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ACA To FCC: Small Systems Keep Closing, Pressured By Excessive And Rising Programming Costs

Trade Group Urges Agency To Explain Harms In Annual Report To Congress

PITTSBURGH, August 24, 2015 - The American Cable Association told the Federal Communications Commission that small cable systems keep closing in rural markets, pressured by excessive programming costs that have been trending unmanageably higher for smaller cable operators at least since 2008.

ACA provided the latest cable system closing data in a filing at the FCC on Aug. 21 as part of the agency's annual report to Congress on the state of competition in the delivery of video programming.

"The video programming ecosystem continues to evolve and ACA encourages the FCC to recognize in its next video competition report the fact that smaller systems continue to close at a steady rate, affecting thousands of subscribers in rural and hard-to-serve areas. For Congress to understand the state of competition in the video marketplace, it is vital for the FCC also to note the factors responsible for these closures and future trends that ACA has highlighted in these comments," ACA President and CEO Matthew M. Polka said.

In the FCC filing, ACA said that since 2008, 1,169 cable systems serving 55,302 subscribers have shut down. For calendar year 2014 - the year for which the most recent data are available - ACA said that 47 cable providers shut down 91 systems with 5,307 subscribers in 32 states.  ACA noted that because these systems were not interconnected with other systems or replaced with newer systems by their owners, these systems ceased providing service to their customers, who were required to find alternative means of accessing multichannel video programming distributor (MVPD) service, which in many cases means paying more.

Although there are many regulatory factors contributing to the decline in the number of cable systems in operation, ACA said that runaway programming costs were a primary cause of small and rural closings, adding that programming costs have risen at a faster rate than video revenues, a trend expected to continue for many years as documented in a recent ACA research paper called "High and Increasing Video Programming Fees Threaten Broadband Deployment."

In order for the FCC to give Congress an accurate picture of the health of competition in video distribution markets, ACA said it is important that the video competition report include data revealing the overall decrease in the number of cable systems from FCC sources as well as from other sources, including the National Cable Television Cooperative, the programming buying cooperative for hundreds of independent cable operators.

ACA urged the FCC to build on the data to assess the causes of these system closings and market exits, including an evaluation of the role of substantial increases in video programming costs. ACA's comments recommended that the FCC report on the likelihood that programming fees will continue to climb in the years ahead and the expected future impact of these rising fees on cable system closures.

About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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