In 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 Honorable Thomas Wheeler
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.
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
650 College Road East, Suite 3100
Princeton, NJ 08540
Edward T. Holleran, Jr., Chief Executive Officer
David J. Keefe, Chief Programming Officer
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
5555 Airport Hwy, Suite 110
Toledo, OH 43615
John Gdovin, Executive Vice President and Chief Administrative Officer
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
2300 N Street NW
Washington, DC 20037
Hon. Thomas Wheeler
February 25, 2014
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
3628 S. 35th Street
Tacoma, WA 98409
Kevin Stelmach, General Manager
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
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
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
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
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
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
Joe McCarter, President
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
Mammoth, PA 15664-0135
Michael D. Meek, President/CEO
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
5990 Tiffin Street
Bascom, OH 48809-031
Hon. Thomas Wheeler
February 25, 2014
Steven W. Katka, CEO / General Manager
Albany Mutual Telephone
131 6th Street
Albany, MN 56307
Russ Pankonin, Vice President/Co-Founder
Allo Communications LLC
Imperial, NE 69033
Perry Oster, General Manager/CEO
411 7th Avenue
Langdon, ND 58249
Grier Adamson, Treasurer
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
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