On a recent visit to Washington, D.C., American Cable Association chairman Steve Friedman met with officials at the Federal Communications Commission and staff members in the House and Senate for briefings on small cable's regulatory outlook on a range of issues impacting consumers in rural markets who subscribe to video, broadband and phone services offered by ACA members.
Friedman's two-day visit on Sept. 8-9 occurred at a time when lawmakers and regulators are devoting considerable time and attention to ways of improving the availability of broadband in rural areas and increasing the number of people who actually subscribe to the service, regardless of where they may live. In its advocacy, ACA has played an important role in helping shape regulators' thinking in terms of understanding the unique needs of small, independent cable operators that have been reliable providers of advanced communications services in rural America for decades.
Friedman, in his second year as ACA chairman, is chief operating officer of Wave Broadband in Kirkland, Wash., which serves about 150,000 video and 120,000 broadband subscribers living in communities on the rural periphery of the Seattle, Sacramento, and San Francisco markets.
On a broad level, Friedman explained in his meetings that regulation comes with compliance costs and that those costs disproportionately impact ACA members because small, independent cable operators can't spread their operating expenses among millions of consumers as large cable providers like Comcast and Time Warner Cable can in their high-density urban markets where clustering is the norm.
Regarding broadband market developments, Friedman urged regulators to track whether content providers are withholding content from broadband subscribers whose access providers have not paid fees to Web content owners. Friedman pointed out that ESPN360, owned by the Walt Disney Co., requires broadband access providers to pay compensation before their subscribers may access the service over the Internet. Closed Internet business models, Friedman said, will drive up the retail price of broadband for everyone and punish the majority of consumers who have no interest in watching sporting events on their computers.
Friedman also expressed ACA's ongoing concerns with the retransmission consent market and the group's ongoing commitment to reform of the rules. He noted that in May, ACA released a member survey conducted by Clarus Research Group that found that cash retransmission consent payments rose by 271% in 2009 and that ACA's smallest members -- those with 1,000 subscribers or fewer -- paid increases that were 200% higher than the increases of systems with 25,000 subscribers or more. Friedman stressed that broadcasters abuse their market power by engaging in price discrimination, which results in ACA members paying more per-subscriber for retransmission consent than large cable operators in the same local market for no legitimate cost-based reason.
On an important equipment issue, Friedman applauded policy makers for agreeing to allow small cable operators to rely on low-cost set-top boxes to offer consumers advanced digital video services and speed the process of converting their networks to all-digital platforms. In particular, Friedman hailed the FCC's ruling in June to grant Evolution Broadband waivers from the so-called integration ban for two limited-capability boxes. Friedman urged support for waivers for boxes capable of processing high-definition signals because millions of Americans have purchased HD sets to replace their outdated analog units.
In conclusion, Friedman noted that with respect to the issues he discussed, adoption of ACA's positions would provide small cable operators additional resources and regulatory flexibility to invest more capital in broadband in some of the most economically challenging communities in the country, furthering the Obama Administration's goal of providing every American with affordable broadband access in a timely fashion.