapid growth.” The company said the newer entrants don’t need “regulatory entitlements” to “thrive.” Online distributors “gained legitimate access -- with the express consent of the content owners -- to vast libraries of programming” through contracts, “with no regulatory overhang,” Comcast said.
Filings continued using the proceeding to get the FCC to act on 2009 petitions by public, educational and government group Alliance for Community Media and others that MVPDs must carry PEG channels in a similar manner to commercial networks. “Local residents expect PEG channels to be delivered in an equivalent manner to commercial broadcast and other cable channels, which is not the case with AT&T’s U-Verse system,” the alliance said (http://xrl.us/bntpa2). If the agency acts on the petition, it may dismiss it, agency and industry officials have said (CD May 20/11 p6). “Critics’ broadside against AT&T’s PEG offering” should be disregarded by the agency, because such filings don’t respond to the inquiry’s questions and are “irrelevant” to it, the telco said (http://xrl.us/bntpbx). U-verse isn’t a cable service and so doesn’t face PEG rules, though AT&T includes public access channels in every package of video it sells, the company said.
Boston said it’s “chagrined” its “regulatory hands” are “tied” by the FCC, where the city’s effort to re-regulate Comcast’s rates has been on hold for six months since the agency hasn’t ruled on the company’s effective video competition request. The city also took issue with CenturyLink’s initial filing on the MVPD competition report backing state laws that award statewide franchises so telcos don’t need permission from each LFA where they want to sell video (CD Sept 13 p21). That almost all the households where Verizon’s FiOS service reaches are in the mid-Atlantic and New England regions, where there aren’t statewide franchising laws, belies CenturyLink’s stance, Boston said (http://xrl.us/bntpdr). It “challenges CenturyLink or any other provider to document for the Commission a state that has a higher percentage of homes where there is a choice of wireline cable competitors than that which is found in the states of Maryland, New York, Massachusetts, Virginia or Pennsylvania.” It said those states “all preserve local franchising.”