Parks Associates Blog

Monday, November 12, 2007

FCC and NCTA - roll out the bean counters

Today's Wall Street Journal indicates that FCC chairman Kevin Martin may be ready to implement what the Journal calls a "relatively obscure" provision of the 1984 Cable Act to force cable companies to lower the rates that they charge some programmers for access to their lines. The so-called 70/70 provision indicates that the FCC can act to "promulgate any additional rules necessary to promote diversity of information sources" once cable systems with more than 36 channels are available to 70% of households and where 70% of those households subscribe to those services.

There's definitely room for disagreement from the cable side on 1) Whether the 70/70 threshold has been reached and 2) Whether new rules forcing lower fees are necessary. There is no question that the cable operators view the encroachment of AT&T and Verizon into the video services market as a significant threat, and they may have reason to question new FCC rules intended to promote competition where one could argue that - in certain locations - competition is now flourishing.

And, even if the message coming from the FCC is simply about allowing a broader array of content to be able to be carried on cable systems, I would suspect that the MSOs have plenty of reason to argue that this is already being formented, thanks to the dual threat and opportunity posed by the "over-the-top" video services that are now prevalent over broadband connections. In fact, we fully expect cable operators to begin to open up their walled gardens to allow for a wider variety of content to be carried over their broadband pipes, but also still groomed and optmized for a decent viewing experience.

It's a curious time for the FCC to be considering this provision in light of a market that is far more competitive now than at any other time. And, although we don't necessarily credit the cable industry for being consumer advocates, recent battles that they've had with the folks at The NFL Network and The Big Ten Network indicate that they are taking a harder line with new programming where simply passing the cost on to their subscribers may not be an option. We'll have to see where these 70/70 provision conversations lead.


Blogger Ken said...

Good analysis Kurt. Has Martin forgotten that Republicans are supposed to be the party of smaller government (OK, that myth may have been punctured by many other actions over the past decade)? Still, what does he hope to solve with increased regulation of the market place? Is this going to mean a bigger FCC? Will this mean the FCC will create a tariff schedule for programming pricing? Is he just trying to position himself to stay in office if the Democrats take the White House in 2008?

6:04 PM  

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