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ACA’s Boyers Calls For New Policies To Address Challenges Faced By Small Cable

American Cable Association Board Member Patricia Jo Boyers testified April 9 before the Senate Commerce Committee in support of new communications laws and policies that need to reflect the unique challenges faced by independent cable operators in providing rural America with the most advanced communications services.

Boyers, President and Chief Executive Officer at BOYCOM Cablevision, Inc. in Poplar Bluff, Mo., appeared before the panel's Subcommittee on Communications, Technology, and the Internet.  Led by Sen. Mark Pryor (D-Ark.) and Sen. Roger Wicker (R-Miss.), the panel provided a forum for a leader of the independent cable community to identify problems and propose solutions that would spark investment in advanced technologies, especially broadband Internet access, in communities at risk of being left behind.

"Each issue requires Congress' attention so that small cable operators like BOYCOM can continue to compete and can invest in modern networks that are capable of providing faster broadband to greater numbers of rural communities," Boyers said in prepared remarks.

Boyers started her company with her husband in 1993, taking a second mortgage on their home as collateral for their capital investment. The company has five core systems in rural Missouri that provide video to about 2,000 subscribers and broadband to 3,000 customers over fiber-to-the-home networks to ensure customers have the broadband performance capabilities they need for their businesses, education, and healthcare.

In her testimony, Boyers urged continuation of government's regulatory light touch over broadband services, voicing support for reasonable network management and billing practices tailored to address those few customers who use excessive amounts of bandwidth.

She backed state and federal programs designed to bring broadband to all communities, with the caveat that government not subsidize competitors to build their networks in areas where ACA Member companies already provide broadband.

"When we spend our own capital to bring broadband and other services to communities, there is absolutely no reason for the government to step in and aid others. Not only does this discourage private investment, it is a waste of taxpayer dollars," Boyers said.

With regard to the Federal Communications Commission's Connect American Fund (CAF) program, which will provide about $9 billion in broadband support in rural areas over the next five years, Boyers said the agency should distribute support efficiently, providing only the amount necessary to deliver the level of broadband service required by the rules. She said all broadband providers, including cable operators, should have a fair opportunity to access support when the FCC holds reverse auctions.

Under current law, Boyers said, only so-called Eligible Telecommunications Carriers (ETCs) may participate in reverse auctions. Few cable operators are ETCs because the state-run process to become an ETC is so onerous and ETC status comes with burdensome requirements. ETC status is irrelevant to reverse auction participation because it is the FCC that establishes all the requirements to obtain CAF support.

"The FCC can remedy this problem. We ask that Congress encourage the FCC to take steps to make it easier and less burdensome for cable operators to become ETCs so that they may participate in the reverse auctions when such auctions are used," Boyers said.

Boyers highlighted other problem areas for small cable operators that require government attention. She said the country needed to upgrade not only last-mile broadband connections to the home, but also the "middle-mile," which carries traffic from local networks to an Internet backbone access point. In rural areas, she said, often there is only one middle‐mile link available and it is often an outdated technology with limited capacity.

"This in turn limits the data speeds we can provide to our customers. It also means we often pay much higher prices for each byte we transmit," Boyers said. "Some of us have explored constructing our own middle-mile links, but because the distances involved are extremely long and the density of our users too low, the cost is prohibitive."

Boyers said that the federal Pole Attachment Act of 1978 exempts from regulation the fees charged by poles owned by municipalities and electric cooperatives. These groups have set high fees and delayed access, driving up costs and making broadband deployment even more uneconomical in rural areas.

"The FCC's National Broadband Plan wisely suggested that Congress should eliminate the exemption for cooperatives and municipalities to restore fairness and competitive rates to the market. We encourage Congress to take action to deal with the obvious shortcomings in the existing law," Boyers said.

BOYCOM and other ACA members, she said, face many restrictions, delays, excessive fees, and competitively discriminatory policies imposed by private and public entities that control rights-of-way.

"BOYCOM does not have a team of lawyers and consultants to deal with all these gatekeepers," Boyers said. "We are pleased that President Obama issued an executive order requiring federal agencies to develop new uniform policies and practices for accessing the federal government's assets for the purpose of broadband deployment."

Boyers concluded by noting that the cost of video programming has been increasing sharply, particularly for retransmission consent and sports networks offered regionally and nationally. While video revenue has increased for most cable operators, she said her video expenses have grown faster, sending video margins to historic lows five years running.

"Our subscriber base simply cannot afford to pay another dime. We're eating the cost increases. The reduced profit from video puts pressure on cable operators, particularly smaller ones, and reduces available capital for broadband," she said.

She added that since October 2005, the number of cable systems has declined by 26% (from 7,208 to 5,312) and that for systems with fewer than 10,000 subscribers, the percentage drop in the number of systems has been even greater.

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