NTCA COMMENTS ON THE STATUS OF VIDEO MARKETPLACE
NTCA–The Rural Broadband Association submitted comments to the FCC August 21 in response to a public notice issued July 2 seeking feedback on the status of competition in the market for the delivery of video programming.
The provision of video services is key to rural providers’ ability to deliver robust broadband services to consumers in high-cost areas. Therefore, access to video content at affordable rates and under reasonable terms and conditions is needed not only to generate greater video competition, but also to spur broadband investment in rural service areas, the association said.
In order to promote broadband investment and marketplace competition, NTCA recommended that the commission take the following actions:
· Address inequities in the retransmission consent regime and issue a notice of inquiry to investigate content providers’ use of unfair bargaining practices that threaten the viability of rural video providers.
· Investigate anticompetitive practices of video programming vendors and take certain steps to improve multichannel video programming distributors’ (MVPD) access to video content at affordable rates and under reasonable terms and conditions.
· Prohibit mandatory broadband tying, in which rural MVPDs are forced to pay per-subscriber fees for nonvideo broadband customers.
· Monitor the market for “over the top” video services to ensure that exclusive arrangements do not prevent rural MVPDs and broadband providers from gaining access to Web-based video content.
Citing the “NTCA 2014 Broadband/Internet Availability Survey Report,” the association noted that even as an overwhelming majority of small rural carriers offer video services to consumers, more than 98% of respondents indicated that access to reasonably priced programming is a significant barrier to the provision of video services [Washington Report, June 18, 2015].
-- Jill Canfield
NTCA, ATVA URGE UPDATE TO RETRANSMISSION CONSENT RULES
NTCA–The Rural Broadband Association, along with several of its industry allies, has been working with FCC staff to address video policy issues.
On August 25 and 26, the American Television Alliance (ATVA)—of which NTCA is a member—held an ex parte meetings with FCC Commissioners Mignon Clyburn, Ajit Pai and their staff. The group urged the commission to revise the rules to provide meaningful relief for video programming distributors and consumers with respect to outdated video policies that have tilted the playing field in favor of broadcasters during retransmission consent negotiations.
ATVA noted that the take-it-or-leave-it negotiation tactics that broadcasters engage in are particularly harmful to smaller providers forced to accede to unreasonable demands due to their lack of bargaining leverage in negotiations.
Additionally, the group discussed the commission’s legal authority to take action to address anticompetitive behavior by broadcasters and other programmers that have led to the rising costs of video content for consumers of video programming.
ATVA also sent an ex parte letter August 18 to FCC Media Bureau Chief William T. Lake urging the commission to address the lack of transparency in retransmission consent negotiations. ATVA urged the commission to seek comment on what practices constitute bad faith negotiation tactics pursuant to the STELA Reauthorization Act of 2014.
NTCA and its industry allies held a series of ex parte meetings in July to discuss video retransmission consent issues with commission staff [Washington Report, July 23, 2015].
FCC Chairman Tom Wheeler released a blog post August 12 regarding his proposed updates to media rules for the video marketplace, including a review of good faith negotiations over retransmission of broadcast TV signals [Washington Report, August 13, 2015].
-- Jill Canfield
Reprinted from the NTCA – The Rural Broadband Association
NTCA–The Rural Broadband Association is the premier association representing nearly 900 independent, community-based telecommunications companies that are leading innovation in rural and small-town America. NTCA advocates on behalf of its members in the legislative and regulatory arenas, and it provides training and development; publications and industry events; and an array of employee benefit programs. In an era of exploding technology, deregulation and marketplace competition, NTCA’s members are leading the IP evolution for rural consumers, delivering technologies that make rural communities vibrant places in which to live and do business. Because of their efforts, rural America is fertile ground for innovation in economic development and commerce, education, health care, government services, security and smart energy use. Visit us at www.ntca.org.
How Much Cable Subscribers Pay Per Channel
By Rani Molla
Wall Street Journal August 5, 2014
TV programming is a main driver of cost in your cable bill—and the price for both is going up.
Cable and satellite providers such as Comcast, Time Warner Cable or DirecTV pay networks like ESPN and TNT a certain amount per customer for programming each month.
The wholesale cost per network is expected to increase 36% by 2018 according to media-research firm SNL Kagan estimates. Cable providers currently pay a total of $28.32 for a few dozen channels, depending on the provider and the cable package, with ESPN taking over $6 of that. Meanwhile median price paid for each channel a subscriber gets is 14 cents. ESPN is estimated to cost $8.37 per month in 2018, an increase of 39%.
Fortunately, cable bills aren’t estimated to rise at that rate. According to Kagan’s data, the cable industry currently charges on average $54.92 per month for basic service. By 2018 that’s expected to be $61.76, a 12% increase. According to the FCC, the price of expanded basic service has increased at a compound average annual growth rate of 6.1% from 1995-2013.
How Do Programming Costs Work?
Reprinted from website of RCN, a broadband provider in urban areas nationwide
The price that a consumer pays each month for a video service is driven largely by the costs that distributors like RCN must pay to the companies that create or package the programming – the networks.
That’s right – TV providers pay a fee for every household that receives that package, regardless of whether anyone in that household watches the network.
Those networks set certain rules for how their shows and networks can be sold to end consumers, including which packages can contain their channels.
In the past, the fees paid by companies like RCN to distribute cable networks (like Discovery, Viacom, AMC, ESPN, Fox Sports, etc.) were set in private business negotiations. Customers rarely knew those negotiations were taking place. However, fees have risen higher and higher recently, forcing distributors like RCN to take a stand.
At the same time, local broadcast stations have begun demanding significant fees to carry programming that they offer for free over-the-air and via the Internet. We don’t think it’s fair to make customers pay for programming that others receive for free.
In the past few years, many TV providers, like RCN, have taken a stand against unreasonable fee increases demanded by both cable networks and local broadcast TV stations. We are pushing back against Networks that demand exorbitantly more money without delivering more value.
Sometimes that result is a public dispute, with both sides using TV, e-mail, and other communications vehicles to tell their side of the story. And customers are caught in the middle. While RCN does not like public disputes, we are committed to delivering the best value for our customers and doing all we can to minimize the excessive increases being demanded.
Retransmission Consent & Programming Contract Renewal are a National Issue.
Retransmission and programming fee disputes have become a national issue, not just isolated to any one TV provider. Many TV providers have had public disputes with networks and station owners. In 2013, CBS and Showtime were removed from Time Warner’s channel line-ups for one month as a result of fee dispute. This year alone, Dish Network no longer carries Turner Network programs and both Suddenlink and Cable One no longer carry Viacom Networks as a result of the same kind of fee dispute. Disputes leave consumers without their favorite programming or an increase in their bills. Cable companies have to either pass on huge increases to their customers or risk TV blackouts. These disruptions are an industry-wide problem. No TV provider is immune.
Retransmission Consent vs. Contract Renewal - What is the Difference?
These terms describe essentially the same thing. A renewal is the process that happens when the owner of a network or group of networks negotiates a new contract with a TV service provider like RCN. Retransmission consent is the legal term for the process that happens when the owner of an over-the-air broadcasting TV station or group of TV stations negotiates a contract with a TV service provider for carriage.
What is Retransmission Consent?
Retransmission consent refers to a provision of the 1992 United States Cable Television Protection and Competition Act that requires TV providers to obtain permission from broadcasters before carrying their programming. In exchange, a broadcaster may propose that the operator pay cash to carry the station or ask for any other form of consideration. The cable operator may refuse the broadcaster's proposal and the broadcaster can withhold permission for the cable operator to carry the programming. It boils down to a negotiation to arrive at an agreement.
Broadcast TV stations distribute their signals over the air, using free spectrum granted to them by the federal government. In effect, taxpayers subsidize the distribution of broadcast TV signals. These same broadcast TV stations are then allowed by the government to charge TV providers for their signals — and if we don’t agree to pay, broadcasters will remove their channels from our lineup. Without the written consent of the local broadcast station ownership, TV providers are not allowed by law to carry those signals.
This is an unfortunate tactic that network owners use to gain leverage in their negotiations. It’s an attempt to pressure and coerce TV providers into accepting the outrageous increases. What’s more, before and after they remove channels, they may ask you to call and/or email your TV service provider in an attempt to put pressure on the provider to cave in to the network owners’ excessive fee increases.
Twenty years later, the competitive environment for video distributors has changed dramatically. Companies that own the local broadcast TV stations are increasingly imposing huge demands for cash that drive up a cable, satellite, or telephone company’s costs of doing business, and this pricing affects you.
Taking Action on Programming Disputes
Write your Congressman or Senator to let them know your feelings. They put these regulations into effect and only they can change them.
· Contacting Congress - http://www.contactingthecongress.org
· Finding Your Representatives - http://www.house.gov/representatives/find
· Looking up Your Congress Person by Zip Code - http://www.opencongress.org/people/zipcodelookup
· Contact Your Government - http://www.usa.gov/Contact/US-Congress.shtml
Rising Programming Costs Putting Small Cable Systems Out Of Business
· by Wayne Friedman, August 25, 2015, 4:35 PM
High programming costs have caused over 1,000 small and rural cable systems to go out of business over the last seven years.
In an August 21 filing with the Federal Communications Commission, the American Cable Association -- which represents small and mid-size cable systems -- says 1,078 cable systems serving 50,000 subscribers have gone out of business since 2008 due to rapidly escalating programming costs from rising rates of traditional cable networks as well as broadcast TV stations.
In 2014 alone, 47 cable operators shut down 91 systems serving 5,307 customers in 32 states. The group now says there are 4,833 cable systems versus 5,127 of a few years ago.
The Association says programming costs grew at an average annual rate of 9.4% from 2010 to 2015, citing research from SNL Kagan. Over the same time span, average revenue per pay-TV subscriber only grew at a rate of 4.1%.
For smaller cable systems, programming costs are even higher -- climbing 10.6% a year from 2010 to 2015 -- and the group says this excludes two of the fastest-growing programming categories, regional sports networks and broadcast TV stations.
The group says the situation will only get worse, especially with the likes of CBS expecting to see higher retransmission revenue in the coming years -- growing to $2 billion in 2020 from $500 million in 2013, at a 21% increase per year.
From MediaPost Communications