Tag: cable operators

GOP To America: All Well In Cable-Land! Skyrocketing Rates and Lousy Customer Service All In Your Mind! Forget What We Said Last Summer About Needing COPE!

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I must applaud the Republican House Commerce Committee members for their willingness to stay bought. Why else would 23 of the 26 Republicans on the House Commerce Committee send this letter celebrating the perfection of the cable industry in the United States and opening a can of whoop-ass on Kevin Martin for daring to suggest otherwise? Because if that letter came in response from hundreds of constituents complaining that their cable service costs too little and the service is too good, I’ll eat my lap top.

God knows, with the number of issues on their plate and with their party’s standing plummeting in the polls, you’d think Republicans would decline to publicly defend the cable industry. What with rates consistently rising faster than inflation (and despite increasing profits-per-subscriber until the last quarter or so), cable operators have raised rates every year – whether they need to or not. As if that were not enough, the customer service records of the major cable companies are abominable (or why would Mona “The Hammer” Shaw have attained folk-hero status?). So with us heading into an election, and the Republicans weighed down by all the baggage of the Iraq War, corruption scandals, accusations of cronyism and mismanagement, and a general anti-special interest sentiment in the electorate, you wouldn’t think the Republican party would rise up en mass to defend the cable industry from one of their own?

And yet that is precisely what 23 Republican members of the House Commerce Committee just did. Upset that Kevin Martin has proposed several items for the next FCC meeting that limit cable market power, the Commerce Committee Republicans have leaped to the defense of the cable industry. “Shame!” They have cried to Kevin Martin. “All is well in cable-land! The industry is intensely competitive, prices are low, service is wonderful, and consumers are bursting with happiness! How can you even think of regulating the cable industry?”

Mind you, these are the same Republicans who in the summer of ’06 were so gosh darn concerned about the lack of cable competition that they were all set to completely rewrite the Telecom Act to help phone companies get into video. Because God knows if we didn’t deregulate phone companies we couldn’t get any competition for cable, and Lord knows we needed competition for cable. But when you are a member of the Republican Party and you see a special interest and regular campaign contributor in need, you don’t worry about such fiddlin’ details as consistency with your past positions. Either that, or we should assume Mr. Barton, Mr. Upton, and the rest that championed the “we must deregulate the phone companies to bring competition to cable” bill in 2006 believe that the whole competition thing worked itself out, so that is now — in the words of the 23 Commerce Committee Republicans — “significant competition in the video programming marketplace.”

So now we see the delightful sight of Mr. Barton, Mr. Upton, and the rest of the Republican Cable Commerce Cheering Squad, who last summer couldn’t vote fast enough to deregulate because we needed cable competition, taking FCC Chairman Martin out to the woodshed for daring, DARING to suggest that cable has market power and that therefore the FCC should take steps to address this problem, or at least bloody recognize the reality. (Apparently, flip-flopping is not a problem if it is bought and paid for flip-flopping.)

So rest assured America, in the fight between your personal well-being and the profit margins of GOP campaign contributors, you can always count on the Republicans to stay bought and stand up for special interests.

Stay tuned . . . .

The 77% Solution, or Even with Three Different Methods You Still Get a Take Rate Greater than 70%

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There has long been reason to suspect the data which the cable industry provides to various reporting services like Warren Communications News, Kagan Research, and Nielsen Media Research for U.S. cable coverage and subscribers precisely because the cable industry has considerable incentive to lie about it. Specifically they have incentive to under-report both coverage and subscribers so as to avoid a finding that the 70/70 limit – that seventy percent of American homes are passed by cable and that seventy percent of homes subscribe to cable – has been reached, thus triggering additional FCC regulation of the industry. The numbers have danced around the mid- to upper-60% range reported in these sources since 2004, only tipping over in Warren Communications News’ Television and Cable Factbook, which recently reported a 71.4% take rate to the FCC.1 When it became clear that the FCC was prepared to take action to invoke the 70/70 rule on the basis of the Warren data, the managing editor of Warren Communications News’ Television and Cable Factbook immediately called its own data into question in an interview in Communications Daily:

The figures from the Television and Cable Factbook aren’t well suited to determining whether the threshold has been met, said Managing Editor Michael Taliaferro. Taliaferro said Factbook figures understate the number of homes passed by cable systems — and the number of subscribers — because not all operators participate in its survey. “More and operators are just not giving up” those numbers, he said. “We could go with two dozen footnotes when we start to report this data.” Cable operators participating in the Factbook survey said they passed 94.2 million homes and had 67.2 million subscribers.

The FCC official who asked him for the cumulative figure didn’t say how it would be used, Taliaferro said. If he had known, he would have provided a list of caveats, he said. “It would have been a very lengthy email,” he said. Taliaferro said he did point out the shortcomings in a phone conversation with the FCC official but didn’t put it in writing because he wasn’t asked to. “I had no idea what they were doing with it.”2

More below…

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Lies, Damned Lies, and Understatements

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The cable industry is running scared in the face of FCC Chairman Kevin Martin demanding a vote certifying that the cable industry has met the 70/70 test.  This test gives the FCC greater regulatory authority once cable is available to seventy percent of American households and seventy percent of those households subscribe to cable.  This is clear from the way the cable industry has pulled out all stops to avoid the finding, even persuading Warren Communications News to discredit its own Television and Cable Factbook, claiming that there are technical reasons for regarding it as unreliable.

It’s worth quoting the remarks of the managing editor of Warren Communications News’ Television and Cable Factbook to Communications Daily (also owned by Warren) on the subject:

‘The figures from the Television and Cable Factbook aren’t well suited to determining whether the threshold has been met, said Managing Editor Michael Taliaferro.  Taliaferro said Factbook figures understate the number of homes passed by cable systems — and the number of subscribers — because not all operators  participate in its survey.  “More and operators are just not giving up” those numbers, he said.  “We could go with two dozen footnotes when we start to report this data.”  Cable operators participating in the Factbook survey said they passed 94.2 million homes and had 67.2 million subscribers.

‘The FCC official who asked him for the cumulative figure didn’t say how it would be used, Taliaferro said.  If he had known, he would have provided a list of caveats, he said.  “It would have been a very lengthy email,” he said.  Taliaferro said he did point out the shortcomings in a phone conversation with the FCC official but didn’t put it in writing because he wasn’t asked to.  “I had no idea what they were doing with it.”’

Taliaferro, who relies on cable industry data to put out the Factbook, clearly came under a lot of pressure from the industry to badmouth his own data, but even then he didn’t get the job done.  If the problem is understating number of households passed and number of subscribers because cable operators refuse to provide the data, as Taliaferro suggests, then Warren’s Television and Cable Factbook must understate the number of households passed and subscribers.  This means that the real numbers — the numbers we’d have if all the cable providers coughed up the data — have as a matter of mathematical certainty to be greater than 70% coverage and 70% subscription.  Taliaferro, attempting to please the cablecos, has in fact given evidence that the Warren figure of 71.4 percent of homes having gotten cable as of October 10, 2007 has to be an understatement of the reality.

The only way the Warren data could fail to support invoking the 70/70 rule would be if cable providers systematically over-reported the number of households covered and number of subscribers.  And they’d have to be crazy to do that, since they want to avoid regulation at all costs.  I know from personal experience that the cablecos lie to avoid regulation.  It was patent from data submitted by Comcast and Time Warner in connection with the Comcast-Time Warner-Adelphia transaction that Comcast tried to circumvent the 30% cable ownership cap by submitting year-old data for some affected DMAs while Time Warner submitted current data. (You can see where I called them out on this in my expert submission on MAP’s Petition to Deny.)

This is why Warren is so desperate to sow confusion about its own data.  The Nielsen and Kagan numbers (which are lower than the Warren numbers) are estimates.  The cablecos don’t share nearly as much proprietary data with Nielsen and Kagan as they do with Warren, which is regarded as a safe, cable-friendly trade press outlet.  When Warren shared the data with the FCC, the footnote they neglected to provide with it should have read: “Don’t use this data for regulatory purposes because it will make the people who gave it to us very cranky.”  Hence the attempt on Warren’s part to cover up the embarrassing bits like a stripper at a police raid — by misdirection.

It’s also significant that two Republican FCC Commissioners, Deborah Tate and Robert McDowell, have made a huge  deal out of this non-story by writing to Taliaferro that “We wanted to take this opportunity to ensure that at least these two Commissioners are indeed seeking the trustworthiness, truthfulness, and viability of the data in question.”  Either they don’t understand what the mathematical meaning of the understatement by cable operators is, or they’ve decided to play cableco sock-puppets.  I’m hoping for the former, but I’m betting on the latter, athough I’d like to give them the benefit of the doubt.

In addition to voting the 70/70 finding on a 3-2 with Chairman Martin and the two Democrats forming a majority for real regulation of the cable industry, Chairman Martin should put forward a regulation requiring that the cablecos provide detailed coverage and subscription data publicly to the FCC on an annual basis, certified by the CEOs of the cablecos under penalty of perjury.  If Tate and McDowell vote for a rule like that with real teeth to keep the cablecos honest and provide the necessary data to the American people, then they really are concerned with the accuracy of data.

If they don’t, we need to ask whose hand is up the puppets’ arses.

Time For Some Hot Bi-Partisan Action on Cable: Or, Why Copps and Adelstein Need to Work With Martin Here Part I

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I gotta hand it to the NCTA – they really know how to spin the press. Given the outrageous excesses of market power displayed by incumbent cable operators, you would imagine that activists would leap at the opportunity offered by Kevin Martin to reign in cable market power – regardless of whether one likes Martin personally or thinks he is a Bellhead or industry tool in other respects. But no, over the weekend, the NCTA has done an exemplary job of spinning the upcoming sledgehammer to cable market power as a bad thing.

I am talking primarily about the news that the FCC may invoke the “70/70″ provision of Section 612(g) of the Communications Act (codified at 47 U.S.C. 532(g)). For those not as obsessed with the Communications Act as yr hmbl obdnt, this provision states:

[A]t such time as cable systems with 36 or more activated channels are available to 70 percent of households within the United States and are subscribed to by 70 percent of the households to which such systems are available, the Commission may promulgate any additional rules necessary to provide diversity of information sources. Any rules promulgated by the Commission pursuant to this subsection shall not preempt authority expressly granted to franchising authorities under this subchapter.

Now you would think anyone who opposes media concentration would be jumping for joy here, wouldn’t you? At last, a clear source of authority for the FCC to regulate cable in the name of diversity, and a directive from Congress to do it (without preempting local franchise authorities). And one would certainly expect that the Democratic Commissioners, Copps and Adelstein, who have repeatedly shown themselves stalwart champions of diversity and enemies of consolidation, would rush to seize the moment. But while I hope the later is true, some normally sensible people are buying into the cable spin that this is somehow bad because (choose however many apply):

A) It’s an “archaic leftover” of another time and nowadays cable is “highly competitive.”

B) It’s not really true that the 70/70 test is met anyway so the courts will just reverse it.

C) Kevin Martin is an evil Bellhead who has it in for cable, wants to deregulate broadcast media, and shafted local franchising authorities, so you know this must somehow be evil, even though it is something media reform advocates have fought for over 20 years to achieve.

D) Somehow, this is just an effort to distract us from the fact that Kevin Martin is an evil Bellhead who eats puppies and throws kittens into trees for his amusement.

E) Martin is just slapping the cable guys around because they didn’t do family tier.

G) Somehow this helps Kevin Martin deregulate the broadcast industry.

Having spent the last several years trying to get the FCC to recognize the goddamn truth that 70/70 was met years ago, and trying to get the FCC to address leased access and carriage complaint issues, the 30% cable ownership cap, and a bunch of other reforms to address cable market power, I am just a shade peeved to see folks who should know better eating out of NCTA’s hand. Because public policy is not about whether I like or dislike the current FCC Chair or whether I would rather he focus on reigning in telcos rather than cable cos. It’s about what is the best public policy. And what Martin has put out for a vote: 70/70, reform of leased access and the carriage complaint process, and reaffirming the 30% cable ownership cap, are all things justified by the record and urgently needed.

We have already seen that when the Democrats work with Martin to protect independent programmers, good things happen. Holding the cable operators accountable under the set-top box law, letting The America Channel arbitrate its case against Comcast, these are areas where Copps and Adelstein recognized that their interest in promoting diversity and free expression converged with Martin’s interests in restricting cable market power and worked together to create well-crafted rules that promote the public interest without selling anyone out. This is that “bipartisan” thing everyone claims they want – work together where you can, oppose each other when you must, and always keep in mind the public interest rather than your partisan ends.

Below, I run through some background on what’s going on — especially with the 70/70 test. Since that will make this ridiculously long, I will save for Part II why Copps and Adelstein need to seize this opportunity before the NCTA gets a chance to work its mind-clouding magic and once again get a quorum to vote that slavery is freedom and market power is competition. And, since Martin’s motives appear to absolutely rivet everyone’s attention, I will give my best speculative guesses followed by my explanation of why Martin’s motives don’t matter. Because, as in all good politics, Martin has maneuvered it so that he will get his political pay off whether the Democrats vote for the cable items or not. So rather than waste the best chance at cracking cable market power in the last 20 years and give Martin a political victory anyway, the only sensible thing to do is vote for the items and make it clear that doing the right thing in cable over here doesn’t give Martin a pass on previous bad Orders (like preempting local franchise authority) or give a license to deregulate broadcast ownership.

More below . . . .

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Comcast Morally Outraged That America Channel Adjusts Business Model to FCC Rules. Cats outraged when mice fight back.

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Some of you may recall The America Channel and their efforts to blow the whistle on Comcast’s exercise of market power in the cable programming world. As part of resolution of the Adelphia transaction, the Commission declined to provide any specific relief for The America Channel. They did promise to have a general rulemaking on the carriage complaint process (whereby independent programmers complain that cable operators have illegally discriminated against them) and the leased access process (whereby independents can lease access to the cable system) (a proceeding the Commission announced last month). The Commission also created special protection for regional sports networks (RSNs) so that Comcast could not do unto others as they did unto Mid-Atlantic Sports Network. As part of the FCC’s order approving the Adelphia transaction, a regional sports network can demand carriage on Comcast or Time Warner, and can require that an arbitrator resolve the cost issues.

TAC, seeing that it would get nowhere with its old programming idea, proceeded to reinvent itself as a regional sports network. It has deals with a number of NCAA Division I schools — particularly for the less popular women’s sports, which it will bring to the various regions the schools are in. TAC will pay for the production costs but will not pay for the games themselves, a reversal of the usual royalty agreement I understand. TAC has gotten carriage on cable overbuilder RCN, provided TAC can reach the critical mass of carriage on other providers to achieve viability.

So how’s that working out, and what will the FCC do? More below . . . .

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FCC Staff resolves leased access complaint after only 3 years! Go team!

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O.K., it is probably a bad idea to make fun of people for doing stuff you want them to do. So when the FCC released a leased access complaint on January 29, I should probably have just applauded for joy. But given that it took three years to resolve a complaint when the cable company in question never even filed a reply to the complaint, I think a little mention of what is wrong with the current leased access rules, and the Commission’s enforcement of same, is needed.

And I will pause to put in a genuinely good word for the New Media Chief Monica Shah Desai for getting this cranked out relatively quickly after she got there. Keep crackin’ that whip!

But the decision also highlights everything I’ve been complaning about in the current leased access system so that even the people who want to make it work are having a heck of a time and why we need the leased access rulemaking that Martin promised Adelstein back in July.

Some analysis below . . . .

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VDC — Video VOIP

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I confess I hadn’t heard of VDC: Virtual Video Cable until they filed a program access complaint. Of course, since the vast majority of people probably hadn’t heard about that either (or even know what a “program access complaint” is), I imagine I remain in the distinct minority.

VDC bills itself as a purely broadband-based cable-like service. I compare it to “video VOIP” (or voice-over-IP for the five readers unfamiliar with the acronym). In theory, a service like VDC could provide real competition to cable by letting you get an actual cable service (as opposed to video clips like YouTube or random episodes from iTunes or from some streaming site) — just like VOIP allows a company like Vonage or Sunrocket to offer voice if you have a broadband connection so you can discontinue phone service, saving a bundle (assuming your broadband provider does not make you buy a bundled service or interere with your VOIP packets).

So it is unsurprising that when a possible competitor like VDC emerges, cable uses its market power to try to squash it like a bug. In this case, cable companies have resurected one of the old reliable tricks from their early days: deny the would-be competitor needed programming. Here, Time Warner has refused to enter into negotiations to make CNN available to VDC. (We can expect that if this doesn’t do the trick, cable cos will move to the new fangled tricks — mess with the packets.)

But VDC has a few weapons in its arsenal. It has invoked a provision of the 1992 Cable Act called the “program access rule” that Congress passed to force cable operators to make programming available to would-be competitors like Direct Broadcast Satellite (DBS) providers. VDC has only two problems:

1) The complaint is being handled by the FCC’s usual cable enforcement staff which, as I have observed previously, does not exactly move on “internet time.”

2) The program access rules stop working (“sunset”) this October. So even if staff resolve the complaint in something approaching reasonable time, it may not do much good.

So is video VOIP dead before it even starts? Not necessarily. For a full explanation of what’s going on and how you (yes, you) can help make video VOIP a reality, see below . . . .

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Boston City Council “Wicked OTAHD-ed”

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According to this article, the City of Boston is considering banning or otherwise regulating the placement of DBS receiver dishes. The article reports that in a number of places these have become real eye sores, especially where a tenant moves out and just leaves the dish. Also, DBS comapnies are increasingly puting dishes in windows rather than all the way on roofs, and are generally not that concerned with keeping the neighborhood looking pretty.

Nevertheless, after the trouncing the FCC gave Massport last month over OTARD, this is pretty silly. Or, as those of us from Boston might say “wicked OTAHDed.”

Now there are ways the City can try to deal with the esthetic problems. For example, it could mandate that landlords permit use of rooftops for DBS providers (one big problem is often that landlords sign exclusive deals with incumbent cable operators, so only tennants with a southern exposure window can subscribe). Or Boston might require that any tenant that terminates DBS service remove the dish or who moves must remove the receiver dish. The city could probably require that if a DBS or other provider comes to install a dish and finds a “dead dish” connected to the residence, the DBS provider must remove it (I’m a little leary of this one because it imposes additional costs on the DBS provider and therefore may be preempted by federal law).

These are just ideas off the top of my head, so they may not be plausible. If the City of Boston wants some help, I recommend the Boston University Law School Legislative Drafting Clinic (of which I am an alum). But I hope they resist the urge to just pass something stupid that a federal judge will smack down in five minutes. That never helps anyone, and is especially irritating when taking a bit of time and effort to get it right can save everyone some grief down the road.

Stay tuned . . . .

How Broadcasters Make Lobbying Lemonade Out of National Catastrophe Lemons

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Jim Snider at New America Foundation has written an excellent piece extensively documenting how broadcasters leverage their response in national emergencies and support of charitable causes to get special regulatory goodies and rules that keep competitors out. You can dowload a copy here.

While in one sense not news to anyone in DC, most people are unaware how broadcasters shamelessly take the coverage of local charity events or other efforts (which (a) are local news and so worth doing anyway, and (b) other companies routinely do) and use them to justify many billions of dollars in privileges such as must-carry rights on cable systems and limiting the ability of rivals such as satellite radio or Low-Power FM to compete. A bit of advocacy expounding, and a few thoughts on Jim’s paper and policy recommendation, below.

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Enforcement Staff Respond to Application of Clue By Four to Head

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After the very public tongue-lashing from FCC Commissioner McDowell as part of deciding the Comcast/TW/Adelphia transaction, the “lazy and indolent bureaucracy” charged with processing cable complaints has finally issued an Order designating for hearing MASN’s complaint that Comcast refuses to air the DC Nationals games violates the law. Sort of. There are a few interesting little oddities, as well as a big, heapin’ WHAT THE HECK TOOK SO LONG!

We’ll have to see if they now move to the other proceedings — such as the leased access rulemaking — promised in the Adelphia Order, or if this is just a one shot because Washington Nationals coverage (or lack thereof) has become such a sore point for folks here in DC. But it gives some modest hope that (at least for the moment) the FCC has some genuine interest in actually enforcing the laws already on the books that limit the ability of cable operators to abuse their market power.

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