Cox Vs. Volume Discounts

WASHINGTON — Cox Communications may be the third-largest U.S. cable operator, but it used the Federal Communications Commission’s program-access proceeding to argue it was a something of a David among video Goliaths.

In meetings at the FCC two weeks ago, Cox president Pat Esser pitched various staffers and commissioner aides on the adverse impact of volume discounts on the smaller operators that can not get them.

Volume discounting is a frequent complaint of the American Cable As sociation; many of its small, independent member operators are systems that serve only a few hundred subscr ibers. But Cox?

“Even companies like Cox, with nearly 5 million basic video subscribers, lack the leverage to obtain comparable deals,” the company argued, according to ex parte filings.

Likely recognizing that the FCC was about to remove a regulation and not add one, Esser and company pitched the commission on opening a separate proceeding on prohibiting what it called discriminatory volume discounts.

“The commission has received more than enough evidence to justify commencing a proceeding to examine the scope of the competitive problems caused by non-economic volume discounts and to adopt rules to combat them,” Cox told the FCC.

Cox pointed to the same broad authority the FCC was asserting in its order removing the ban on exclusive contracts between distributors and co-owned program networks. The order said that program-access complaints could be covered under rules against unfair or deceptive practices. Cox said the same broad authority could be exercised to:

• “Establish a presumptive maximum permissible volume discount level, above which an MVPD would be required to demonstrate that the discount is tied to actual benefi ts realizedby the programmer; and

• “Prohibit all MVPDs from entering into any programming contract that includes an impermissible volume discount.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.