Policy

Washington Warrior

5/02/2011 12:01 AM Eastern

Washington — Michael Powell is no stranger to politics,
combat or the cable industry.

The 48-year-old son of Gen. Colin Powell, a former
armored cavalry officer himself, served for four years
as the chairman of the Federal Communications
Commission, from 2001 to 2005 — a time in which he
had to navigate broadcasting-indecency minefields
and battle foes of media consolidation — to mixed
reviews.

Even before Powell got the job succeeding Kyle
McSlarrow atop the cable industry’s main trade association
in March, one former FCC official suggested
that the cat-herding nature of dealing with the NCTA
board might discourage him from taking the post. Earlier
this month, though, Powell told Multichannel News
at a White House event that at NCTA, he felt like he was
among friends.

Cover_Story_Image_05/02Powell has already been representing the NCTA’s
biggest members in an ex officio capacity, at least on
the broadband side, as honorary co-chair of the Broadband
Innovation Alliance. That group of companies
— including Comcast, Time Warner Cable and Cablevision
Systems — has advocated for marketplace solutions,
rather than regulatory approaches, to boosting
broadband deployment and adoption.

Today, Powell is gearing up for a different kind of
campaign, with the cable industry’s continued success
in the balance.

Powell spent his first days in his new role — his first
official day was last Monday (April 25) — settling in
and meeting with department heads and staffers.

He is not talking with reporters about the job’s
challenges and priorit ies unt il he meets with the
NCTA board in mid-May, a spokesperson said last
week.

Based on off- and on-the-record conversat ions
with industry lobbyists, analysts and former officials,
though, several key issues will demand the new chairman’s
attention as he prepares to lead the industry into
a quadruple-play-plus, over-the-top future.


1 Keeping Elephants in a Chorus Line.
Never before
has the cable industry been so balkanized among
media conglomerates pursuing differing agendas.
Operators and TV stations have turned negotiations over
retransmission consent into a very public and nasty debate.

And with NBC Universal now in its fold, Comcast, the
NCTA’s largest member company, is now the 800-pound
peacock in the room.

Powell might be well-advised, said one veteran cable attorney,
to focus on some of the key issues where he can
be a “thought leader,” such as privacy or universal service,
rather than taking on the traditional video fights
that tend to divide the industry between programmers
and operators.

But Craig Moffett, a media analyst with Sanford Bernstein,
said the squabble over retransmission consent is one
fight Powell will have to referee.

“From the Street’s perspective, sorting out the retrans
mess is high on the list (good luck with that, Michael!),”
Moffett said. “And retrans is only the most visible of what
will be a whole series of squabbles between content and
distribution that will only get more common as technology
accelerates. iPad streaming is a good example.”

Under McSlarrow, the NCTA stayed on the sidelines
during the merger review of the Comcast-NBC Universal
joint venture. The company can likely continue to fight its
battles without Powell as point person — particularly with
veteran David Cohen overseeing policy, and McSlarrow
himself now running Comcast’s Washington shop.

[Comcast] “has plenty of smart people to make industry
policy,” the attorney said, though he pointed out that
policy-making is Powell’s strong suit and he may have to
“align” those policy thoughts with Comcast’s. The resulting
tension had some predicting that Powell would not
take the job.

2 TV (Brushfires) Everywhere. One of the thorniest issues
Powell will have to tackle, in addition to retransmission
consent, is the status of “over-the-top” video, in which the Internet is used as an end run around
traditional means of distribution — specifically on such
mobile devices as Apple’s iPad.

Right now, the issue is focused on iPad apps from Cablevision
Systemss and Time Warner Cable, and such
programmers as
Discovery Communications
(all NCTA
members), but the
broader discussion
is about how overthe-
top video will be
treated in a broadband-
centric future.

The FCC two
weeks ago said for
the first time that it
will separate online
video in its next video-
competition report
(see Rules). Eventual ly, it
will need to weigh in
on the carriage and
access rights that
online video programmers
will get
if, as the FCC has
signaled, it expects
them to become
competitors to traditional
cable.

The FCC said it
would not enlarge
the mult ichannel
video programming
distributor (MVPD)
marketplace to include
online video
distributors (OVDs)
just yet, adding that
over-the-top content
was still “additive,”
rather than a substitute for traditional video.

But the extent to which over-the-top video has become a
competitor to pay TV over the past few years is among the
information the FCC is seeking.

Blair Levin, former chief of staff to Democratic FCC
chairman Reed Hundt and now with the Aspen Institute,
agreed that online competition will be one of the industry’s
key issues going forward.

The economics are unlikely to ever enable a new entrant
by virtue of a facilities based-platform, such as broadbandover-
power line providers, Levin said.

“But there are all kinds of things like Netflix and
YouTube that can provide not what economists call perfect
competition, but [that] could have some impact on the
marketplace,” he said.

3 AllVid, All the Time. FCC chairman Julius Genachowski
is no Kevin Martin when it comes to pushing
the a la carte sale of cable networks to consumers,
but Powell does face a broadband-driven variant in the
form of the FCC’s AllVid inquiry. AllVid seeks a universal
adapter that would handle pay TV content from a variety
of video platforms, including cable, satellite, IPTV
and over-the-top TV.

One priority for Powell, according to a telecom analyst
who spoke on background, is ensuring that the AllVid proceeding
does not become a stealth a la carte regime or a
way to force cable providers to sell their channel lineups
to online video providers at a government-established
wholesale price.

The FCC has been pushing the creation of the universal
set-top to unite traditional cable and broadcast and
broadband to help spur broadband adoption and deployment,
since only 75% to 80% of U.S. homes have a computer,
while 99% have a TV set.

While rolling out broadband is atop the to-do lists of
both the FCC and the Obama administration, Powell will
likely press the point that government-imposed technology
mandates are not the flexible approach that a constantly
changing technology environment demands.

Powell has credibility in that argument, given his “first
do no harm” approach while FCC chairman to what he saw
as government regulation’s tendency to nip technological
innovations in the bud.

“We should not dare to pick technology winners or losers,
whether consciously or unconsciously,” he said while
still a commissioner. But he will be fighting the invocation
of a barrage of public purposes under the broadband umbrella,
like remote health care — as in using broadband to
help sick kids, the poor and the elderly — whenever any
means to that inarguably laudable goal is challenged.

4 Privacy, Please. Powell is a former college gymnast
who forward-rolled his way onto the NCTA stage, literally,
in his first speech at The Cable Show as FCC
chairman. He faces a tough balancing act on the issue of
online privacy and do-not-track legislation, however.

As with the broadband deployment issue and all of its
public-service tie-ins, it is hard to argue against protecting
online privacy. Cable operators will need to carefully
negotiate this issue.

The privacy issue has been heating up in the past several
months, fueled by the Commerce Department, the Federal
Trade Commission and legislators including Rep. Ed
Markey (D-Mass.) and Sen. Jay Rockefeller (D- W.Va.), who
are pushing for online do-not-track legislation for kids and
adults.

Time is growing short in the current Congress, though,
particularly with work still to be done on a long-term budget
bill. While there has been talk of bipartisan legislation
on online privacy for years, nothing has emerged yet.

But Powell will still need to make the point that overregulation
of privacy is like overregulation of anything else, a
disincentive to investment and a threat to the free Internet
content that the public has come to expect as something of
a digital birthright. His point must be that while it’s important
to give Web surfers more choice and control, the reality
is that for content to remain free and flowing, a business
model — in this case, targeted advertising — is needed.


5 Broadband Wagon Rolls On.
Powell has inherited a
position on network neutrality: The “better than Title
II” compromise to which the NCTA was a party.
But that won’t prevent such NCTA members as Cablevision
from challenging that stricture, a stance more in
line with Powell’s longstanding hands-off policy toward
Internet regulation. The issue of federal rules banning
broadband-access providers from blocking or degrading
unaffiliated Web content or applications is far from settled,
but any settlement — if there is one — is likely to come
from the courts.

“The net neutrality battle isn’t over, it is simply constantly
changing its name,” said Moffett. “[Powell] is going to
have his hands full with the intertwined issues of peering
and interconnection for wholesale broadband, consumption
pricing for consumer broadband, and what seem today
like routine issues of network management.”

Powell faces Genachowski, a Democrat, who is focused
like a laser on broadband — and that could be a
double-edged sword for the new NCTA chief. On one hand,
speeding broadband buildouts has meant trying to ease
rights-of-way issues, like utility-pole attachments. And
his willingness to compromise rather than hold a hard line
produced a “better than the alternative” network-neutrality
rule change that NCTA has said it could live with.

The other hand is a potential fist: the threat that the FCC
will do whatever it takes to get broadband to the masses.
To wit: The agency’s last broadband deployment report,
which for the first time found that the technology was not
being deployed in a reasonable and timely fashion.

For Powell, an FCC effort to redefine broadband access
according to its own views of speeds and prices — or an
effort to push through a definition of Internet service under
Title II of the Communications Act, to save off a court
defeat — are both potential flash points.

And Everything Else … Cyber-security is another issue
that will come to the fore as cable operators move toward a
more broadband-centric model. The NCTA last fall pointed
to the “viruses, worms, spam, malware, spyware and
denial-of-service attacks” that operators have to combat
daily, to the tune of 11.5 billion blocks per month by Comcast
alone.

Reclamation of the broadcast-TV spectrum is primarily
an issue for broadcasters, but has lots of implications for
the must-carry regime. In the FCC’s efforts to woo broadcasters
off their channels, the NCTA must guard against
being used as a carrot through such variations of mustcarry
as high-definition carriage of standard-definition
signals, multicast must-carry or must-carry of signals that
aren’t even on the air — all issues it recognized last week
in co-opting broadcasters’ “hold harmless” mantra (See
Rules).

In small doses, cord-cutting works to cable’s advantage,
in that it buttresses the argument for a light regulatory
touch. But Levin cautioned that cable’s services may
be at risk at a time when the level of discretionary income
for most families is “at a dangerously low point.”

Levin is one person from across the aisle who’s been impressed
by Powell’s public service and personal character.

“He has a lot of good will on both sides of the aisle and
I think there is a lot of respect for what he did at the commission,”
Levin said. “He’ll do great.”

March