Cable TV Conventions

INTX 2015: Wheeler Cites Vast Broadband Competition Wasteland

Calls Comcast-TWC Deal Drop 'Directionally Correct' 5/06/2015 12:15 PM Eastern

Federal Communications Commission chairman Tom Wheeler essentially branded the broadband competition landscape a vast wasteland, evoking an earlier FCC chairman's iconic dressing down of the broadcast industry over its programming.

 

Wheeler was addressing Wednesday's opening session at the National Cable & Telecommunications Associations' INTX show in Chicago Wednesday (May 6). And while he talked about regularizing pole attachment rates, something NCTA has been seeking, and praised the NCTA as the leading broadband association for its network buildouts and programming prowess. But if they were applause lines, pins could be heard audibly dropping as he signaled that Title II was going to be the law of that competitive wasteland. There was polite applause at the beginning and the end, sandwiched between was a stunned silence.

 

Cable has clearly had some tough times under Wheeler's watch.

 

The chairman has branded ISPs as gatekeepers with the incentive and opportunity to be anticompetitive, and backed preempting state laws limiting broadband buidouts on the premise they were the handiwork by proxy of incumbent ISPs looking to discourage competitors.

 

NCTA's largest member, Comcast, had to abandon its Time Warner Cable play after the Wheeler-led FCC signaled the deal would not pass muster no matter what conditions were applied. That followed the FCC Democrats' decision to reclassify broadband under Title II regs, which NCTA has called a "disaster."

 

Wheeler invoked all those in his speech, defending preemption, saying Title II was going to be the law of the land, and saying the broadband industry was not competitive enough, and the FCC would be working to change that.

 

Wheeler signaled that Comcast's decision — which came after the FCC forced its hand — to back off of the Time Warner Cable merger was necessary given the sweep of broadband history. "Brian Roberts' leadership that it's 'time to move on' was not only a thoughtful response, but also directionally correct," he said.

 

"It is time to look forward, not backward," he told the audience. "This is not the time to dwell on the reasons why both the Federal Communications Commission and the Department of Justice reached the conclusion that this proposed transaction would not be in the public interest."

 

But Wheeler did give the underlying reason why the FCC was not going to approve it.

 

"[I]t is important to understand that the tipping point from cable to broadband came while the transaction was under review," he said. "We recognized that the industry had changed and we saw concrete evidence of the new competition and business models made possible by high-speed Internet access."

 

"In other words, we recognized that broadband had to be at the center of our analysis, and that video was, in essence, an application that flows over networks and that could be supplied both by the owners of facilities and by competitors that use broadband pathways to compete against the owners of those broadband pathways."

 

He said there was not nearly enough of that competition, which is when he hit cable operators with their own "vast wasteland" paperweight.

 

"You don't have a lot of competition, especially at the higher speeds that are increasingly important to the consumers of online video," he said. The FCC has made 25 Mbps its new high-speed target, one NCTA has said is OK as an aspiration, but not as a way to suggest there is not competition where lower speeds are offered.

 

"More competition would be better," he added. "That is why we granted the preemption petitions filed by two communities that wished to expand their gigabit networks into surrounding areas, including where people had no broadband at all."

 

"I recognize the challenges of overbuilding, and to encourage it is not to assume its immediate appearance."

 

"And while I know it is an anathema to your geographically-defined way of looking at the industry, I believe — as some have already demonstrated — that it can also be an opportunity. Many years ago at NCTA [Wheeler used to be president] we passed out Lucite paperweights in which were embedded small dried flowers. Imprinted on them was, "Plant a flower in the vast wasteland."

 

"By bringing competitive alternatives to television viewers, this industry did just that— and the video business was changed forever. Then your industry went on to upgrade, compete with the telcos, and dominate broadband. Now the question is whether consumers will have competitive alternatives for broadband. To harken back to what you did before, will you now plant a flower in the competitive broadband desert?"

 

NCTA responded to the chairman's remarks with a general statement thanking the participation of all the commissioners. "We are grateful that chairman Wheeler and commissioners Clyburn, O'Rielly, Pai and Rosenworcel are all participating at INTX. As strong supporters of an open and robust Internet that is delivering ever-increasing speeds and a great experience for American consumers, we appreciate that Chairman Wheeler would use the show to highlight the importance of net neutrality. Cable is the largest broadband industry in America and our networks are ushering in an exciting transformation of how consumers are enjoying content and experiencing new entertainment services. The INTX show is just a small example of how the cable industry is providing a platform of possibilities that is open for all kinds of transformative services and groundbreaking opportunities."

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