The American Cable Association and its head, Matthew M. Polka, are concerned that in seeking competitive advantage over some rival distributors, Comcast is harming adoption of broadband and online TV programming combos—thus slowing overall broadband deployment.
Why? The ACA says Comcast is “insisting on contract terms for its popular regional sports networks (RSNs) that require rivals to limit sales of the local TV station basic cable programming tier.”
Polka noted, “Many consumers that want to opt out of the big cable bundle in favor of a less expensive alternative are gravitating to a bundle that includes just the basic cable tier (essentially local TV stations), plus broadband Internet access, and then relying on over-the-top video services to gain access to a more limited amount of cable programming more narrowly tailored to their specific interests.”
To Polka, Comcast “is standing in the way of ACA members that want to help their customers escape the burdens of the big and expensive expanded basic bundle of channels, while at the same time aggressively marketing a bundle of networks very similar to the broadcast basic tier to its own customers through its new ‘Instant TV’ service.”
ACA spelled out its concerns in comments filed Oct. 10 with the FCC in connection with the agency’s 19th “Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming.”
In these comments, ACA claimed the fact that vertical integration—where programming and multichannel video programming distributor (MVPD) networks are commonly owned— continues to pose a threat to competition and consumers.
ACA noted two near-term events that further underscore the need for program access protections: The impending merger between AT&T and Time Warner Inc.; and the expiration on Jan. 20, 2018, by their terms, of program access conditions placed on the Comcast-NBCUniversal merger.
ACA says these merger conditions “provided additional protections beyond the FCC’s program access rules to ensure that Comcast’s rivals have the ability to access Comcast’s must-have programming, including the NBC O&O local broadcast television stations, the bundle of national cable programming networks controlled by NBCUniversal, and RSNs that hold exclusive rights to carry local and regional sports events in many major markets.”
One means for ACA members to help their subscribers avoid having to purchase 50 or more cable programming networks found on the “expanded basic” tier is by offering just the basic tier coupled with broadband Internet access, ACA argues — where online video distributors like Netflix, Hulu and Amazon Prime are available at more attractive price points than the expanded basic tier that is the home of pricey networks such as ESPN, Disney Channel, and Fox News Channel.
By longstanding industry practice, ACA continues, “nearly all cable programmers have agreed to exclude basic cable-only subscribers from so-called minimum penetration requirements, which mandate the percentage of MVPD subscribers that must receive the programming. This allows MVPDs to place the more expensive (and potentially unwanted) cable programming like expensive sports programming on the expanded basic tier while leaving them free to broadly market basic cable-broadband Internet bundles without triggering penalties.”
Comcast, through its licensing agreements for RSNs with a number of ACA members, has “unilaterally decided that ACA members should no longer be able to sell the basic broadcast service tier, coupled with broadband Internet, in a totally unrestricted fashion,” ACA further states.
As a result, an MVPD must either dampen demand for the service by, for example, raising the price of the broadcast basic tier, ACA claims, “or essentially cease to offer a true basic tier/broadband combination that does not include a large number of costly cable programming networks.”
For the ACA, “either outcome will clearly harm consumers and potentially slow the overall adoption of broadband by denying some consumers access to the video/broadband package of services that is most attractive to them.”
ACA is concerned that following expiration of the Comcast-NBCU merger conditions in three months, Comcast will introduce the same sort of practices to licensing agreements for national cable programming networks with the National Cable Television Cooperative (NCTC), the programming-buying arm for hundreds of ACA members.
NCTC’s current agreement is set to expire less than 10 months after the Comcast-NBCU merger conditions sunset.
“Both ACA and NCTC fear that NCTC will be less able to resist Comcast’s unreasonable, anti-consumer and anti-competitive demands without the threat of being able to ask to submit the dispute to baseball-style arbitration to determine fair and reasonable terms and conditions and without the ability to file a program access complaint with the FCC,” ACA noted.
Polka concluded, “The threat that Comcast-NBCU will further expand its use of this practice to licensing agreements for national cable programming networks following the impending expiration of the merger conditions should concern policymakers.”