PITTSBURGH, April 29, 2020 – ACA Connects explained to the Federal Communications Commission that the fixed broadband marketplace is substantially competitive now and likely to grow even more competitive in the future. The trade group also called attention to the sobering reality that the video market in general, and the retransmission consent marketplace in particular, is completely dysfunctional, marked by rate hikes, signal blackouts, and even the shutdown of rural cable systems priced out of the market by avaricious TV station owners and video programmers.
ACA Connects’ observations came in response to a notice in which the FCC sought comment on competitive issues and trends in communications markets to inform the agency’s development of the next biennial Communications
Marketplace Report due out in 2020. On broadband matters, ACA Connects noted that that the markets in which ACA Connects members provide broadband Internet access service are marked by pervasive and growing competition.
“The FCC deserves much of the credit for the strong competitive dynamics that are present in the broadband market,” ACA Connects President and CEO Matthew M. Polka said. “The agency’s efforts in recent years to remove regulatory barriers to deployment have spurred upgrades and network expansion from ACA Connects members and others.”
ACA Connects members invest about $1 billion annual to deploy the most current broadband technologies, including DOCSIS 3.0/3.1 and all-fiber technologies. On a per-megabit basis, ACA Connects noted, consumer broadband prices have fallen at least 50% basis over the past few years.
In the years ahead, ACA Connects members expect to face competition from technologically novel sources, including 5G wireless deployments and low-earth orbit (LEO) satellite constellations, such as SpaceX’s Starlink system.
“While the FCC can further stimulate competition in the fixed broadband marketplace through policymaking that unleashes private investment, we recognize that such measures alone are insufficient to deliver the benefits of broadband to all,” said Polka. “ACA Connects supports well designed government programs, which work in tandem with, and do not undercut, private sector efforts. Government programs should support what is working in the market and intervene only where necessary to meet the remaining issues that the marketplace cannot solve on its own.”
Regarding retransmission consent – which allows TV station owners to demand payment from multichannel video programming distributors (MVPDs), such as cable operators – ACA Connects described in vivid terms the harms being acutely felt by smaller cable operators struggling to cope with TV station owners that have become giants in the field via steady consolidation, sometimes achieved via the outright evasion of FCC local ownership rules.
“Large station groups have grown larger nationally and have evaded the FCC’s media ownership rules to amass duopolies, triopolies and even quadropolies of ‘Big Four’ networks in some markets. They use this leverage to extract outrageous, ever-increasing fees from MVPDs in exchange for ‘must-have’ broadcast programming. In the past year, a few MVPDs have found this situation so untenable they have exited the video business entirely,” Polka said.
ACA Connects noted that retransmission consent has produced rural TV discrimination.
Even though rural cable operators carry fewer retransmission consent signals than their urban counterparts, they pay much more to TV station owners — $93.37 per subscriber, per year on average compared with $70.88 per subscriber, per year for larger cable systems. It turns out, ACA Connects observed, that smaller cable operators are paying 32% more for retransmission consent while carrying 3.5 fewer stations. In the future, the FCC should produce an analysis that controls for the number of signals carried to gain an accurate understanding of the real discriminatory penalty retransmission consent imposes on small and rural cable operators and their customers.
When it comes to cable video programming, ACA Connects noted that vertically integrated entities have the incentive and ability to raise prices in order to harm their MVPD rivals, including ACA Connects members. The trade association cited the AT&T/Time Warner decision as a case in point. There, the presence of a voluntary commitment to submit program access disputes to binding arbitration was cited by the U.S. District Court in upholding the merger.
About ACA Connects: America’s Communications Association: Based in Pittsburgh, ACA Connects is a trade organization representing more than 700 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA Connects’ members work together to advance the interests of their customers and ensure the future competitiveness and viability of their businesses. For more information, visit: https://www.acaconnects.org