Broadcaster Signal Exclusivity Makes McAdam Envious
LAS VEGAS -- TV stations’ statutory signal protections are stronger than the top-two U.S. carriers’ advantages of size, said Verizon CEO Lowell McAdam. “So why do you guys need protecting now,” he asked NAB CEO Gordon Smith at the association’s show Tuesday. “For people who say AT&T and Verizon dominate wireless, I'd like to be” in a broadcaster’s position when it comes to signal exclusivity within an affiliate’s market, McAdam said in a one-on-one where Smith asked the questions. “I think we actually partner pretty well with NAB,” and Verizon’s desire to reduce the size of cable channel bundles “isn’t a cause célèbre for us” but rather an early warning of the need to move toward a la carte, McAdam said later in the Q-and-A.
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"The monopoly has shifted” from the time of the 1992 Cable Act, which gave TV stations retransmission consent rights, said McAdam. “At that point, the cable companies were a monopoly and the broadcasters needed to be protected.” That there’s now DBS, telco TV and over-the-top (OTT) video providers changed that equation, said McAdam. But changing retrans isn’t among his top-5 hopes for what should change in any Telecom Act rewrite, he said. “There’s gotta be a little bit of a negotiation here, other than pulling the channel, which seems extreme” for both sides if one can’t get what they want from a retrans deal, said McAdam. He asked why not import a signal from Baltimore into the Washington market.
Areas of common interests between NAB and Verizon Wireless include that the FCC have a successful incentive auction of TV frequencies, that broadcasting and broadband are needed to meet consumer entertainment interests and that streaming video isn’t on track to supplant TV stations, based on the Q-and-A. The carrier’s plan that was disclosed at CES with the NFL to stream the Super Bowl to subscribers isn’t meant to supplant broadcasting (CD Jan 10 p14), and Verizon’s work with Coinstar to roll out a video streaming service may not amount to a major product, said McAdam. He doesn’t foresee the carrier adding more smartphone models with FM chips to its lineup, even though Sprint Nextel is rolling out some (CD April 9 p2) and Smith asked him numerous times about it. “The truth is, we can learn much from one another,” said Smith. “There are really no secrets in telecommunications.” McAdam was “brave” to speak at NAB, Smith said.
Broadcasters and carriers have the incentive auction as an issue “we should feel good about -- we've partnered on this one, rather than one of us trying to be the heavy,” said McAdam. He’s worried the FCC may be “sort of putting their thumb on the scale” of the auction. It’s not “fair” of the agency to limit what any station can sell its spectrum for, he said. “They also shouldn’t try to keep AT&T or Verizon Wireless out of the auction.” Smith said he wants “the market” to determine the outcome, “rather than any predetermined government line.” The military, another source of low-band frequencies with long wavelengths, is “not particularly” open to alternatives for it, said McAdam. Smith had said the military on spectrum matters “always seemed like a closed shop to me.” There’s “some openness” in the military to working with industry on spectrum sharing and compression, said McAdam. “But I would say there is cautiousness.”
There’s not enough customer demand for Verizon Wireless to put FM chips in more smartphone models that work on its network, especially among younger consumers, said McAdam. “This isn’t a religious issue for us -- it’s what customers want.” The ability to get a radio station’s signal on a mobile device “is a very small issue for customers” and so “it’s not something I'm going to dictate to my device guys,” said McAdam. He replied “why not” to Smith’s question if broadcasters could help advertise FM-chip phones. After Smith said of Sprint’s deal with Emmis to introduce such a phone, “Sprint doesn’t want to be a mule for us any more than you might,” McAdam said the NAB head had found several ways to ask him about adding the chips. “Honestly, no,” Sprint’s deal doesn’t stimulate Verizon Wireless’s interest, said McAdam. “We have tried never to be a follower.” Customer information “says they are going to be moving away from that” and toward personalized music streams, added McAdam.
"Subscription TV is going to be around” for many years, predicted McAdam. It’s time for a pay-TV channel “meritocracy, that if a particular channel is a big hit, and a customer wants to watch it, they should pay to watch that channel,” said McAdam. “But I think the feedback we get from some of our customers” is that some channels may have only hundreds of viewers among FiOS TV’s approximately 5 million subscribers, he said. The FiOS broadband service isn’t likely to adopt caps on how much bandwidth customers can use, predicted McAdam. “I don’t see, on our horizon, putting data caps in place. But look, you need to be very responsive to customers” if they should say they want to pay less for a monthly package that limits how data can be consumed, said McAdam: “But I see no technical need” for wireline broadband caps, since it’s a fiber-to-the-home service.
OTT is picking up popularity, though it’s not a large portion of traditional video viewing now, said McAdam. “Whether or not you're a fan of it from a broadcast perspective,” OTT “is starting to gain traction,” he said. “If we decided to -- and we haven’t decided that -- to get more into the older television episodes that are being watched broadly, we could do that.” The Redbox product Coinstar and Verizon are working on “gives you the flexibility to pull your tools together” to meet consumer demand, said McAdam. “I don’t know how big a deal it’s going to be for us in the long run.”