Policy

ACA’s Polka Revved Over Retrans

4/11/2011 12:01 AM Eastern

WASHINGTON — The American Cable Association, which represents roughly 900 small and midsized
independent cable operators, holds its annual Summit in Washington this week (April 11-13), a chance
for members to get face time with each other and wiith the regulators and legislators who oversee their
business.

ACA president Matt Polka talked with Multichannel News Washington bureau chief John Eggerton
about the key issues facing his constituents, first and foremost retransmission consent for broadcast-TV stations and the
regulatory vehicle that the FCC has provided to move reform of that regulatory regime past the talking stage. An edited
transcript follows:

MCN: The ACA was among those whose petition to the
Federal Communications Commission for changes promoted
the agency’s current retransmission-consent reform
rulemaking proposal. Give us a sense of how important it is
for the FCC to get that issue right.

Matt Polka: There are a couple of
things. First, we are very pleased that
the notice of proposed rulemaking
even exists because it validates our
long-held views that the rules need
to be reviewed. We will be more than
happy to come to Washington to tell
them about retransmission consent
in their markets.

It is also important because this is a
retrans [negotiations] year, where one
[contract] cycle ends and another one
begins. The impact of the FCC rulemaking
could be important even as it
relates to the presence of that rulemaking
while negotiations are ongoing.

Obviously, this is the most important issue our members
face. It is the one issue they have come to Washington to talk
about, wishing that there was a congressional or regulatory
vehicle, which there is now. We think that with the questions
the commission has asked, they can get it right and will look at
good-faith negotiations and how those rules can be strengthened.
We were very pleased they asked questions about joint
negotiations with broadcasters in a marketplace for retransmission
consent, and even on price discrimination. They are
asking the right questions, and we are going to help them get
it right by giving them the data and analysis, the stories and
facts that show that retransmission consent definitely harms
consumers and it is time to change the rules.

MCN: Were you surprised that the FCC recommended
getting rid of syndicated exclusivity and network nonduplication
rules, which bar cable operators from airing most
network and syndicated programming via out-of-market TV
stations?


MP: No. In fact, when you look at the rulemaking itself, a
footnote specifically incorporates by reference ACA’s petition
for rulemaking filed back in 2005, where we specifically
raised those issues and what we called a ‘right to shop.’ The
FCC incorporated that petition as part of this rulemaking.
Since then, any number of groups have talked about the
harm to consumers as s result to what is the new monopoly
marketplace created by nonduplication and syndex.

MCN: What are the main things the
FCC could do to get retransmission
consent right?

MP: First, a ban on joint negotiations
by broadcasters in a market. The FCC
has allowed local marketing agreements
and shared-services agreements,
which on their face would be
great except when the broadcasters
use those LMAs to say, ‘Why don’t we
go ahead and engage in collusive bargaining,
too, while we are at it?’

Second, we are going to ask the FCC
to examine the price discrimination
that our members face. I can’t say that
the agency may be ready to address that
issue yet, but I think they need to get the data to show what
kind of rates our members are smaller providers are paying
in smaller markets and rural areas versus the larger providers
and ask if this is something beneficial to consumers. I think
the answer to that is no.

Third, I think they need to look at the [network nonduplication]
rules [barring pay TV providers from carrying outof-
market broadcast-network affiliates]. I think they need to
realize that what has occurred in the marketplace is that, in
many cases, our members are permitted by law to carry outof-
market stations, and FCC regulations and the law would
permit them to do that because either they are small, distant,
or significantly viewed, but the provisions of the network-affiliate
contract prevent that. Even where a station can and would
like to grant retransmission consent, the network prevents it.

MCN: So, the FCC should disallow those provisions in
network-affiliation contracts?

MP: Why should the network prevent carriage of a station
that the law allows a cable operator to carry? That is maximizing
the monopoly of the local station and network to extract
even greater retransmission consent fees. If the cable
operator has the right, Big Brother network should not step
in to say no.

MCN: So, just changing the FCC rules isn’t enough?

MP: It may not be. Th ere may be some things the commission
has to do to acknowledge limitations in its statutory
authority and to say to Congress that to get this right there
needs to be further action. We hope they will do that as well.

MCN: What are other key issues?

MP: Retrans is our focus, but most of our issues will primarily
be at the FCC this year. Universal service/intercarrier
compensation is a huge issue and transitioning the
high-cost USF fund [Universal Service Fund, which subsidizes
landline phone service to rural areas] to a broadband
fund. Is this a fund that will be technology-neutral?
Will our members have access to it? Will it be properly
and narrowly focused on unserved areas, rather than
underserved areas where the fuzziness of the rules have
allowed for taxpayer funds to overbuild our members?

We spent a lot of time on that issue. As you can imagine with
900 companies, 40% of whom are traditional telephone-based
companies, we have a lot of difference of opinion on USF and
intercarrier comp.

In our comments, which will be filed April 18, we are asking
the FCC to eliminate waste, fraud and abuse; and if someone
is operating in an area without USF funds, another provider
shouldn’t be able to get USF funds for that same area. And last,
but not least, we are going to suggest giving some additional
time to smaller phone carriers with 100,000 access lines or
less to use the fund for traditional service before they are fully
transitioned into the broadband fund.

We will also be involved in the AllVid proposal [for universal
conditional access to pay TV content], the CALM [Commercial
Advertising Loudness Mitigation] Act [which sets an
FCC standard for volume on locally inserted commercials],
the video description [notice of proposed rulemaking] and
what that could mean in terms of additional equipment and
other requirements. We will be keeping an eye on the Copyright
Office’s notice of inquiry on the compulsory license and
whether or not it should be phased out.

September