McSlarrow Blasts ‘Sweetheart’ Bill

By Ted Hearn -- Multichannel News, 3/9/2006 12:09:00 PM MT

National Cable & Telecommunications Association president Kyle McSlarrow urged key House members Thursday to reconsider terms of a draft bill that would create a national video franchise for phone companies and deny cable operators similar relief until their phone rivals had grabbed 15% of the market.

“This is clearly a sweetheart deal for an industry that doesn’t deserve a special break and a competitive advantage over anybody, let alone the cable industry,” McSlarrow said in a late-afternoon conference call with reporters.

McSlarrow’s comments came one day after Republican and Democratic leaders of the Energy and Commerce Committee agreed in principle to legislation that would, among other things, create a national franchise and limit cable’s ability to respond to video prices set by AT&T Inc. and Verizon Communications Inc. when the two phone companies begin to compete for video subscribers.

McSlarrow, although troubled, said cable still wanted to work with Congress on passing a comprehensive telecommunications bill with a deregulatory thrust “not just for us, but for our competitors, too.”

Senate Commerce Committee chairman Ted Stevens (R-Alaska) is expected to release in a few weeks a bill with franchising breaks for the large phone companies.

In a controversial move, the House bill would also impose network-neutrality mandates on cable and phone high-speed Internet-access providers in an effort to shield Google Inc. (www.google.com) and Yahoo! Inc. (www.yahoo.com) from potential discriminatory tactics by network owners.

If the House bill were enacted, “it would be a huge step backwards in the wrong direction,” McSlarrow said, calling the network-neutrality provision the first attempt by the federal government to regulate the Internet.

McSlarrow was uncertain about the substance of various provisions in the House bill because the House panel did not release any legislative language for public review. However, he said it was possible that the House Subcommittee on Telecommunications and the Internet could vote on a bill as early as next week.

The NCTA is especially upset that the House bill would force cable to continue to sign local franchise agreements until a phone competitor was serving 15% of the market.

Both McSlarrow and House aides were unable to say whether the penetration test involved 15% of local households, local TV households or local pay TV households. And no one could identify the scope of cable's relief when the penetration test had been satisfied.

Another provision McSlarrow disliked involved the inability of cable companies to price their products in response to competition. He said that if a phone company is offering discounts to homes in one section of a franchise, the cable company couldn’t offer the same deal to those customers alone. It would have to make the offer available to all of its subscribers in the market under a process called uniform pricing.

“Uniform pricing is big government price control,” McSlarrow said. “Essentially, the effect of it would be to shield the Bell companies from competition.”