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McSlarrow Faces Changes

NCTA President Kyle McSlarrow is a veteran Republican who faces a new Democratic majority in Congress. He is a free-market fan who is up against an FCC chairman who has hammered the industry on cable rates, tried to impose multicast must-carry and has pushed for à la carte cable programming and family tiers. McSlarrow talks with B&C's John Eggerton about DBS cowboy John Malone (see cover story, p. 18), digital must-carry and keeping customers satisfied.

Will the recent entry of John Malone into the satellite business help the cable industry's argument in Washington that it has legitimate competition?

Well, in a way it will, just by virtue of the force of his personality. He will be able to make satellite more visible. I don't think the facts will be any different. The facts show that we have already had competition. The good news for us is that the hemorrhaging of basic subs that was taking place the first part of the decade has come to a halt and been reversed. But there's no question that this is not just somebody who is a pioneer but somebody who is extremely capable in lots of ways. It's not like we weren't already on our toes, but, certainly, we'll still be on our toes.

You have to represent a diverse group, operators, programmers, large and small. On an issue like retransmission consent, how do you serve an independent like Hallmark, which is a top 10 network, and other networks that have essentially been built by this law?

It's not easy. But I think one thing NCTA has historically done pretty well is to first get alignment on [core] principles. Given a choice, we're going to be for deregulation. Given a choice, we prefer deregulation to regulating our competitors. Given a choice, we prefer free-market solutions rather than government-mandated solutions.

When you zero in on something like retransmission consent, one way to look at it is that the rules are different for satellite than they are for cable.

You can talk about them in terms of their implications for retransmission consent, but you can also look at them the way I've looked at them and talked about them, which is about parity with current competitors.

I think there are rifle-shot ways we can address the issues and places we can go where we can be fair to everybody. Parity is one.

On the multicast must-carry front, how much of an issue is cable capacity, really?

Capacity is an issue, but it is an issue that probably, over time, dissipates. As a practical matter, and regardless of any mandated multicasting rules, in order to serve all our customers, we are going to be carrying a lot of different signals.

In a day and age when we've got the pipe used for analog channels, it's an issue. But there's obviously a day when there is digital and some capacity is freed up. It is usually at this point in the conversation that my broadcaster friends say, "Aha! You've freed up capacity so multicasting should no longer be an issue."

But my point is we're not just a video provider. We've got lots of ideas on what to do with the pipe and they are mostly directed to what our customers want as opposed to what broadcasters want.

You don't oppose video-franchise reform, but don't support the telcos' brand. What would your ideal reform be?

My ideal version would be a combination of the House and Senate versions. The House did a great job of providing a level playing field and opting into the streamlined process quickly.

The Senate bill eliminated a lot of the economic regulation. The problem with the FCC is that they are necessarily limited.

Joe Barton was a pretty cable-friendly chairman of the House Energy & Commerce Committee. How do you think you will fare under the Democrats?

I think we'll be fine. Every chairman has some issues where we're more likely to be aligned and others not. I can't point to anyone and say they are pro-cable or pro-broadcaster.

I think with Chairman Dingell and Chairman Markey, they are probably more aligned with us on video-franchising issues. But there are undoubtedly going to be some other issues, like net neutrality, where we're not going to be aligned. The good news is that I think they will be fair and allow us to make our case.

What is your best case against à la carte?

There are a number of studies that make it very clear that à la carte is more expensive to the consumer while providing less choice.

Now there are a lot of policy issues in the country that are hard calls. It seems to me that if that is the outcome, it's not really a hard call.

FCC Chairman Kevin Martin has hammered cable pretty hard on issues like multicast must-carry, cable pricing and à la carte. You don't seem particularly worried, so how do you deal with it?

We've got to work it out. We don't agree with his proposals, but we have to make our case, not only to the chairman but to the other commissioners and the Hill.

I think our policy direction is more congenial to more people. It's not that I ignore it. Obviously, I would rather have the chairman proposing things that we are delighted with, but we've got to deal with it.

If cable could have one big victory in 2007, what would it be?

I guess it would be for the FCC to conclude that the marketplace is the best place to allow any provider of video service to figure out how to deliver the service in terms of the device, whether it is set-tops, broadband—whatever.

The integration ban [on combined security and surfing functions in cable set-tops] is just the point of the spear.

Behind that is the theory that the appropriate role for the FCC is to micromanage the marketplace for so-called navigation devices.

They've got to get out of that business.