GOP Seeks to Revise Cable Rules for 21st Century

Two decades of change in the video market warrant a fresh look at the Cable Act, House and Senate Republicans said ahead of Tuesday’s Senate Commerce Committee hearing on the 1992 legislation. Retransmission consent, program carriage, compulsory copyright licenses and program access rules are likely subjects for consideration, said a minority memo that circulated ahead of the hearing. Cable groups will press the committee to rewrite the 20-year-old rules that govern broadcast signal fee contracts in a way that reflects the current video market.

Minority members of the House Commerce Committee separately denounced what they called a “broad expansion of FCC program carriage rules,” in a letter sent Monday to Chairman Julius Genachowski (http://xrl.us/bnhw7b). They said the commission’s recent interpretation of the rules could permit programmers to “force their way on to a cable operator’s system by merely alleging that their programming is similar enough to the operator’s affiliated programming.” Consumers will ultimately bear the brunt of the commission’s “expanded regulations” through higher costs, and cable operators risk losing customers who seek to cut their expenses, the letter said. The letter was signed by Committee Chairman Fred Upton, R-Mich., House Communications Subcommittee Chairman Greg Walden, R-Ore., 30 other Republicans and Reps. Jim Matheson, D-Utah, and Mike Ross, D-Ark. The FCC had no comment.

ACA CEO Matthew Polka urged cable groups to ratchet up the pressure on lawmakers. Monday’s remarks came in a pre-recorded speech aired at the group’s Independent Show in Florida. Though it could take as long as two years for lawmakers to pass Cable Act reform, members should continue to press the FCC to prevent broadcasters from coordinating their retrans negotiations, he said. “Broadcasters’ intent is clear: Use collusion to gain overwhelming bargaining leverage over ACA Members and price-gouge pay-TV customers,” he said. “It would not surprise me if our opponents eventually over play their hand in an effort to cling to outdated government-granted advantages used to mistreat consumers."

A half dozen regional public service groups including the Red Cross and the United Way in separate letters sent last week urged Senate Commerce Committee members to resist any effort to eliminate or alter retrans rules. If lawmakers decide to rewrite them, it could cause financial burden to stations and hamper their ability to provide timely information to citizens in times of crisis, they said. NAB had no comment.

The Cable Act has been “bypassed by a technological revolution that it never anticipated and is ill equipped to handle,” said Wide Open West CEO Colleen Abdoulah in prepared remarks. The outdated rules are causing consumers to pay increased prices for content that is bundled with “unwanted, unwatched and unmarketable” programming, said Abdoulah, chairman of the ACA. The call for action was echoed by members of the American Television Alliance.

Abdoulah urged lawmakers to revise retrans rules in the Cable Act or convince the FCC that it must penalize broadcasters for conducting coordinated negotiations on retrans fees. The current rules “fail to reflect the wide disparity” in bargaining power between a multichannel video programming distributor and a TV station affiliated with the big four broadcast networks, she said. Year over year retrans costs for WOW have increased by nearly 90 percent, she said. Abdoulah said failed negotiations among all MVPDs have led to at least 69 blackouts in the first half of 2012, a 35 percent increase from all of 2011.

Congress should embrace the Next Generation Television Marketplace Act (S-2008 and HR-3675) as a means to fix the problems with federal TV regulations, wrote Preston Padden, a former broadcast and cable executive who’s now a fellow at the University of Colorado’s Silicon Flatirons Center, in his prepared testimony. S-2008 and HR-3675 would repeal both the compulsory copyright licenses and retrans provisions of the Act and allow “dynamic marketplace forces to manage the distribution of broadcast programming in response to consumer demand,” he said. Committee member Sen. Jim DeMint, R-S.C., is the author of the Senate bill, and Rep. Frank Wolf R-Va., is the author of the House bill. The retrans right is “fundamentally flawed” and compulsory licenses create a “major impediment” to the emergence of new online video distributors like Netflix, said Padden. U.S. TV rules look like “that old closet in your basement that you keep promising yourself that one day you will finally clean out,” he wrote. “In my opinion, the day has come to clean it out.”