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Cable Chief Slams FCC Chief

Alan Breznick

Lashing out at cable's chief regulator, National Cable & Telecommunications Association (NCTA) president Kyle McSlarrow blasted the Republican-led Federal Communications Commission (FCC) yesterday for what he termed its "micromanagement" of communications policy and "fundamental misunderstanding" of the cable industry.

In particular, McSlarrow, a former high-ranking federal official appointed by President Bush, took aim at FCC Chairman Kevin Martin, a fellow Bush appointee. Using some of the harshest language that an NCTA president has reserved for an FCC chairman in recent memory, McSlarrow stopped just short of calling Martin a blatant hypocrite, as well as a traitor to the Bush Administration cause of open markets and government deregulation.

"I just think there's a disconnect between the rhetoric of free markets and deregulation and the reality of the proposals that are being proffered by the leadership of the Commission," McSlarrow told reporters in a year-end conference call. "What I see, when you put all of these dots together, is an agenda that really represents one of the most sweeping examples of regulatory micromanagement."

McSlarrow made his comments as the FCC is poised to adopt new video franchising rules that could allow phone companies to gain local cable franchise rights within 90 days of their applications, among other things. If cities and towns did not act within the three-month limit, the telcos would be granted the rights automatically if they already enjoyed public rights-of-way.

Accusing the Commission of favoring the phone companies over cable operators, McSlarrow said he had no problem with the 90-day "shot clock" approach. But he objected to other expected provisions of the new franchise rules, which could also limit the ability of municipalities to impose build-out requirements and other conditions on new video entrants.

"I think it's a proposal that has to be dramatically pared back," he said, hinting that the industry might take legal action if it isn't. "We're not too keen on any proposal that treats us and the telcos differently."

McSlarrow also attacked Martin's efforts to push cable operators to sell cable channels to subscribers on an à la carte basis, rather than in the current cable bundles and tiers. In addition, he lambasted Commission proposals to mandate cable carriage of all broadcasters' digital multicast channels and require public disclosure of contract terms between cable operators and programming networks.

In his one-hour press briefing, the NCTA chief seemed especially enraged about the government's annual cable pricing survey that the FCC is slated to release at its monthly public meeting Wednesday. As usual, the pricing report is expected to show that monthly cable rates have shot up much faster recently than the overall rate of inflation. But, in an unusual move, Martin is expected to use the survey's results to justify the passage of the proposed franchising rules in the name of competition.

Calling the study "almost entirely useless" as the basis for a policy decision, McSlarrow contended that the survey relies on two-year-old data. He also argued that it doesn't take into account digital tier prices, various cable discount programs, and triple-play bundles, as well as price hikes by satellite TV and telco TV providers.

"So it's data but it's not particularly useful data," he said. "The bottom line is that value and price have only gotten better for our customers. That is a much sounder basis for policy proposals than outdated and manipulated statistics."

FCC officials defended the Commission's actions against McSlarrow's verbal assaults. They asserted that Martin is seeking to empower market forces by encouraging telco video competition with cable, pushing the unbundling of cable monthly bills, and pursuing cable carriage of broadcasters' digital multicast channels, among other things.

McSlarrow, however, remained unstinting in his criticism. In his remarks, he also slammed the Commission for keeping the price study "under wraps" for nearly a year and leaking report data that reflects unfavorably on cable.

Asked by a reporter why Martin might have it "out for cable," McSlarrow declined to address the chairman's motivation. But he said the agency seems to be looking at the industry through a 10-year-old or 20-year-old prism, when cable operators were considered far more sluggish competitors than they are today.

"You have to ask him," McSlarrow said. "I just think there's a fundamental misunderstanding of what the cable industry is doing. It's almost [as though] they are viewing it through a time warp."

— Alan Breznick, Site Editor, Cable Digital News

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Michael Harris
Michael Harris
12/5/2012 | 3:31:47 AM
re: Cable Chief Slams FCC Chief
Regardless of who's pocket you think the FCC is in, it's hard to argue that Cable co's aren't enjoying a monopoly. My cable bill has doubled in the last 10 years with no change in services. Not so with my phone bills. Mr McSlarrow just wants to maintain the regulatory barriers to keep his monopoly profit margins as long as possible.

Lobbyists are lobbyists, that's for sure, and must be taken with a grain of salt. That said, isn't the definition of "monopoly" a market without competition? Don't you have the choice to walk into any electronics store, buy a satellite dish, and get virtually every video channel offered by your cable provider?

A key reason video prices have soared over the last decade -- for both cable and satellite -- are skyrocketing licensing fees from programming networks like ESPN. Phone service prices have fallen under pressure from VoIP, mobile and competitive cable phone services.

12/5/2012 | 3:31:55 AM
re: Cable Chief Slams FCC Chief
Regardless of who's pocket you think the FCC is in, it's hard to argue that Cable co's aren't enjoying a monopoly. My cable bill has doubled in the last 10 years with no change in services. Not so with my phone bills. Mr McSlarrow just wants to maintain the regulatory barriers to keep his monopoly profit margins as long as possible.
12/5/2012 | 3:31:55 AM
re: Cable Chief Slams FCC Chief
The FCC is too busy trying to re-create the old Bell monopoly to pay attention to cable providers. Hand the kitchen sink to ATT, over fellow commissioner's dead bodies, while throwing stones at cable co's. What is wrong with that? Maybe they are behind on their RNC dues or something.
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