Writing a guest column in Seattle Times, a top-20 daily newspaper, American Cable Association Chairman Steve Friedman alerted consumers that rising cable rates are increasingly the result of discriminatory cash-for-carriage demands made by local TV stations aided by government regulations that assign a subordinate role to small cable operators in carriage talks. Friedman chose to write the column for his hometown paper, he said, because news coverage of the cable industry tends to miss the connection between higher monthly cable bills and contentious unfair cash-grab tactics employed by TV station owners.
"Many years ago, cable won a place in the American home by offering consumers choice and value. Those halcyon days are never coming back unless we see the repeal of major laws and regulations and the adoption of new policies designed to curb the abusive market practices of major media corporations, especially the owners of multiple broadcast outlets," Friedman said in his column, which is available online by clicking here: Will Someone Please 'Fix' The Market For Small Cable Customers?
In the column, Friedman noted that News Corp. chairman and CEO Rupert Murdoch recently declared that broadcasters are entitled to 10 percent of cable's operating income.
News Corp. COO Chase Carey added that the higher fees obtained from cable operators would "fix" a broken broadcast business model, even though his company just reported $8.7 billion in quarterly revenue and $1.2 billion in operating income.
Friedman, who is Chief Operating Office of Wave Broadband in Kirkland, Wash., has served as ACA Chairman since 2008, leading the independent cable operator organization at a time when TV stations have dramatically stepped up their demands for more and more cash from cable operators, regardless of the impact on consumers coping with the worst economic downturn in decades.
"Consumers have a right to know why rates go up. They shouldn't expect to see any relief until the government gets serious about policing aggressive media conglomerates that leverage favorable regulatory conditions to trap small cable operator's customers into paying far more than they should for broadcast programming," Friedman wrote.
Friedman explained that broadcasters have a negotiating advantage because they can pulling their signals from cable subscribers without fear of a negative reaction from the FCC; and because cable subscribers have no ability under FCC rules to opt-out from paying for local TV signals, a buy-through requirement that inflates demand for local broadcast programming.
"Viewed together, these broadcast-friendly regulations mean that my company, Wave Broadband, has no choice but to accept unreasonable price hikes demanded by local TV stations and pass them along to consumers, who can end their relationship with me at any time and switch to a competitor if I don't have the broadcast programming they want," Friedman said.
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