Cable’s Plan: Ride Out Martin Storm

Industry ‘Reaching Out’ To Others To Nullify Chairman

By Ted Hearn -- Multichannel News, 4/1/2008 4:46:00 PM

Washington—The cable industry has no expectation that Federal Communications Commission chairman Kevin Martin will be anything other than hostile in what is probably his last year as leader of the national media regulator.

“It’s a given: This is what it’s going to be like while he is chairman. There’s nothing the industry does that’s going to be good enough. So we have to make our case to other people," National Cable & Telecommunications Association president Kyle McSlarrow said Tuesday in remarks to the Association of Cable Communicators.

Martin, appointed chairman in 2005, will probably head for the exit early next year, even though he has a few more years in his term and has indicated interest in staying on if Sen. John McCain (R-Ariz.) is elected president in November.

Over the past three years, cable and Martin have repeatedly clashed, leading to nine federal lawsuits.

Cable, McSlarrow said in his one-on-one chat with veteran cable consultant Steve Effros, is reaching out to Congress and the other four FCC members in an effort to nullify Martin, who decided to mete out regulatory punishment to cable after the industry refused to embrace an a la carte business model favored by Martin.

“The elephant in the room is that we got a fairly hostile FCC chairman and that’s really the bread and butter of what’s keeping us busy," McSlarrow said.

McSlarrow indicated that NCTA's strategy to neutralize Martin appeared to be working.

“The good news is, as powerful as the FCC chairman is, he’s still only one vote," he said. “I’m not saying it’s going to be easy. But I’m not throwing in the towel either."

Martin has relied on rising nominal cable rates to justify nearly all of his anti-cable moves, from the abrogation of cable contracts in apartment buildings to requirements that local governments act on Verizon’s cable franchising applications within 90 days.

“Chairman Martin is concerned about cable rates,” said FCC Media Bureau spokesperson Mary Diamond. “Our focus is not on the welfare of a particular industry, but the welfare of consumers, who are not seeing the benefits of lower prices and more choices.”

Martin has ordered FCC staff to ignore data showing that per-channel cable rates have declined and to disregard other metrics indicative of qualitative improvements in cable, such as channel additions, industry awards, and consumer time spent watching cable programming.

Martin claims the a la carte sale of cable channels would lower monthly cable bills and provide the best filter of indecent content.

McSlarrow said “an a la carte model does two things: it drives up prices for consumers and reduces diversity of choice. Even in Washington, that’s not a great policy outcome.”

On rates, McSlarrow said the industry has to repeat the message that cable prices cover new investments in video programming and pay for network upgrades that enable high-speed data and digital phone services.

Consumers, he said, are reaping the benefits of those investments.

“They are voting with their remote. They're voting with their calls to hook up service," he said.

Consumers, he said, are notoriously cranky about recurring bills, almost without regard to the service they are buying.

“Do you think the price of bubble gum is too high? We’re Americans. We’re all going to say, `Yeah, it’s too high,’” McSlarrow said.

The cable industry, he warned, can't escape the rate debate. The goal, he said, is to ensure that the rate issue didn't become the springboard to punitive regulation.

“I don’t think we should delude ourselves. This is not a policy debate that you ‘win,’” he said. "We just have to engage and be patient and tell the story. And, in most cases, for those who are willing to listen, I think they get it.”