Suddenlink Communications chairman and CEO Jerry Kent said he would support opening up the cable industry’s billing practice to government scrutiny, but only if programmers air out their own wholesale pricing schemes to regulators, in a letter to House and Senate leaders Monday.
Kent, an outspoken executive who has taken up the mantle of high programming costs to regulators in the past, wrote that a June 10 letter by broadcast group TVFreedom.org, calling for an examination of pay TV providers’ billing practices. Kent wrote that he and his company were open to such an examination as long as it included an inquiry into programming rate increases by content providers.
“I’m confident that an unbiased examination would conclude that wholesale programming and retransmission consent fee increase, which are growing at several multiples of the inflation rate, are the biggest video threat to the American consumer,” Kent wrote.
In its June 10 letter, TVFreedom.org, which includes affiliate associations of major broadcasters, state broadcast associations, smaller braodcast groups and consumer groups among its membership, argued that high cable rates are due in part to the lack of competition and consumer choice in the market, and that regulatory oversight would make for lower pay-TV bills for consumers.
Kent disputed that argument, adding that the real culprit in high cable charges is “the demands of content providers exploiting the intensely competitive landscape in which pay-TV providers operate.” He added that the TVFreedom.org letter is “cynically designed to deflect attention away from the anti-consumer implications of rapidly increasing wholesale programming fees and carriage requirements.’
Retransmission consent fees alone have increased six-fold from $500 million in 2008 to $3 billion in 2013, according to SNL Kagan and are expected to double to $6 billion by 2018.
Kent mentioned a similar letter by Mediacom group vice president of legal and public affairs Tom Larsen on June 13, where the Mediacom executive called for a deeper dive into content costs to ferret out the reasons behind high cable prices. Larsen argued that because content providers refuse to permit public disclosure of their pricing, “consumers blame their pay TV providers for the never-ending price increases and lack of choice in channel selection, rather than the content owners who are really responsible.”
Suddenlink joined Mediacom in its call for an inquiry into wholesale programming fees and carriage requirements adding that as an operator that serves primarily smaller cities and rural communities, it has an interest in assuring that “subscribers in smaller markets are not being discriminated against by content providers in favor of subscribers in large metropolitan areas.”
Kent added that regulatory relief may be the only way to resolve the issue and lambasted the practice of forcing operators to buy bundles of channels that prevent pay TV providers from creating lower cost tiers of service for consumers that can’t afford pay TV.
“Although Suddenlink is reluctant to embroil Congress in private negotiations, it is convinced that the programming marketplace is broken and that limited governmental intervention – in the form of an inquiry shedding light on content providers’ harmful programming practices would be constructive,” Kent wrote.
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