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CEA’s Shapiro Compliments Cable, Blasts Broadcasters

 “I would hold up cable as one of the most strategic industries there is,” said Gary Shapiro, president and CEO of the Consumer Electronics Association, at a Media Institute luncheon Monday during which he criticized broadcasters for employing “every possible strategy to slow walk the [spectrum] auctions.”

Most of Shapiro’s remarks  focused on the need for access to more spectrum to serve the fast-growing adoption of wireless devices.  He cited CEA’s “15th Annual Household CE Ownership and Market Potential Study,”released on Monday,  which found for the first time in the survey’s history, that mobile devices -- especially tablets and smartphones  -- were the top four products in terms of increased household. 

Although Shapiro did not single out online “subscription services” in his remarks, the CEA study also identified that nearly “43 million U.S. households (36%) subscribe to video rental and streaming services, and another 15% of households said they expected to subscribe to at least one of these services in the year ahead.”

Video subscription services “are expected to continue to grow as these services evolve,” according to the CEA study, suggesting greater competition for cable services.  The study pointed out that all Internet phone, digital file back-up, and music subscription services had about a 5% increases above the previous year’s survey.

Shapiro’s comment about the cable industry’s strategic preeminence came in response to my question about the role of over-the-top and other on-demand video services. He cited the “creation of Cable Labs” which led to the creation of cable broadband, and described it as a way to focus on high-value consumers. 

“That’s a strategy that made sense to me,” he added, suggesting (but not outright saying) that the broadband infrastructure has enabled cable operators to be ready for the growing alternative video distribution market.

Shapiro urged that government policy should be “pushing competition among broadband providers so that consumers have a choice.” 

In his remarks, Shapiro condemned broadcasters for their battle against Aereo, the broadcast-to-Internet venture. He contended that, “The Aereo service actually expands the viewing base of commercials.”  He labeled the legal assaults on area as “revealing “the ruse,” showing that “Over-the-air just isn’t that important.”

He chastised broadcasters “fight against disruptive innovations” such as Aereo and Dish’s “Hopper” feature that facilitates skipping commercials.

“What broadcasters value is not the audience for free over-the-air commercials, it is the government mandate that cable and satellite must carry or pay for their service,” Shapiro said. He suggested that the number of broadcaster stations will eventually “dwindle to two or three stations per market,” although he didn’t specify a target date for such an overhaul.

In his central assault on broadcasters’ spectrum demands, he cited the new CEA study that demonstrated, “Almost every American will soon have at least one wireless product.”

“The challenge we face is ensuring they work,” Shapiro said. “We need spectrum for these devices. And it must come from both repurposed spectrum now barely being used by government agencies, and more immediately, from the spectrum loaned to the broadcasters.

“The FCC must resist efforts to maim the auctions by those seeking to slow them down, restrict participation, or impose unreasonable requirements,” he continued. “ Delayed or failed auctions will mean that our policymakers will be responsible for future dropped calls, service interruptions, blackouts, or all the service unpredictability one would expect in a third world country.”