Cable companies urge Program Access Rules update

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NCTCIn a letter to FCC Chairman Wheeler filed 2/25, executives from 53 companies — including former FCC Commissioner Kathleen Abernathy, now with Frontier Communications — called on the FCC to update its program access rules to include “buying groups,” such as the National Cable Television Cooperative (NCTC), which is used by MVPDs to purchase cable programming.


Under current FCC rules, NCTC is excluded from program access protections based on an FCC-created definition that is out-of-step with market realities. The letter stressed the need for action because of the pending Comcast-Time Warner Cable merger. This transaction, if approved, will result in TWC’s cable systems becoming vertically integrated with the Comcast-NBCU networks, significantly raising the footprint of subscribers served by a vertically integrated cable operator, noted the American Cable Association.

The letter:

The Honorable Thomas Wheeler

Chairman

Federal Communications Commission

445 12th Street, NW

Washington, DC 20554

Dear Chairman Wheeler:

As small and medium-sized multichannel video programming distributors (“MVPDs”), we are writing to express alarm about the increasing level of vertical integration between large programmers that own popular national networks and large cable operators we compete against head-to-head.1 Unless the program access protections that Congress intended are in place to mitigate the incentive and ability of cable-affiliated programmers to charge our companies discriminatory fees, consumers and the competitive pay-TV market overall stand to be harmed. This trend toward vertical re-integration requires the immediate attention of policymakers, particularly in light of Comcast Corp.’s $45 billion agreement to merge with Time Warner Cable (“TWC”).

The latest outbreak of vertical integration started in early 2011 when Comcast acquired NBC Universal (“NBCU”), a deal bringing together the nation’s largest cable operator, Comcast, with one of the nation’s largest programmers, NBCU. Nationally distributed networks owned or effectively controlled by Comcast-NBCU include USA Network, CNBC, Golf Channel, Syfy, Bravo, E!, MSNBC, and NBCSN, among others.

The trend continued in early 2013 when Liberty Media purchased a controlling interest in the nation’s fourth largest cable operator, Charter Communications. Because John Malone holds a substantial interest in Charter through his stake in Liberty Media, as well as interests in Discovery Communications and Starz, all of the companies are now effectively operated under unified control. National cable programming networks that are vertically integrated through Malone include: Discovery Channel, TLC, Animal Planet, OWN: The Oprah Winfrey Network, and the premium service Starz.

The cable operators and programmers involved in these recent deals do not comprise the entire universe of programming that is cable-affiliated. For instance, the AMC Networks, which include AMC, home of the hit series “The Walking Dead,” are also cable-affiliated through the Charles F. Dolan family that effectively controls Cablevision.

1 Each of the undersigned is an MVPD with three million or fewer subscribers, is a member of the National Cable Television Cooperative, and has a competitive overlap of at least 10% with at least one of the six largest cable operators affiliated with a national cable network: Comcast, Time Warner Cable, Charter, Cox, Bright House, and Cablevision.

Lawmakers have long been concerned about the perils of vertical integration in the cable industry. In 1992, Congress adopted the program access rules to foster and protect competition in the MVPD marketplace by preventing cable operators that are vertically integrated with programmers from attempting to disadvantage MVPDs, including their buying groups, by overcharging them for programming. Conditions imposed on the Comcast-NBCU deal by the Commission and the Department of Justice in 2011 demonstrate that policymakers remain concerned about the incentive and ability of a vertically integrated cable operator to disadvantage other MVPDs in the sale of cable programming.

It is likely the cable industry soon will become even more vertically integrated under the Comcast-NBCU-TWC merger. This transaction, if approved, will result in TWC’s cable systems becoming vertically integrated with the Comcast-NBCU networks, significantly raising the footprint of subscribers served by a vertically integrated cable operator.

Given that we have entered an era of renewed vertical integration, it is more important than ever that the Commission carry out its statutory mandate to protect competition and consumers against discrimination in the sale of cable-affiliated programming. Accordingly, the Commission should act on the nearly two-year-old request by the American Cable Association (“ACA”) to close a loophole in its program access rules that has left our companies and other small and medium-sized MVPDs with significantly less protection from cable-affiliated programmers than Congress intended.

Nearly every small and medium sized MVPD – a group that numbers nearly 900 companies, including the undersigned – purchase the bulk of its programming through a buying group called the National Cable Television Cooperative (“NCTC”). Although Congress explicitly instructed the Commission to adopt program access rules that provide protection to buying groups, the agency has failed to carry out this statutory directive by defining a “buying group” in a manner that effectively excludes NCTC. Because NCTC has no means of utilizing the program access rules for redress against discrimination, our companies, and all other NCTC members, have essentially no protection from cable-affiliated programmers, in stark disregard of Congress’ intent.

In response to ACA’s highlighting this issue, the Commission initiated a rulemaking well over a year ago, tentatively concluding that its definition of a “buying group” needs to be modernized to include NCTC, and sought comment on a couple of related issues meant to ensure cable-affiliated programmers stay true to the intent of the rules. ACA has since made repeated requests of the FCC to act on this rulemaking. Yet, as the Commission soon considers whether to approve one of the largest vertical cable mergers ever, involving about 12 million TWC customers, small and medium-sized MVPDs like us are left waiting and wondering whether we’ll ever be given the full protections that Congress intended.

As the trend toward vertical integration increases, so will grow the likelihood that our companies, and hundreds of other small and medium-sized MVPDs that depend upon NCTC, will be treated in a discriminatory manner. With the recent increase in vertical integration combined with the likelihood of yet more integration to come through the Comcast-NBCU-TWC transaction, it is more important than ever that you call for a vote in the Commission’s pending rulemaking and modernize the agency’s rules to ensure that small and medium-sized MVPDs have the protections that Congress intended.

Thank you for your consideration.

Respectfully submitted,

 

Colleen Abdoulah, Chief Executive Officer and Chairwoman

Wide Open West Networks LLC

7887 E. Belleview Avenue, Suite 1000

Englewood, CO 80111-6007

 

Jim Holanda, Chief Executive Officer

RCN

650 College Road East, Suite 3100

Princeton, NJ 08540

 

Edward T. Holleran, Jr., Chief Executive Officer

David J. Keefe, Chief Programming Officer

Atlantic Broadband

1 Batterymarch Park, Suite 405

Quincy, MA 02169-7484

 

Steven B. Weed, CEO

WaveDivision Holdings / Wave Broadband

401 Kirkland Parkplace, Suite 500

Kirkland, WA 98033

 

Brad Mefferd, Chief Administrative Officer

Buckeye CableSystems

5555 Airport Hwy, Suite 110

Toledo, OH 43615

John Gdovin, Executive Vice President and Chief Administrative Officer

Grande Communications

401 Carlson Circle San Marcos, TX 78666

 

Gary S. Jones, President

Northland Communications Corporation

101 Stewart St., Ste 700

Seattle, WA 98101

Kathleen Q. Abernathy, EVP External Affairs

Frontier Communications

2300 N Street NW

Washington, DC 20037

Hon. Thomas Wheeler

February 25, 2014

Page 4

 

Ted Heckmann, Managing Director-Regulatory & Government Affairs

Cincinnati Bell Extended Territories LLC

221 E 4th Street

Cincinnati, OH 45202

Andrew S. Petersen, Vice President External Affairs and Corporate Communications

TDS Baja Broadband, LLC

525 Junction Road

Madison, WI 53717

 

Michael Hagg, CEO

Horry Telephone Cooperative, Inc.

PO Box 1820

Conway, SC 29528

 

Michael Gottdenker, Chairman & CEO

Hargray CATV Company, Inc.

PO BOX 5986

Hilton Head, SC 29938

 

Kathryn S. King, Senior Counsel & Privacy Officer

EPB Fiber Optics

10 West M.L. King Blvd.

Chattanooga, TN 37422

Tenzin Gyaltsen, General Manager

Click! Network

3628 S. 35th Street

Tacoma, WA 98409

 

Kevin Stelmach, General Manager

Metronet

8837 Bond Street

Overland Park, KS 66214

Benjamin A. Lovins, SVP Telecommunications Division

Jackson Energy Authority

119 East College Street

Jackson, TN 38302

 

David Pratt, Director of Video

Arvig

150 2nd St. SW

Perham, MN 56573

Jennifer Gilliam, Programming Coordinator

Volunteer Wireless, LLC

311 N. Chancery St.

McMinnville, TN 37110

 

Lana Eccles, Product Manager – Video

Enventis Telecom, Inc.

221 E. Hickory Street

Mankato, MN 56001

Terry Huval, Director

Chad M. Governale, Contracts, Rates, Regulatory Compliance

Lafayette Utilities System / LUS Fiber

1314 Walker Road

Lafayette, LA 70506

Hon. Thomas Wheeler

February 25, 2014

Page 5

 

Hank Blackwood, Chief Technical Service Officer

Dalton Utilities / OptiLink

1200 V.D. Parrot Parkway

Dalton, GA 30722

Rolan Honeyman, Business Development Manager

Consolidated Cable Vision, Inc.

PO Box 1408

Dickinson, ND 58602

 

Ernest Villicana, Executive Director Video Content Programming & Packaging

Hawaiian Telcom

1177 Bishop Street

Honolulu, HI 96813

Christopher A. Dyrek, President

Cable America Missouri LLC

7822 E. Gray Road

Scottsdale, AZ 85260

 

Mark A. Taylor, Senior Product Manager

Lumos Networks

One Lumos Plaza

Waynesboro, VA 22980

Jerry Heiberger, General Manager

Alan Severson, Customer Service Supervisor

Interstate Telecommunications Coop., Inc.

312 4th Street W

Clear Lake, SD 57226

 

John C. Easton, Director of Public Services

City of Wadsworth

120 Maple Street

Wadsworth, OH 44281-1825

 

James J. Kail, President & CEO

Laurel Highland Television Company

PO Box 168

Stahlstown, PA 15687

 

William Bottiggi, General Manager

Braintree Electric Light Department / BELD Broadband

150 Potter Road

Braintree, MA 02184

Paul H. Beckhusen, Director

Coldwater Board of Public Utilities

1 Grand Street

Coldwater, MI 49036

 

Bill Eckles, Chief Executive Officer

BEVCOMM

123 W 7th Street

Blue Earth, MN 56013

Chad Lawson, Broadband Network Manager

Murray Electric System

401 Olive Street

Murray, KY 42071

Hon. Thomas Wheeler

February 25, 2014

Page 6

 

Joe McCarter, President

RTC Communications

244 North Main Street

Montgomery, IN 47558

Brian Skelton, General Manager

Tullahoma Utilities Board

901 S. Jackson

Tullahoma, TN 37388

 

Dennis K. Cutrell, President

Citizens Cable Communications

Route 982

Mammoth, PA 15664-0135

 

Michael D. Meek, President/CEO

PES Energize

128 S. First Street

Pulaski, TN 38478

 

Kenneth Johnson, General Manager

Conneaut Telephone Co. / CableSuite 541, Inc.

224 State Street

Conneaut, OH 44030

 

Gene W. Putnam, Product Manager

SRT Communications, Inc.

PO Box 2027

3615 N. Bdwy.

Minot, ND 58702-2027

 

Randy Grogan, Assistant Manager

Ballard Rural Telephone Cooperative Corp.

PO Box 209

LaCenter, KY 42056

 

Frankie Cagle, CEO & General Manager

Randolph Telephone Membership Corporation

3733 Old Cox Road

Asheboro, NC 27205

 

Ronald Charlton, President

Southern Cable Communications

2101 S. Fraser Street

Georgetown, SC 29440

 

Tom W. Maroney, Chief Executive Officer

Halstad Telephone Company

345 2nd Avenue W

Halstad, MN 56548-0055

 

Bart Olson, President

Merrimac Communications Ltd.

327 Palisade Street

Merrimac, WI 53561

 

Kenneth Miller, Manager

RTEC Communications, Inc.

S732 County Road 20B

Ridgeville, OH 43555

 

Dave Fox, President

Westphalia Broadband Inc.

109 East Main Street

Westphalia, MI 48894

 

Donna Siebenaller, Assistant Manager

BTC Multimedia

5990 Tiffin Street

Bascom, OH 48809-031

Hon. Thomas Wheeler

February 25, 2014

Page 7

 

Steven W. Katka, CEO / General Manager

Albany Mutual Telephone

131 6th Street

Albany, MN 56307

Russ Pankonin, Vice President/Co-Founder

Allo Communications LLC

610 Broadway

Imperial, NE 69033

 

Perry Oster, General Manager/CEO

United Communications

411 7th Avenue

Langdon, ND 58249

 

Grier Adamson, Treasurer

HTC Communications

75 Main Street

Hickory, PA 15340

 

Jon Scott Shilling, Vice President

Bay Country Communications

502 Maryland Avenue

Cambridge, MD 21613

 

Mark Irish, President

LaHarpe Video & Data Services Co., Inc.

104 N. Center Street

La Harpe, IL 61450

 

Rich Ellison, Network Service Manager

NDTC

211 22nd Street NW

Lake, ND 58301

cc: Commissioner Mignon Clyburn

Commissioner Jessica Rosenworcel

Commissioner Ajit Pai

Commissioner Michael O’Rielly Gigi Sohn, Special Counsel for External Affairs

Maria Kirby, Legal Advisor, Office of the Chairman

William Lake, Bureau Chief, Media Bureau


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Carl has been with RBR-TVBR since 1997 and is currently Managing Director/Senior Editor. Residing in Northern Virginia, he covers the business of broadcasting, advertising, programming, new media and engineering. He’s also done a great deal of interviews for the company and handles our ever-growing stable of bylined columnists.