CEA, Others Clash Over FCC’s 16th Video Competition Report

Video regulations need to be reformed to reflect increasing competition, said pay-TV providers, broadcasters and industry associations in comments for the FCC’s 16th Video Competition Report.

Commenters such as CEA, NCTA, NAB and the Writer’s Guild of America differed on how the FCC should address the increased competition, clashing over the integration ban, the future of retransmission consent, program carriage rules, and vertically integrated multichannel video programming distributors. “Enforcing regulations premised on supposed video market deficiencies while ignoring the effectively competitive state of the market results in a policy mismatch that is harmful to consumers,” said the Free State Foundation’s Randolph May.

Increasing competition in video means the FCC should allow industry the flexibility to compete, said both NCTA and NAB in their comments. FCC annual video competition reports “long ago stopped characterizing cable operators as the ‘dominant’ providers of multichannel video service,” NCTA said. “Cable operators’ share of MVPD customers has steadily eroded, from 98% to 53%,” NCTA said. The increased competitiveness of MVPDs means “the FCC’s rules should allow broadcasters greater flexibility in establishing ownership structures that permit them to achieve economies of scale and scope,” said NAB, speaking of a draft order that would limit joint sales agreements. “Allowing the marketplace to offer a diversity of approaches is far more successful than attempting to prescribe a uniform government mandated technology,” said NCTA, referring to FCC rules on set-top box security. Both associations’ backing of less regulation were echoed in other filings, including the FSF, Verizon and CEA. “Neither consumers nor the marketplace are well served” by “regulatory constraints” CEA said.

The integration ban for set-top box security was a point of contention for commenters in the proceeding. “Technology mandates” requiring the use of CableCARDs are no longer needed, considering the prevalence of cable set-top box alternatives, said Verizon. “Consumers and operators that elect leased boxes are paying a penalty in unnecessary expense and energy costs,” because of the ban, said NCTA. A lack of clear standards threatens the future of competition in the market for retail set-top boxes if the integration ban isn’t preserved and vacated CableCARD rules aren’t reinstated, said TiVo, echoing comments from the AllVid Tech Company Alliance. “For retail competition to succeed, consumers need to be able to buy a device knowing it can be used nationwide to view all content to which they have subscribed, not navigate a chart to see which devices and apps work with which content,” TiVo said. Being “tied” to leased boxes “frustrates consumers” who “periodically need to move, or who want to change their MVPD providers, or want to buy a new and different CE product,” AllVid said.

Reforming retransmission consent toward “a true, market-based approach” would likely require an act of Congress, but the FCC should “take interim steps to minimize the harm to consumers,” Verizon said. NAB disagreed, referenced a draft order that would limit joint negotiation as threatening broadcaster “control of their signals.” That in turn threatens the ability of local stations “to make the substantial investments needed to maintain high-quality, costly programming, including news,” NAB said. CenturyLink said retrans prices are “the single most significant issue from a cost standpoint” it faces in delivering video. To lower retrans rates, the FCC should “consider requiring networks to provide distribution options that include not requiring that the network be in a basic MVPD tier of programming,” CenturyLink said.

Possibly spurred by the proposed Comcast/Time Warner Cable deal, several commenters cited the prevalence and issues surrounding vertically integrated MVPDs. “Only a small percentage of cable programming networks are vertically integrated with cable systems,” NCTA said. “Even if they had the incentive to refuse to carry independent networks, cable operators do not control enough content to fill the gaps,” NCTA said. The finished Video Competition report should contain information on the trend toward vertical integration and the effects of program carriage on buying groups, ACA said. The Comcast/TWC deal would “threaten competition,” the WGA said. “Video distribution will never have robust competition unless the FCC takes action to limit anti-competitive behavior.”