PITTSBURGH, April 25, 2016 - Today, at a forum hosted by the Federal Communications Commission's Media Bureau, independent cable representatives called for immediate action by the agency to curb negotiating abuses by dominant content companies - including TV station owners - that effectively limit or deny consumer access to a diverse range of independent channels from their pay TV provider while also frustrating consumers who are interested in smaller packages to combine with online offerings.
"The FCC needs to act now to stop the largest players from engaging in tactics that clog cable systems with unwanted channels and drive up the price of monthly cable service because it hinders carriage of independent networks," said American Cable Association President and CEO Matthew M. Polka, who attended the FCC session in Washington, D.C.
The FCC event, the second of two just this year, opened a new chapter as independent cable operators, led by the ACA, continue to identify severe challenges in the programming market that have a materially negative impact on smaller cable operators that have limited channel capacity and capital investment budgets, particularly their ability to offer independent and diverse programming. ACA continues to press for solutions, including recommendations that the FCC update its own rules to permit the National Cable Television Cooperative (NCTC) to file complaints under the program access rules as Congress intended and that the agency ban broadcasters' bundling of top-four-rated broadcast signals with other "must have" programming in retransmission consent negotiations.
Speaking for the NCTC was:
§ Judy Meyka, Executive Vice President, Programming at NCTC, the industry's most widely utilized cable programming buying cooperative;
ACA members speaking for their companies were:
§ Heather McCallion, Vice President of Programming at Atlantic Broadband, a 245,000- subscriber cable operator serving eight states, including Pennsylvania and South Carolina.
§ Chris Kyle, Vice President of Industry Relations and Regulatory at Shentel, a cable operator serving more than 50,000 subscribers in Virginia and West Virginia.
ACA members Duke Milunovich, Sales and Marketing Director, Volcano Vision, Inc., and Jimmy Todd, Chief Executive Officer and General Manager, Nex-Tech., also testified at the FCC forum.
NCTC's Meyka - who helps negotiate programming master agreements for hundreds of independent cable operators - explained how the largest programmers use channel bundling to obtain carriage of dozens of channels, regardless of their popularity with viewers.
Pursuant to agreements with the nine largest programmers - which own or control well over 100 channels - NCTC members that opt to distribute just one channel from each of the nine will trigger obligations to carry at least 65 other channels, she said.
"Forced bundling takes up a tremendous amount of often scarce bandwidth that could be utilized for independent programming or other services. Members routinely complain that large programmers' forced bundling is an egregious use of their market power," Meyka said in her prepared remarks.
Large programmers also insist on penetration requirements, Atlantic Broadband's McCallion said. These require a cable operator to distribute a network to large numbers of subscribers in the most widely distributed packages. Taking cost and network capacity issues into account, penetration requirements mean independent networks, if carried, are often relegated to less widely distributed, less popular, packages that cost consumers more to access.
"The penetration requirements undermine our ability to carry independent programming just as much as do bundling requirements. They create a bloated and needlessly expensive expanded basic tier, one we are reluctant to expand further by including independent programming. As a result, Atlantic Broadband's systems carry only a very small number of independent channels in expanded basic," McCallion said in her prepared remarks.
Other concerns raised include the use of so-called Most Favored Nation (MFN) clauses, which are restrictions imposed by the largest distributors that severely restrict the ability of independent programmers to reach mutually satisfactory deals with smaller cable operators.
Another issue mentioned was the conduct of some TV stations that tie retransmission consent for the TV signal to the carriage of regional sports networks (RSNs) and other programming considered "must have." Some TV stations even seek to link retransmission consent to carriage of a network "yet to be launched."
In addition to echoing Meyka and McCallion, Shentel's Kyle noted that penetration requirements - in addition to having a deleterious impact on competition, diversity, and innovation - hampered the ability of consumers to combine a slimmed-down cable package with online subscription services enabled by Shentel's broadband network.
Shentel is eager to provide this option, because it would serve as a tool for subscribers to gradually make the transition to getting much of their television content through broadband video. But Shentel's hands are largely tied.
"If a provider requires its programming to be distributed to 85% of Shentel's total customers (in addition to tier requirements), Shentel can only provide a ‘skinny bundle' option to approximately 2,000 subscribers before crossing that 85% threshold," Kyle said in his prepared remarks. "Although Shentel would prefer for its subscribers to receive more of their video programming online, Shentel cannot offer attractive or viable skinny bundles that would allow our subscribers to ‘cord shave.'"About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 750 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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