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Smaller Cable Ops Sing Blues in K.C., but Have Hope

As independent operators settle in Kansas City this week for their annual convention, they’ve got more on their minds than just barbecue and blues. In the group’s hometown this year, National Cable Television Cooperative and American Cable Association members have gathered to hash out the myriad issues facing small, midsized and independent cable operators: the skyrocketing cost of programming, Internet-protocol delivery of video and data, retransmission consent and TV Everywhere.  Multichannel News editor in chief Mark Robichaux caught up with ACA president and CEO Matt Polka to hear what’s on his legislative agenda for members.

MCN: As you head into Kansas City, what would you say are the three biggest concerns for your membership?

Matt Polka: From a business perspective, it is really trying to embrace all things (IP) and all things broadband. With the changing nature of our industry, it's rapidly moving into the Internet of everything, and that makes it incumbent upon our members in their unique markets to provide the same kind of services that a consumer would expect in New York or Los Angeles or Chicago.

 So we're going to be doing a lot at the show focused on [Internet protocol] and broadband for everything, basically, and encouraging our members to be very active in embracing that future. So that's No. 1.

No. 2, on a daily policy basis, it's keep up the fight. After many, many years and a lot of battles in Washington, we are succeeding in moving forward in seeing Congress and the [Federal Communications Commission] act on outdated rules and regulations, primarily broadcast carriage, retransmission, consent regulations. The FCC's actions this year in March on coordinated retransmission-consent negotiations prohibit that collusion by broadcasters; the House passed its version of a satellite extension bill last week that included aspects of retransmission consent reform that set the stage for a larger Communications Act, when these outdated regulations can be eliminated.

The third thing is to begin to encourage, from my perspective at least, Washington to act now, while it can, on important broadband policy issues before they get out of hand and become unmanageable. My example here is, as it relates to the FCC's open Internet proceeding and other consideration by Congress, [is that] while the FCC and Congress talk about regulating Internet service providers and prohibiting any discrimination of blocking by ISPs, at the same time that the blocking and discrimination that's occurring today is happening by content providers — not cable operators, not ISPs.

So whether it's the CBS Corp. blocking Time Warner Cable broadband customer’s access to CBS online programming or Viacom blocking access to some 50, 60 of our member companies and their broadband subscribers access to Viacom online programming because these companies, our members, didn't agree to renew the big Viacom programming bundle. That’s got to stop. This is content that Viacom freely makes available over the Internet to anybody. But they single out and target our members' broadband customers, and deny them access to what they make freely available over the Internet, just because our members didn't want to agree to pay for the big bundle any longer.

MCN:  You recently told the FCC that these new rules wouldn't protect openness unless they extend to content providers, right?

MP:  That's exactly right. And we said any examination of open Internet rules, for the simple sake of fairness, has to include a consideration and regulations and restrictions on content provider's actions to block or discriminate because frankly that's where we see it.

And it's not just Viacom. What is to prevent others, a Google, a Netflix, an Amazon, from doing the same thing? Companies like Google say we fear what Comcast could do to us. Well, we fear what Google could do to us. What if Google came to our  members and said that if you want all of your broadband subscribers to be able to use Google as their homepage, pay us $2 a subscriber per month before we give you access to it — what's to prevent that? The answer is nothing.

So if there is going to be an examination of what the rules of the Internet road should be, it must include similar restrictions on content providers.

MCN: What about net neutrality rules — where do you stand on that?

MP: No Title II. The fact is that because of the FCC's previous policies on Internet deployment and regulation of the Internet under chairman [Michael] Powell in particular, and then under chairman [Julius] Genachowski, the Internet principles basically allowed a relatively light touch of regulation to encourage further broadband deployment without a heavy-handed regulation.

And that becomes increasingly important for small companies simply because we have always complained about — rightfully so — the unique and disproportionate heavy-handed impact of regulation on smaller providers, compared to larger providers. We, as smaller providers, have been able to significantly and successfully deploy broadband in some of the most remote markets in the country because of Congressional and FCC policies to encourage that.

MCN: You recently applauded a Mediacom Communications memo to the FCC that said the market is dominated by these giant programmers, broadcast and cable,who are engaged in a “coercive practice” of bundling and “unjustified volume discounting.”

MP:  Mediacom's letter was right on point. In Washington, everything's a fight, so it takes time. But what will bear out in the instance of what's outlined in that letter are just the facts of what's happening in the marketplace.

Consumers don't want the big bundle, that's why they're cutting their cord or shaving their cord for more Netflix, Amazon, Hulu, etc. It's a way for them to express their desire for choice, which they can't get on cable, and which we as cable providers, at least independent cable providers, would like to give them.

But consumers are rejecting the big bundle of Viacom and Disney and Fox and Comcast/NBCU because all they get is a big bundle of ever-increasing programming that they have to pay more for and generally don't watch. We support that effort toward reform in that area and we'll keep fighting to try and give our members the ability to give our customers more choice.

MCN: Rupert Murdoch recently made an offer for Time Warner Inc. What do you think the impact of a merged Time Warner Inc. and 21st Century Fox will be in the current marketplace?

MP: Once we saw Comcast announce its acquisition of Time Warner [Cable], which was quickly followed up by AT&T and DirecTV, we predicted that it wouldn't be long until we see the same kind of thing on the content side. And that's going to happen.

So the outcome of that will not be good for consumers. I mean its great for these big companies that have leverage that can negotiate the prices that they want to manage their own economics. But at the end of the day, somebody's got to pay that, and when a Comcast-[TWC] or an AT&T-DirecTV can get a lot and better volume discounted price, that difference in economics has to be made up somewhere.

So our members are going to feel the brunt of that, and our consumers are going to feel the brunt of that, not to mention just the further lack of choice and control consumers will have over what will be an ever increasing bundle now controlled by even fewer hands.

That's why you see, in this most recent Viacom renewal for our members, 50, 60 companies of our members said, “No, we don't want it. We're not going to renew. We're going to put on replacement programming. We don't want it.” That's why you see that happening and you'll see that happening more often.

And No. 2, you'll see operators basically say, “Hey look, cable programmer, you want to charge whatever you want to charge? We're simply going to tell our subscribers that we're just simply passing through the costs every time, that if they have any complaints, here's your number.” They can call you or they can call the FCC, or their congressman and senator.

MCN:  Sinclair Broadcasting has been on your radar this year with the Buckeye CableSystem retransmission fight. Will these continue?

MP: The broadcasters want to sell themselves like a cable channel, right? But we have no choice to get comparative or lower-cost programming either from another lower-cost station or even to say no if we don't want to pay for it, because the law says we have to carry it.

I think if the broadcasters want to be bought and sold like a cable channel, then all of the protection, the monopoly protection that they have that gives them an exclusive right in their market and the ability to keep out any competition, as well as the ability to mandate that we carry them, all of that has to go out the window.

Retransmission consent is not an issue where our members are not willing to pay for a valuable service if delivered but it's about more of a free marketplace for those services and that doesn't exist today. The only reason why a Sinclair can hold Buckeye and its customers hostage for six months is because of these outdated regulations where Sinclair could care less about the customer. All they care is about the bottom line.

And all I hear from the broadcasters about my free TV is garbage because broadcasters do not want consumers to receive broadcast television free over the air. They don't want that. If that happened, where consumers all said we're going to get an antenna, their business would die. Their business is based on extracting fees from cable operators, blaming cable operators and then saying, “Hey we're the free local TV station.”

MCN:  Are you encouraged by the latest movements on the Satellite Television Extension and Reauthorization Act?

MP:  It’s a huge step forward for the House to pass a bill that contains aspects of retransmission-consent reform. People said it would never be done. The broadcasters said it will never be done. They have used their smear tactics, their mud-slinging, blaming cable operators for taking away free TV. It’s just not true.

And frankly, despite the efforts of the [National Association of Broadcasters] and, now the focus moves to the Senate. The Senate Commerce Committee is moving forward on a bill that they have been working on on a bipartisan basis.

The time has come for members of Congress and consumers all across the country to say, “We are done with this type of outdated monopoly regulation and we want choice, we want true freedom where we're not forced to carry channels and we can better determine what we want to see without broadcasters telling us what we have to watch.”

MCN: You've got fire in the belly.

MP: Absolutely, we're ready to roll. We are as fired up as ever.