NCTA Seeks Hill Win in Axing Integration Ban

The House included the integration ban repeal in STELA reauthorization legislation passed last month, and Senate Commerce Committee leaders have not ruled out including it -- they say they'll unveil legislation in September -- fueling speculation and lobbying. The integration ban calls for cable operators to use CableCARDs instead of built-in security in set-top boxes. TiVo has long opposed repealing the ban, and is vocal in hearings and letters. TiVo CEO Thomas Rogers and NCTA CEO Michael Powell exchanged jabs in recent letters to Senate Commerce Committee leaders. TiVo also formed a voluntary agreement with Comcast earlier this year, in which Comcast will follow CableCARD rules vacated by the U.S. Court of Appeals for the D.C. Circuit and focus on forming a two-way non-CableCARD security solution to replace CableCARD.

"This seems to be an NCTA issue rather than a cable operator issue,” TiVo General Counsel Matt Zinn told us during his trip to Washington just before August recess. “If you think about it, Comcast, by virtue of their agreement with us, doesn’t have anything to worry about with the integration ban, right? There’s a path to move forward when they're ready. Charter has a waiver, so they shouldn’t be worried about it. Cablevision has a waiver; they shouldn’t be worried about it. Cox tends to follow what Comcast does, so I don’t think they're going to be terribly worried about the integration ban. So who’s worried about it besides NCTA?”

"Since the integration ban was first proposed, NCTA has been the lead advocate with the full support of our cable operator member companies, and suggestions that this is some rogue NCTA issue are illogical,” NCTA’s spokesman countered. “NCTA advocates on behalf of our member companies and wouldn’t be out in front on the integration ban if it wasn’t a priority for our member companies."

NCTA’s ‘Conflicted’ Hill Lobbying

Cable companies back a repeal of the integration ban, seeing it as good policy, but most companies lobby far more heavily on retransmission consent overhaul, one industry lobbyist representing multichannel video programming distributor interests told us. NCTA does not typically lobby on retrans due to its member Comcast, which owns NBCUniversal and thus has very distinct, different stakes in that debate, the lobbyist said. Repeal of the integration ban is a natural policy issue with unified support for the association to lobby on it, and considered important in its own right by individual companies despite its not being the biggest issue on their minds, he added.

NCTA is “conflicted out of working on some issues that are important to the cable industry,” Public Knowledge senior staff attorney John Bergmayer agreed, pointing to Comcast’s membership in the association and what that means for its ability to lobby on retransmission consent overhaul. Consequently, NCTA “is able to put more attention on secondary issues like the integration ban,” Bergmayer said.

But don’t assume NCTA’s member companies don’t care about CableCARDs, another media industry lobbyist cautioned. He agreed that NCTA is the source of most of the lobbying firepower and that the integration ban repeal may strike NCTA as an achievable issue to target. But NCTA members care, many lacking an established Washington lobbying presence and thus relying on NCTA, he said.

One former FCC official also emphasized NCTA’s silence on retransmission consent, given that issue’s importance to most cable companies. That silence may explain NCTA’s lobbying push on the integration ban, “which seems pretty modest by comparison,” the former official said. Trade associations assume “a valuable role as bad cop” that allows members to resist regulators and legislators without their names attached, he said. NCTA has been an effective group, partly due to its unified voice, but it could face challenges as its members grow their own lobbying shops, “especially if Comcast is able to acquire Time Warner Cable,” he said.

Heavy Lobbying Amid STELA Debate

NCTA spent $4.01 million on lobbying in Q2 and said it lobbied on the legislation repealing the integration ban. TiVo, meanwhile, paid Grayling $40,000 in Q2 to lobby on possible CableCARD language in STELA legislation, according to Grayling’s quarterly disclosure form.

Zinn attacked some of NCTA’s arguments. “Energy efficiency is a ridiculous red herring,” he said, saying with the current generation of security the cost amounts to 40 cents annually per user per set-top box: “Forty cents is nothing.” But NCTA multiplies that amount and “you get to a big number,” he said. “But nobody is saying that if the integration ban passes, then all the non-integrated security boxes are magically going to go away. They're not going to go away. They're going to be in use for eight years, as they normally will.”

NCTA’s other big point, Zinn said, is that repealing the ban will lower set-top box costs and thus save consumers money. But Zinn pointed to Powell’s House appearance where he was asked whether consumers would see savings (CD March 13 p1). “The head of the NCTA has said that nobody’s going to see any savings, so how can that possibly resonate with anybody?” Zinn said. “Those are their best arguments. Those are no arguments.”

"TiVo can continue to try and distort the facts about the ineffectiveness and significant consumer cost of the integration ban but the reality is that it is an unnecessary technology mandate being imposed on only one segment of a competitive and evolving video industry,” the NCTA spokesman said. “Considering how the video market has changed dramatically in the last decade, TiVo’s arguments again show how far they are out of touch with marketplace reality.” He cited the repeal’s bipartisan House backing. “As an industry that is working with energy advocates and the U.S. Department of Energy to save consumers billions of dollars by improving the energy efficiency of set-top boxes, we disagree that TiVo should be scoffing at the opportunity to reduce the energy use of set-top boxes,” the spokesman added. “The [data on] energy usage of CableCARDs comes directly from the EPA, so while TiVo may choose to dispute those figures, we believe any technology mandate that can impose considerable costs [on] consumers for no additional benefit is a one that should be eliminated.”

Lobbying disclosure forms for some major cable companies list repeal of the ban among priorities. Time Warner Cable, in reporting the $1.9 million it spent lobbying in 2014’s Q2, explicitly included it. Ryan MacKinnon and Brownstein Hyatt, two firms hired by Comcast, also mentioned it, and Comcast said it lobbied on Communications Act Section 629 in its own form, clocking $4.45 million in the latest quarter. Comcast is lobbying for a “generally” clean STELA reauthorization, according to July congressional testimony (http://1.usa.gov/1mvuHGc). It highlighted NCTA’s integration ban priority “to the extent that the Committee considers any changes to STELA.” That Comcast testimony backs the repeal in general, slamming the ban’s effects, though a Comcast spokeswoman confirmed to us that NCTA has taken the lead on the issue.

Expect a possible Senate Commerce Committee STELA markup on Sept. 17, industry officials have told us (CD Aug 22 p10). Committee leaders have yet to release any legislative language. (jhendel@warren-news.com)