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STELA Hearing Runs Gamut of Video Issues

If some of the leadership of the House Communications Subcommittee gets its way, the renewal of the Satellite Television Extension and Localism Act will be "clean," that is without expanding it into other issues -- like revisions of the 1992 Cable Act and 1996 Communications Act. But those other issues are likely to get their own separate inquiries from legislators who generally agree that the video marketplace has changed dramatically since those laws and their associated regs were installed.

That was one of the big takeaways from Wednesday's (June 12) hearing on the law, which was appropriately titled "The Satellite Television Law: Repeal, Reauthorize, or Revise?" Rep. Steve Scalise (R-La.), who favors taking a chainsaw to old regs in the face of new digital realities, held up both a "brick" cell phone of yore and his iPhone early in the hearing to emphasize the marketplace revolution.

There were arguments for all three options -- repeal, reauthorize or revise -- among the half dozen witnesses. And while the bill mostly deals with the compulsory license that allows satellite operators to deliver distant TV station affiliate signals to about 1.5 million customers who lack access to that affiliate locally, the hearing ranged over a host of related issues, particularly retransmission consent, bundling and the price of programming.

Committee chairman Greg Walden (R-Ore.) has said heexpected the passage of a "clean" bill, one that focused on the satellite issues rather than ranging into that host of other issues, although he has made clear the committee will debate those, as it did Wednesday. Ranking member Anna Eshoo and former chairman Henry Waxman, both California Democrats, have said they support a clean renewal.

In fact, Eshoo suggested that after Wednesday's hearing the committee should get to work on a draft so the bill could pass well in advance of the Dec. 31, 2014 deadline. The bill was written to sunset every five years unless reauthorized.

But at the same time, they and others raised issues they suggested needed the committee's attention in a marketplace of proliferating distribution platforms.

For example, Waxman entered a letter from Tennis Channel president Ken Solomon into the record -- Tennis Channel is based in his district -- on the effectiveness of the FCC's carriage rules. He also said that the committee should look at whether the video marketplace is making diverse, independent content available.

Rep. John Dingell (D-Mich.), did not ask any questions, which was unusual, but instead simply put a fine point on the issue of clean reauthorization. He offered, by way of brief cautionary remarks, that the committee would be better off dealing with other issues after it had established a full record, which he said it has not. And if it tried to do so through STELA, he said the result would be "one of the doggone-est donnybrooks in recent memory."

Eshoo seconded that, but the exclamation point came in the testimony that followed as legislators brought up issues like programming costs; retransmission consent/must-carry; program carriage and access rules; syndicated exclusivity and network nonduplication rules; Aereo; and even the FCC's ban on integrated set-tops.

There were two representatives from small cable operators. Marci Burdick of Schurz Communications, who owns TV and cable operations and is also chair of the National Association of Broadcasters TV board, said that retrans was working fine. Amy Tykeson, CEO of Bend Broadband, said that the system was broken and should be fixed with STELA as the vehicle.

Tykeson said retrans was not a free market and that the regime, along with program bundling, was driving up prices and hurting consumers. Burdick countered that there was market power on both sides of the table in those negotiations and that the result was broadcasters getting at least closer to a fair price for their high-value content, which was the most watched on cable. In fact, she said, cable's viewership would only approach a (relatively low rated) MyNetworkTV or CW affiliate.

When asked by one legislator how her programming cost dollar broke down between broadcast and cable channels, Tykeson talked percentages rather than cents, which Burdick was quick to pick up on. Burdick countered that Tykeson had not answered the question. She said that, while she was not a mathematician, when you start from zero, percent increases could get pretty big.

Rep. Joe Barton (R-Tex.) took aim at cable prices. He said that he had three homes -- two in Texas and one in Washington, and that he was paying about $200 a month apiece for Comcast, Charter and DirecTV. He said that was making him consider cutting the cord and going the free TV route.

By the time the dust had settled on the two-plus-hour hearing, retrans had been debated extensively. It was either broadcasters, with the government's thumb on the scale, leveraging co-owned cable channels and their must-have programming to extort and collude their way to billions of dollars that came out of the hides and went into the bills of consumers, or it was a fair market negotiation that was successful most of the time to the benefit of consumers, localism and diversity. Or, as Burdick rather colorfully put it in her testimony: "The retransmission consent system in place today has a success rate of 99%. Only in Washington could something that works 99% of the time, providing for thousands of deals every year, be called 'broken.' This success rate trumps the effectiveness of the best medicines, the free throw percentage of the most accurate basketball player, and the approval ratings of the Dalai Lama and the Pope."