Panel Advises FCC Access to Content Contracts
SAN FRANCISCO -- The key to addressing issues around the high cost of content is allowing regulators to gather accurate data about those costs, according to an Incompas panel here today. But that information may not be easy to get.
Pay-TV providers, particularly smaller telco and cable operators, say content owners, including local broadcasters, are driving up the cost of content to levels that destroy any possible profits and potentially drive up the cost of their services to the point where consumers cut the cord. But one condition of the contracts that govern those costs is that they are secret. So it's not generally known, for instance, how big a discount larger network operators are getting over smaller and newer market entrants, or how rapidly costs are going up.
At the very least, the contract information needs to be shared on a confidential basis with regulators, to inform their decision-making as to whether change is needed, says Milo Medin, vice president of access services for Google (Nasdaq: GOOG).
"The FCC should get contracts from everyone, and really get the data," he said. Volume discounting was allowed by Congress, he noted, so maybe it is Congressional staff members that should access the contract information. Either way, Medin said, it could be done confidentially, without public release.
"Data should drive the decision-making," he said. "Having access to that information is critical for policy makers to take action."
Jill Canfield, vice president of legal and industry and assistant general counsel for the NTCA - The Rural Broadband Association , says her small telco members aren't allowed to share details of their content acquisition contracts with even the association. She agreed with Medin that it would be helpful to regulators to at least understand what these companies are up against.
"These small companies are paying 100% increases and they aren't allowed to tell us what they are paying," Canfield said. "Plus they are forced to take channels they don't want. It is more than just the price. When you look at where my members serve, it's the rural areas."
The association's research shows that a quarter of its members serve areas in which 90% or more of subscribers cannot get over-the-air broadcast video, so they have no option for TV other than to pay for content, she added. "The people who need it most pay the most for content," Canfield noted.
The panel members had other issues. The fact that pay-TV providers can't sell services à la carte, and are being forced to buy content they don't want in order to get things they do want are two big hurdles.
Earlier in the day, Gigi Sohn, counselor to FCC Chairman Tom Wheeler, had indicated the commission is ready to act, particularly against practices deemed to be beyond "good faith negotiating." (See FCC's Sohn: We're Still Fighting for Competition.)
— Carol Wilson, Editor-at-Large, Light Reading