Policy

McSlarrow: Martin a Micromanager

12/19/2006 5:46 AM Eastern

Federal Communications Commission chairman Kevin Martin, a Republican Bush appointee, supports a regulatory agenda for the cable industry that's at odds with his otherwise free-market outlook for telecommunications, National Cable & Telecommunications Association president Kyle McSlarrow said Tuesday.

“What I see, when you put all of those dots together, is an agenda that really represents one of the most sweeping regulatory examples of government micromanagement. I have to say I am puzzled by that,” McSlarrow said in a year-end conference call with journalists.

The “dots,” as McSlarrow called them, referred to Martin’s support for the a la carte sale of cable channels; mandatory carriage of TV stations’ digital-multicast services; public access to cable-programming contracts; and phone-company-friendly terms on entering cable markets.

“As I survey that last couple of years, I just think there is a disconnect when I think about the FCC and the agenda -- the disconnect between the rhetoric of free markets and deregulation and the reality of the types of proposals that are being proffered by the leadership of the commission,” McSlarrow said.

Asked why Martin has problems with cable, McSlarrow replied: “You’d have to ask him. All I can say is that I just think there is a fundamental misunderstanding of what actually our industry is doing. It’s almost like they are moving through a time warp.”

McSlarrow’s assessment was likely the harshest words an NCTA president has had for an FCC chairman in more than one decade. The politics of the dispute are notable because McSlarrow, himself a Bush appointee, joined the NCTA in March 2005 from the No. 2 position at the U.S. Department of Energy.

An FCC official, provided with some of McSlarrow’s comments, said Martin has remained faithful to letting market forces prevail.

“A la carte and multicast must-carry -- those are free-market, competitive positions,” said the FCC official, who declined to be identified by name. “The chairman has never proposed mandatory a la carte.”

On Wednesday, the FCC is expected to release the 2005 cable-price survey and adopt new franchising rules, which, among other things, might allow Verizon Communications and AT&T to offer cable service after 90 days, with or without signed contracts with the proper governmental authorities.

“I think it’s a proposal that has to be dramatically pared back,” McSlarrow said, doubting that the FCC has legal authority to dictate terms to cities. “We’re not too keen on any proposal that treats us and the telcos differently.”

On the price survey, McSlarrow had several criticisms, including that it would not show that the price of a voice, video and high-speed-data bundle that cost about $129 10 years ago today costs about $99.

“The bottom line is that value and price have only gotten better for our customers,” he added. “That is a much sounder basis for policy proposals than outdated and manipulated statistics.”

An FCC official said Congress did not order the commission to make the pricing comparisons suggested by McSlarrow.

The FCC’s price survey measures nominal cable-rate changes from year to year. It typically shows that the bundled cost of basic cable, expanded-basic cable, a set-top box and a remote control have outpaced inflation by a few percentage points. The agency also routinely finds that nominal per-channel cable rates have held steady or have actually declined if adjusted for inflation.

Martin has said that per-channel comparisons were irrelevant because cable consumers can’t buy ESPN, CNBC and CNN on an a la carte basis.

“I would generally agree with that,” said Gene Kimmelman, Consumers Union’s senior director of public policy. “If you can't buy it that way, what does it mean? You pay for a package that includes channels you don't watch or sometimes find offensive, so the package is the mandatory price consumers face.”

McSlarrow complained that the FCC has been sitting on the 2005 price-survey results for nearly one year, but an agency official claimed that the survey was always released on a delayed basis.

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