By: Shirley Bloomfield and Chip Pickering
Last month, Comcast and Time Warner Cable announced their decision to walk away from the proposed merger that would have created the largest cable and broadband Internet company by millions of subscribers. The termination of the merger agreement marked a huge victory not only for consumers, but also for the hundreds of rural telecommunications providers, competitive communications service providers and supplier partners we represent. We couldn’t be more pleased that the FCC and the Department of Justice heard our concerns and reaffirmed their commitment to promoting innovation and effective competition in the marketplace.
To foster more choice in rural America, more work needs to be done to ensure that all providers continue to have the opportunity to compete and offer high-quality broadband and video services to their subscribers. Our members—small and midsize providers that operate in the most rural markets to the biggest cities—consistently raise concerns about their ability to obtain video content at affordable rates and under reasonable terms and conditions.
In fact, a recent survey of NTCA–The Rural Broadband Association members found that 99% of survey respondents cited access to reasonably priced programming as a chief business concern. This has a real impact for those providers offering broadband and video service, especially those building out and upgrading their networks. Access to content is critical for broadband providers as most consumers still want to purchase television programming in addition to broadband.
Unfortunately, in today’s market, content providers’ offerings are often “take it or leave it,” with high fees, automatic escalation clauses and the tying of undesired programming with desired programming. One study recently showed that programming pricing has increased 10%–15% annually in the last five years. This has made it very difficult, if not impossible, for video providers to offer reasonably priced video packages that consumers want.
For decades, large companies have rigged the regime for obtaining video content. Today, these giants use market power to defy consumer choice, the public interest and the effective working of a video marketplace, enabling broadcasters and other programmers to extract ever-increasing fees from local video providers. Ultimately, it is consumers who are held hostage by these demands, as they pay the price in increased rates and/or the loss of programming and access to online content.
Costs and the questionable negotiation practices of content providers make offering subscribers video service extremely challenging. Denying the merger was a huge first step, but now is the time to build on that momentum and level the playing field.
Giving video providers the freedom to purchase broadcast content from neighboring markets would inject much-needed competitive market forces into a tired and protectionist retransmission consent regime, thereby enabling providers to pass cost savings on to consumers. Creating a standstill provision would also preserve consumers’ access to a broadcast signal while negotiations or dispute resolution proceedings are underway.
Transparency is a real concern too. Well-functioning markets depend upon buyers and sellers making informed decisions among a variety of options. But today, there is little to no transparency as content providers demand mandatory nondisclosure provisions to keep their content prices hidden from competitors and consumers. Video content providers should be prohibited from using such provisions to frustrate the operations of the marketplace.
Finally, it’s time to break the bundle. Regulators need to put the control back in consumers’ hands by eliminating forced tying and tiering by all content providers. These practices unnecessarily increase costs and make it nearly impossible for providers to offer tailored, affordable service packages.
Consumers filed more than 700,000 comments with the FCC urging the denial of the Comcast-Time Warner Cable merger—evidence of strong support for action in support of video competition and innovation. The momentum is moving in the right direction, and we need to keep the ball rolling.