Forced Bundling, Penetration Requirements, And Other Demands Prevent Smaller Cable Operators From Offering More Independent Programming
Pittsburgh, PA. March 31, 2016 —The American Cable Association told the Federal Communications Commission that large media conglomerates hinder access to independent video programming by imposing forced bundling requirements, penetration obligations, and other harmful business models.
ACA set forth its views in comments filed yesterday in the FCC’s Notice of Inquiry on Independent Programming, an official examination to address systemic problems in the cable programming market that hinder access to independent programming.
ACA said that the FCC must address practices by large players, such as forced bundling and penetration requirements, not only because they harm ACA members and their subscribers, but also because they threaten diversity. Among other things, ACA said:
- Forced bundling takes away valuable capacity that low-bandwidth systems could otherwise use for independent programming (or for broadband, with which subscribers could access independent programming). It also raises programming costs, making it more difficult for ACA members to afford independent programming;
- Penetration requirements force ACA members to create a bloated and expensive “Super Expanded Basic” tier filled with unwanted programming. This makes it more expensive for subscribers to obtain independent programming, which is often found on specialty tiers. It also makes it impossible for ACA members to offer a “slim bundle” of traditional programming along with Internet video;
- Most-favored nation clauses (or MFNs) that large distributors demand of independent networks can prevent small cable operators from carrying such networks; and
- Attempts to impose programming fees on Internet access (such as the ESPN3 model) could raise the price of broadband, making it more expensive for consumers to access independent programming thereby.
“ACA members share the FCC’s goal to increase programming diversity,” ACA President and CEO Matthew M. Polka said. “These members represent rural communities, and it makes perfect sense for them to carry independent cable networks – especially those that center on rural life.”
Polka illustrated his point by noting that many ACA members with capacity and financial constraints want to support a channel with a rural profile, such as the World Fishing Network. But they can’t because large programmers make them carry channels like The Esquire Network, which targets a more upscale, affluent, urban-dwelling environment. Polka also pointed to the SEC Network, which is bundled with ESPN. Because of this bundling, small cable operators in the Northwest find themselves carrying the SEC Network to the exclusion of the independent Pac-12 network.
ACA’s small and mid-sized cable operators obtain most of their national cable programming through the National Cable Television Cooperative (NCTC). NCTC, which helped ACA draft its comments, sees the same practices as does ACA and cited the same impact on diversity. NCTC negotiates “master agreements” with large programmers that contain bundling and penetration requirements. In order to opt in to an NCTC master agreement, a small cable operator must accept the agreement in its entirety — including bundling and penetration requirements.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing about 750 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://acaconnects.org/