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ACA Chairman Steve Friedman Praises FCC On Review Of Broken Retransmission Consent Regime Sought By Small Cable For Many Years

Says Independent Operators Hopeful FCC Will Ban Collusive Retrans Bargaining Tactics By Local TV Stations

WASHINGTON, April 12, 2011 -- American Cable Association Chairman Steve Friedman said today the trade group for independent cable operators will seek reform of the broken retransmission consent regime at the Federal Communications Commission, including a ban on broadcasters' consumer-hostile practice of jointly negotiating retrans in order to extract excessively large fees from small cable providers.

Friedman said a prohibition on price discrimination -- which would prevent broadcasters from using their market clout to force small cable to pay far more for retrans than their larger pay-TV competitors -- was another urgently needed reform.

"The FCC finally saw the light and responded to consumers by opening a rulemaking on retransmission consent. Now ACA can again document the multitude of ways that this regulatory framework permits TV station owners to abuse their market power," said Friedman, who is Chief Operating Officer of Wave Broadband in Kirkland, Wash., a cable, Internet and phone services company currently serving more than 175,000 customers in Washington, Oregon and California. Wave employs more than 600 individuals and also provides business-class Internet, phone and cable service to companies of all sizes, from Seattle to San Francisco. 

Friedman's remarks helped kick off ACA's 18th Summit in Washington, D.C., the leading educational conference for small, independent cable operators to interact with regulatory officials and Capitol Hill lawmakers as well as discuss the unique challenges of providing world-class communications services in rural America. Scheduled speakers include Federal Communications Commissioner Mignon Clyburn and House Communications and Technology Subcommittee Chairman Rep. Greg Walden (R-Or.).

ACA believes that rules are needed to prevent broadcasters from charging discriminatory fees to small cable providers without any cost-based justification and to stop multiple TV stations that are not commonly owned from entering into collusive arrangements to negotiate retransmission consent jointly in order to gain even more bargaining leverage over small cable companies, Friedman said.

Friedman identified other areas of reform, calling on government to:

  • End broadcasters' ability to interfere in the marketplace through antiquated rules like network non-duplication and syndicated exclusivity;
  • Allow interim signal carriage while a retrans dispute is being negotiated or arbitrated;
  • Take away the market power abuse allowed through Local Marketing Agreements (LMAs); and
  • Allow small operators to use arbitration in a financially realistic manner.
For almost a decade, ACA took the unpopular stance of seeking FCC reform of retransmission consent. But many well-documented signal blackouts by market-dominant broadcasters served to validate ACA's advocacy on this critical consumer issue, resulting in the FCC's historic March 3 vote to open a rulemaking on changing retrans policies to better serve the viewing public. 

"ACA has been beating the drum against the abuses of retransmission consent for years. We saw the abuse, but others didn't and we were often told we were wrong, even from others in the cable industry," Friedman said. "The world with respect to retransmission consent has indeed changed. Many have come around to ACA's position. I'm pleased that ACA has helped reshape the political dialogue surrounding retransmission consent in Washington, D.C., today."

Friedman said the evidence is clear that broadcasters that own Big Four TV station affiliates are forming local pacts to bundle their retrans negotiating clout and coerce pay TV cable operators into paying far more than they should.

" ACA members have documented that joint negotiations drive up the cost of retrans anywhere from 22% to 161%.," Friedman said.

ACA is monitoring the sale of local TV stations and identifying problematic deals, Friedman noted.

Last month, ACA urged the FCC to condition or block the sale of the ABC affiliate in Topeka, Kansas, to a company with a track record of jointly negotiating retransmission consent in its other markets with the company seeking FCC permission to buy the ABC station.

"This transaction would give the buyer control of three of the four Big Four stations in the market. Imagine the impact on our 10 ACA members in that market? Imagine the impact on the 30,000 customers that they serve?" Friedman said.

Retrans reform was once considered impossibility. Today, it's has become a necessity, Friedman said.

"Broadcasters can no longer hide behind their PR campaigns weakly supported by meaningless statistics that are, in reality, designed to avoid accountability," Friedman said. "You've all heard the broadcasters' claim that 99% of retrans deals are made without a fuss. Fuss? Oh, there's plenty of fuss. From us."

Hundreds of ACA members attended the ACA Summit in support of their message that good policymaking ensures that rural companies serving high-cost areas are treated fairly in the marketplace and not overburdened by regulations, so they may continue to supply affordable communications services to their communities. For more, please visit: ACA Summit.org

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