By Brian Hurley, ACA Connects Vice President of Regulatory Affairs
Earlier this week, ACA Connects filed comments with the FCC on the state of competition in the communications marketplace. Our comments focused on two markets that are critically important to our members: fixed broadband and multichannel video. To summarize the comments in a single phrase: “We’ve got good news and bad news.”
On the fixed broadband side, the story is overwhelmingly positive. As the FCC’s own data suggests, the broadband market is substantially competitive, with the majority of Americans having more than one option for service at 100/10 Mbps or greater. ACA Connects members are responding to and helping drive these competitive dynamics by investing heavily to meet consumers’ growing demand for higher speeds and better performance. In doing so, they have been aided by the FCC’s efforts in recent years to remove barriers to investment and stimulate deployment. Our comments urge the FCC to keep up the good work in the years ahead, with additional work to streamline pole attachments, remove outdated cable rules, and implement other reforms.
The video marketplace, on the other hand, is where we find “the bad and the ugly.” In our comments, we called attention to the sobering reality that the video market in general, and the retransmission consent marketplace in particular, is completely dysfunctional, marked by egregious rate hikes and signal blackouts. We noted that the broadcast industry has continued to consolidate, with some station groups evading the Commission’s media ownership rules to amass duopolies, triopolies, or even quadropolies of “Big 4” stations in some markets. They use this leverage to extract ever-increasing fees from cable operators in exchange for “must-have programming.”
As members know, the situation is particularly bad for small and rural cable operators. 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. What is more, they are paying this additional 32% while carrying 3.5 fewer stations on average. This amounts to rural TV discrimination: customers of small, rural cable systems pay for more broadcast programming than their counterparts in more populous areas, for no defensible reason. We urged the FCC to document the full extent of this discriminatory treatment in its marketplace report that it will produce later this year.
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. We called on the Commission to acknowledge this reality as well in its report.