Martin’s FCC Doesn’t Understand Cable, McSlarrow Says

Martin and the rest of the FCC make policy based partly on data showing cable rates rising faster than inflation (see separate story), an FCC official said: “What data shows is that consumers don’t have great control over the programming that comes into the home.” Competition from new video entrants, taken up in the franchise order, is the FCC’s focus, the official said.

To fight net neutrality, cable must communicate more clearly that it won’t create a tiered Internet or impede customer access to any website, NCTA Pres. Kyle McSlarrow told reporters Tues. Industry has no plans to charge Google and other sites for access to broadband subscribers, he declared. Some net neutrality advocates predict broadband providers will charge sites a fee for faster transmission of data to subscribers, creating a 2-tiered Internet.

“We allowed ourselves to be painted into a corner of pursuing a business model that as far as I can tell in the cable industry is on no one’s agenda,” McSlarrow told us: “On the federal level, I think we have to continue to make the case that there really is no problem here.” A spokesman for ItsOurNet.org, which supports net neutrality rules, said “if cable has no intention of creating a dual-tier Internet, then they should just sign up with us to support nondiscrimination language.”

Cable will tell state legislators the same, McSlarrow said. Michigan lawmakers considered and rejected an amendment to a video franchise bill to mandate net neutrality (CD Dec 14 p3). Such controls could encroach on federal rules, he said. “I don’t think states have any authority to regulate in this area,” McSlarrow said: “I'm confident any efforts by the states to regulate in this arena would be struck down” in court.

McSlarrow wouldn’t rule out a suit if the FCC franchise order, set for a Wed. vote, unfairly burdens cable. Cable backs a “shot clock” on franchise discussions between Bells and municipalities - if a Bell’s remedy is to take the city to court, said McSlarrow. A draft of the order circulated by FCC Chmn. Martin would let companies sell TV after 90 days even without a franchise award, Commission officials said. “It’s a proposal that has to be dramatically pared back,” McSlarrow said of the order: “We support a shot clock at the end of which… [telcos] would be able to seek judicial review.” NCTA probably wouldn’t sue the FCC if it had such a clock, he added: “There is no doubt that some streamlining would be useful… If it goes beyond that, I'd just have to make a judgment” on whether to sue.

“There’s no evidence at all to suggest” the FCC will grant cable’s various CableCARD waiver requests, McSlarrow said. Months ago, McSlarrow told major cable operator CEOs to prepare to comply with a July 1, 2007, CableCARD deadline, he said. “Though while I thought we had a meritorious case to make to the FCC,” the cable operators “needed to proceed as if they're going to put CableCARDs in our boxes, and I believe they're doing that,” McSlarrow said: “I see no evidence we're going to get this resolved anytime soon. That’s not to say that it won’t get resolved later, but I think at this point, for July, I think most people frankly are assuming that there’s going to be CableCARDs in some boxes for some period of time” because cable operators need to place orders, he said.

“There’s an irony that’s not lost on us” when the Commission wants to impose a 90-day “shot clock” on video franchising, but hasn’t acted on cable’s waiver requests in the 90 days it’s required to do so by law, McSlarrow said: “It’s ironic that the FCC presumes to tell anybody else in America that they have to get something done in 90 days, when by law they were supposed to rule on our waiver requests within 90 days.” The Commission hasn’t acted on a Comcast waiver request filed last spring, he said. And NCTA’s waiver request -- now 120 days old -- wasn’t even put out for public comment for 76 days, McSlarrow said.

NCTA has done better on the Hill than on the 8th Floor, McSlarrow said: “In Congress, we've actually come a long way, in terms of members’ and staff’s appreciation for the role the industry is playing.” The change in Hill power means that NCTA has more to do. “There’s going to be a lot of engagement and a lot of hearings,” he said. Democrats believe “this is a marketplace that has clearly changed a lot and there needs to be a lot of education of members,” he said: “Even the debates we had 6 months ago seem a little bit outdated.” NCTA will lobby for more deregulation of cable services, he said: “I'm not delusional about it… [But] my pitch, at least, would be that this is an opportunity for a lot of deregulation.” Rather than revise the Telecom Act line by line, Congress should step back and take a “fresh look” at telecom overall, he said.

Cable’s Hill prospects are bright on a la carte pricing, multicast carriage and other issues, McSlarrow said. Last Congress, despite broadcasters’ lobbying, “not one person ever offered a multicasting amendment,” McSlarrow said. And there seems to be “no real appetite” for new a la carte laws, he added.

NCTA hasn’t taken a position on whether the FCC should keep program access rules set to expire in 2007, McSlarrow said: “Historically we've been in favor of those rules sunsetting.”

There’s no basis for speculation that online video will harm cable sales, McSlarrow said. Cable operators believe their video delivery model will beat anything online services offer, he said: “There are serious questions as to whether or not customers are going to want to live in a world where instead of a service provider packaging [video channels] and making it as seamless and user friendly experience as possible, they just rely on what they download from the Internet.”