To the Editor:
No one who reads Sheelah Kolhatkar’s piece (“Why We Despise Cable Providers”) on Jessica Abney could ever come away blaming this Lexington, Ky., cable customer for her sour disposition toward Charter Communications. The ailing senior citizen deserved better from the company. In the end, it looks as if she got a modicum of justice.
Nevertheless, I take strong issue with many of the assumptions planted in this article. For one, using Jessica Abney’s anguish as the basis for drawing a broadly negative portrait of all cable TV providers (sometimes called “operators”) is defective because it assumes that cable operators and the cable industry are the same thing. Nothing could be further from the truth. By dwelling on Abney’s troubles with Charter, Kolhatkar sidestepped a fundamental fact about pay television: Monthly cable TV rates paid by consumers keep advancing higher because broadcast TV networks and station owners, plus the giant companies that own the cable TV programming abuse their market power or legacy regulatory advantages or both to extract never-ceasing fee increases from the cable TV operators that own the distribution facilities connected to the home and to the consumer, like Ms. Abney.
As the dollar flow proves, times have really changed. A decade ago, local broadcast TV stations received next to nothing in so-called retransmission consent fees, a legacy Washington, D.C., regulation giving local TV stations the right to demand cable TV operators to pay for the ability to carry the TV station that is otherwise available for free over-the-air with an antenna. Today, TV stations are collecting $9.4 billion in “retrans” fees, buttressed by a record number of signal blackouts to ensure payment. Viacom, a major cable television programmer, owns more than 20 cable channels. For cable operators to carry the few channels actually popular with viewers, Viacom insists that cable operators also provide all the other, less popular channels to the highest number of subscribers possible. Viacom’s practice – copied routinely by Disney, Time Warner, Discovery, Fox and the rest — has produced bloated cable bundles and monthly bills that are no fault of the cable operator. Has anyone explained that to Jessica Abney?
For years, cable companies — especially smaller ones I represent whose limited channel space has been eaten by the big programmers’ tying and bundling practices — beseeched content firms to create smaller packages in lieu of one size fits all. Only now are programmers doing so with the advent of the “skinny bundle.” That’s a response to the fact that Netflix, Hulu, Amazon Prime and Google’s YouTube have siphoned off millions of cable subscribers that want access to on-demand, ad-free programming at a reasonable price.
If nothing else, Kolhatkar’s article demonstrated that cable operators can’t seem to shake the myth that they do not face competition. She left the impression that Jessica Abney has no realistic video alternative to Charter. That is false. Three of the five largest pay-TV providers in the U.S. are not cable operators (DirecTV, DISH Network, Verizon FIOS). Almost every American has the choice of three pay-TV providers and many have access to a fourth – usually a second cable company called an “overbuilder.” Wide Open West (WOW!), a member company of the American Cable Association, is an excellent example of a major cable company competing not just with national satellite providers (Dish and DirecTV) but also with many cable operators in urban and suburban markets. The Federal Communications Commission, under Democratic Chairman Tom Wheeler, ruled in 2015 that every cable operator is legally subject to effective competition – a decision affirmed recently by a panel of the U.S. Court of Appeals for the District of Columbia Circuit.
I also found troubling that Kolhatkar’s analysis of the telecommunications sector was essentially static. She would have us believe that because wireline broadband Internet access might not have a sufficient level of competition today, surely that will be the case for the next one million Mondays. Making a mistake like that is hard to fathom in this day and age of breakneck technological change that receives blanket coverage from the mass media.
Two decades ago, AOL controlled wireline Internet access and the Blackberry was the essential device for mobile email and text messaging. Today, neither firm ranks among the tech elite. Then, Internet access was considered a narrowband technology. Today, broadband is the dominant technology. Cable and other wireline broadband access providers are pouring billions of dollars into fiber optic network construction to maintain their lead. If they don’t, they will not only fall behind consumer demand for higher throughput speeds, but also fail to meet the challenges from so-called 5G wireless networks being deployed by Verizon and AT&T and the high-speed data offerings on the drawing board of TV stations that are transitioning to a new, robust digital transmission standard called ATSC 3.0.
Kolhatkar also has her history and her facts wrong. I’m not really sure what caused her to suggest that Internet service was “deregulated during the George W. Bush administration.” The retail price of Internet service has never been regulated at the federal level. So there was nothing to deregulate. I am assuming her point has something to do with the more recent “Net Neutrality” debate. If so, what she should have said is that the Republican FCC chairmen under President George W. Bush honored the Democratic Clinton-era consensus that the Internet’s stampeding growth would be threatened by government tinkering, an assessment affirmed by the U.S. Supreme Court in the 2005 Brand X case.
That Sheelah Kolhatkar’s told us Jessica Abney’s story was a good thing. But, unfortunately, perhaps because it’s easy to bash “the cable guy,” she chose not to tell the full story.
Matthew M. Polka
President and CEO
American Cable Association