& cplSiteName &

FCC Tackles Retrans Reforms

Alan Breznick
4/1/2014
50%
50%

Throwing its regulatory weight around, the FCC is moving to curb some of the power that broadcasters have in striking retransmission-consent deals with pay-TV providers.

In an order issued Monday, the Federal Communications Commission (FCC) banned two large broadcast TV stations in the same local market from banding together to negotiate retransmission-consent deals with a pay-TV provider. The ban applies if the two stations rank among the top four broadcasters in market audience share and don't share the same owner.

At the same time, the FCC's adopted a notice of proposed rulemaking (NPRM) to consider possible changes to the overall retransmission-consent rules. Although the Commission's power to modify the Congressionally set rules is limited, the agency will weigh whether it should "provide more guidance" to broadcasters and pay-TV providers on "good-faith negotiation requirements," give better advance notice to consumers about "possible service disruptions caused by impasses in retransmission-consent negotiations," and eliminate its network non-duplication and syndicated exclusivity rules.

The FCC's twin actions come after cable operators, satellite TV providers, and other pay-TV operators have complained strenuously to the Commission about broadcaster practices in retransmission-consent negotiations. Such negotiations have become tougher, louder, and uglier in some cases as retransmission-consent fees have soared in recent years, jumping from a mere $28 million in 2005 to $2.4 billion in 2012.

In particular, the American Cable Association (ACA) , which is holding its annual summit in Washington, D.C. this week, has lobbied hard for more restrictions on the broadcasters because of the impact on smaller and independent cable operators. But large cable companies, such as Time Warner Cable Inc. (NYSE: TWC), have called for regulatory reforms too after bruising battles with large broadcasters like CBS Corp. (NYSE: CBS). (See TWC, CBS End Their Feud.)

In a prepared statement, FCC Chairman Tom Wheeler said the Commission was imposing the ban on joint negotiations by the largest TV stations in a market to restore "fair and effective competition of retransmission-consent negotiations, to the ultimate benefit of consumers." Although Congress intended that the deals be negotiated on a one-to-one basis, he said, larger stations have increasingly banded together in the negotiations to gain higher carriage fees from pay-TV providers, leading to higher prices for consumers.

Wheeler, who signaled his position on the issue in a blog post early last month, cited one study indicating that joint negotiations by the largest stations increased carriage fees from cable systems by 20% to 40%. He argued that such carriage fee increases put "upward pressure on the prices" paid by cable subscribers, leading to higher monthly bills.

"The action we take to address joint negotiation by broadcasters will return retransmission-consent to one-on-one negotiations as Congress intended, rather than many against one," Wheeler said. "This should benefit the consumer by removing the leverage of collusion to inappropriately drive up retransmission-consent fees and with them consumer prices."

Not surprisingly, both the ACA and the National Cable & Telecommunications Association (NCTA) , which represents the big MSOs and cable programmers, hailed the FCC for instituting the ban on joint station negotiations, calling it long overdue. Just as predictably, the National Association of Broadcasters (NAB) blasted the move, noting that the FCC has never found a local station to have negotiated in bad faith.

It's not clear just how much of an impact the FCC's moves will have on the retransmission-consent market. But the NPRM will undoubtedly generate plenty of fiery arguments on both sides of the issue as the broadcasting and pay-TV industries continue to jockey for position.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/2/2014 | 2:29:30 PM
Re: FCC Zebras
There used to be some solid cross-ownership rules in place but we got rid of most of them because, you know, businesses can always be trusted to do the right thing.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
4/2/2014 | 1:17:42 PM
Re: FCC Zebras
No doubt the cross-ownership issue is huge. It reminds me of the concerns in the rabbit ear antenna days about control of the airwaves. Concentration of distribution and content can make it harder for other major networks get the same treatment as NBC does from Comcast.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/2/2014 | 1:03:42 PM
Re: FCC Zebras
In the bigger picture, the content conglomerates are extracting way more from video service providers than their products warrant (i.e., if you want our good channel, you have to take these dozen crappy ones also). Comcast to some extent is protecting its content assets by buying up more cable footprint. In fact, I'd argue that any review of the Time Warner Cable acquisition should focus more on cross-ownership (network and media) instead of just looking at the network side of things. Late entries to the video services business clearly are having second thoughts about the move (the margins are just too weak, and the service provider gets blamed for the unbridled greed of the media companies). OTT will happen because the video services business is turning out to be a loser for network operators.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
4/2/2014 | 12:00:01 PM
Re: FCC Zebras
Though these issues could accelerate some OTT movement, but before more people "cut the cord," they will want to get the same channels they can get on cable as well as the same Internet speeds. The additional I would need to pay for sports and questionable satellite transmission speeds keep me and several others from making the switch. 

Even with rising monthly fees, cable right now is still the best option for many (though the numbers are certainly dwindling). Luckily for me, I haven't missed anything yet due to the retransmission battles. But those are sure to accelerate. It reminds me of the days of all home NFL games being blacked out in the local market (yes, some of us are old enough to remember that).
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/1/2014 | 2:23:21 PM
Re: FCC Zebras
Yes, and this is why some of the newer entries in conventional video services are now much more skeptical of their prospects. Because the money is not working out so well for the middle entity, the migration to OTT is likely to accelerate. That is not good news for the content providers, who have gotten used to collecting money from video service providers for increasingly cheap and crappy content. Tacking more rules and regs onto a system that is fast becoming unworkable at best doesn't solve the problem and at worst only adds to it.
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
4/1/2014 | 2:17:49 PM
Re: FCC Zebras
This seems to be to be a matter of trying to prevent broadcasters from killing the goose that lays their golden eggs. It may be hard to summon much sympathy for Comcast, TWC or AT&T, but there are dozens of smaller cable and telcoTV providers who are literally losing money providing video services because of the outrageous growth in re-transmission fees.

Those same broadcasters then make their content available on-line for viewing after it has aired. So the pay-TV providers aren't in a position, many times, to pass along the persistent fee increases to their customer base.

And that customer base blames the provider for any fee increases, when the cost of content is often responsible. 

I'm not saying the FCC's approach is the best one but some examination of the current state of affairs makes sense. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/1/2014 | 12:53:40 PM
FCC Zebras
Not to be outdone by the NFL, the FCC decides to address faulty rules by ... creating yet more faulty rules.
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


The Citrix NetScaler mobile gateway is an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, NetScaler can be deployed on any hypervisor, on a ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
LRTV Custom TV
Mastercard: 2 Billion Adults 'Trapped' in Cash Economy

3|21|17   |   03:51   |   (1) comment


Despite advances made in the last several years, two billion adults around the world are trapped in a cash economy and lack what we take for granted -- a safe way to receive, save and use money. Shamina Singh, executive vice president of sustainability and president of the Mastercard Center for Inclusive Growth, chats about how Mastercard is developing new ways to ...
LRTV Custom TV
Mastercard: Payment From Every Device

3|21|17   |   5:55   |   (0) comments


A world where everything and everyone is connected creates new points of interaction for commerce. These digital experiences cannot be developed in isolation and instead require an ecosystem to drive mass consumer and enterprise adoption and create better consumer engagement. Predicting when that growth will happen is difficult, but always keeping the end user in ...
LRTV Interviews
InterDigital's Role in the 5G, IoT Era

3|21|17   |   05:47   |   (0) comments


Alan Carlton, managing director and VP for Europe at InterDigital, talks about the company's role in 5G projects in Europe and the prospects for the company in the IoT market.
LRTV Interviews
Lessons Learned From Digital Transformation

3|21|17   |   05:51   |   (0) comments


Ravi Palepu, global head of Telco Solutions at Virtusa, talks about some key takeaways from telco digital transformation experiences during the past couple of years.
Women in Comms Introduction Videos
NetNumber's CMO Shares Her Diversity Do's

3|21|17   |   3:19   |   (2) comments


The telecom industry is transforming the world, and diversity plays a critical role in driving the innovation behind it. NetNumber CMO Kim Gibbons shares why diversity and being authentic is a do amidst all the don'ts women in comms often hear.
LRTV Custom TV
Software-Driven Architecture for 5G & IOT

3|20|17   |   1:56   |   (0) comments


We present Heavy Reading's Jim Hodges's report from Mobile World Congress -- where operators and vendors are working to bring a variety of technologies together to make virtualization a reality in the era of 5G and IoT.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: Italy First Pasta the Post for 5G
Paul Rainford, Assistant Editor, Europe, 3/17/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
5G Faces a Marathon, Not a Sprint
Iain Morris, News Editor, 3/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.