American Cable Association President and CEO Matthew M. Polka traveled to Minneapolis on March 2 to speak to the Minnesota Telecom Alliance's 101st Annual Convention about common interests shared by small cable and telephone phone companies at a time when the media and telecommunications sectors are converging and Washington regulators are considering major regulatory changes with potentially far-reaching consequences for their businesses.
In his keynote address covering a range of policy issues, Polka explained that cable and phone companies are losing their separate identities and fast becoming known as broadband access providers, offering a telecommunications platform that allows consumers a pathway to a suite of services, from video programming to phone service to social media to instant messaging products.
Polka warned that as the market continues to move in a new direction, it's not entirely clear that legacy burdens placed on consumers by media conglomerates will be things of the past, especially on the Internet.
For example, Polka said the Walt Disney Co. has developed an online sports programming service called ESPN360.com (recently changed to ESPN3.com). He said Disney's goal here is to graft the cable business model onto the Internet so that the majority of broadband consumers who are not sports fans need to subsidize the minority who do enjoy watching sports on a computer screen.
Disney flatly refuses to sell ESPN360 directly to consumers; instead, the media giant requires broadband providers to pay wholesale fees that cover every broadband subscriber. This sets the stage for allowing Disney to raise the price of broadband on all customers and make the service less affordable at a time when the Obama administration has made affordable and universal broadband a national priority.
"As we look ahead, what concerns the ACA Board and our membership the most is our ability to obtain access to programming in a broadband, online and digital world. If we are to be successful in this new world, we have to have access to the content our customers want on rates and terms our customers are willing to pay," Polka said.
On other issues, Polka said ACA is deeply engaged in the federal government's review of the Comcast-NBC Universal merger, Universal Service Fund reform and retransmission consent policy at the Federal Communications Commission.
ACA is urging the FCC and the Department of Justice to impose conditions that would prevent Comcast-NBCU from using control of 10 NBC stations, 10 regional sports networks and more than 20 marquee cable networks to engage in anti-competitive conduct against ACA members, many of which compete head-to-head with Comcast for voice, video and broadband customers, Polka said.
On USF reform, Polka said ACA filed comments with the FCC that contained a comprehensive blueprint to modernize the program.
ACA proposed capping the $4.4 billion high-cost fund and withdrawing support from large voice providers and all wireless providers that face competition from entities that have demonstrated they can compete against incumbents without USF support.
Importantly, ACA stressed that all voice providers with 100,000 access lines or fewer must not lose access to USF funding. ACA's plan would use the savings from the high-cost fund to support broadband access in rural America, Polka said.
Regarding retransmission consent, Polka explained that the broadcasters' willingness to pull their signals from cable consumers just prior to the start of a major sporting or cultural events has caught the attention of the media and public officials and put the conduct of broadcasters in a new and negative light.
Nevertheless, Polka said the battle with broadcasters is far from over.
"It will be up to us, collectively here, to demonstrate the economic harm to our businesses, and, more importantly, the out-of-control costs imposed on our customers," Polka said. "We need our customers to support us in this fight to reform retransmission consent, and we need them at our side to convince Washington that reform is needed."
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