ACA Summit: Small Systems are Big Players in D.C.

Rural deployments, net neutrality are top-of-mind for Matt Polka’s indie MSO constituents
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American Cable Association president and CEO Matthew Polka’s members — small cable operators — have an outsized role on the front lines of one of the biggest issues of the day: rural broadband deployment. It has been the subject of hearings, with Polka himself recently testifying; of letters from Congress to the Federal Communications Commission; and of President Donald Trump’s promise of connected agriculture for his between-the coasts constituency.

The ACA this week is hosting its annual ACA Summit in Washington, D.C., where some 350 small and midsized independent cable providers will talk shop and take their concerns in person to Capitol Hill and to FCC officials. On their collective mind: retransmission consent, C-band satellite spectrum management and more.

Polka said the ACA supports bipartisan legislation restoring bright-line net neutrality rules, a big priority, but only if those rules are applied to such edge providers as Netflix and Google as well as ISPs.

Polka paused in his pre-show adrenaline rush to talk with Multichannel News (a media partner of the conference) about the key issues motivating his members.

MCN: Your members are in the vanguard of one of the hot issues of the day, rural broadband deployment. What help do you need from the FCC on that front. Better maps? Improvements to the subsidy process?

Matthew Polka: The first thing I would say is that the FCC has already done the biggest thing for our members, which was to eliminate heavy-handed regulation under Title II, which has encouraged investment in deployment.

ACA president and CEO Matt Polka

ACA president and CEO Matt Polka

That single act by chairman Ajit Pai and the FCC in December 2017 has done more for our members’ ability to deploy broadband and seek and secure investment than anything I could ever ask for, which is why one of the things that we will be talking about with the Hill next Thursday is that the light-touch of regulation on ISPs [under Pai’s Restoring Internet Freedom order] has also worked for consumers, who are receiving greater service in smaller, rural, hard-to-reach areas than they have ever received before. So, “stay that course” would be the first thing.

MCN: And about mapping, which is another hot-button issue?

MP: I do think that better mapping will be helpful in many, many ways. Mapping today is better than when we started this national broadband effort in 2009 because of form 477 [with broadband deployment data], as well as that the challenge process in the Connect America Fund to is more precise about where broadband is. But ultimately, we believe that if broadband is to be included in an infrastructure package, mapping of wired broadband is essential. More of a geocoded map that, once and for all, finally tells us where homes are served and where they are not would be a big deal in helping serve the areas that need broadband the most.

The third thing is regarding funding, whether it is the FCC’s Connect America Fund or [USDA’s] Rural Utility Service programs, we need to continue the helpful trend of laws and regulations that target funds where broadband isn’t, including the most recent definition that funds will be targeted where 90% of an area doesn’t get at least 10 Mbps downstream, 1 Mbps upstream service. That is an unserved area that should receive priority-targeted funds.

MCN: Talk about your members’ unique issues when it comes to broadband deployment.

MP: Our member companies are broadband in every sense of the word. But they do have unique issues. You noted how Washington focuses its attention on rural broadband deployment, saying: “We need to get more out there.” We agree with that focus because of the unique circumstances our members have to deal with in terms of fewer customers per mile, higher cost of technology per customer, higher cost of compliance and regulation per customer, lack of availability of technology versus larger companies with access to technology.

That underscores why we say that what is really needed in Washington this year is a consensus [net neutrality] bill, which would help consumers as well as ISPs, and even extend certain protections and regulations over edge providers.

And we’re talking about a deal I think members of Congress could reach if there is political will to do so. Codifying net neutrality principles of no blocking, no throttling, no paid prioritization, things that our members do each and every day to support their customers, which I think is not a bridge too far.

I was very encouraged by the news of the [Senate] net neutrality working group that has been created. I think that is a very, very positive sign because it shows that Republicans and Democrats can work together to try and find solutions that aren’t necessarily politicized.

MCN: Last time we talked you thought bipartisan legislation would be a steep climb, and, frankly, our takeaway from last week’s House hearing is that there wasn’t a lot of bipartisanship there. Working groups are good, but we didn’t elsewhere see a lot of hope for a bipartisan bill. You do?

MP: I can’t say I disagree with you.

Let’s face it, we’ve been fighting this issue for a lot of years. So, it is certainly hard to reach consensus on such hot-button issues. But I maintain that if we are all interested in insuring consumers’ interests are protected but also insuring that we deploy more of the broadband that consumers want — to residences, businesses, hospitals, institutions — then we have to find a way that meets the needs of both consumer and provider and we can’t be: “It’s either one way or the other.” That just isn’t going to work.

MCN: Would you support restoring a general conduct standard along with the other bright-line rules? That seems to be one of the major issues with any new legislation.

MP: That is a hypothetical I can’t answer. But we know how the general-conduct standard was applied under the previous rules. That was not helpful. It was too vague and uncertain and that was demonstrated. Just the threat of that, as well as the imposition of Title II, even with the possibility of forbearance, was enough from our members’ perspectives to basically dry up their capital, their investors and their ability to deploy more.

So, that is a very difficult question and would have to be worked out together. We would really have to roll up our sleeves in those discussions. So we would be very concerned about a general-conduct standard, but we realize that these are issues that would be on the table that we would have to discuss to reach a deal.

MCN: Have your members all but abandoned traditional video and do you see them cutting that cord entirely soon?

MP: That’s a really interesting question and a shifting paradigm right now. I don’t see our members themselves simply saying: “we’re not in the video business any longer.” Even companies that have been very forthright about it, like Cable One, which will be Sparklight soon, “de-emphasize” video but are still more than happy to provide it to consumers who want it.

I think it just shows the shift in consumer behavior. Most of our members report to us today that it is not by their choice but their customers’ actions. Out of 10 new customers they have, six to eight of them are broadband-only subscribers. And that’s because of what broadband and our members provide that allow our customers to consume over-the-top. I am that way personally. I am a very loyal Comcast subscriber and have the full boat of services. But I watch most of the video I watch on an iPad on an over-the-top service or an integrated service with Xfinity. And I am not alone.

So consumers and their habits are migrating away from cable to more of a broadband dynamic, which I think has a lot to do with the demographics of the younger consumers. But there is still a need for video in many households. It’s just that it is diminishing over time.

MCN: Is that the reason you feel the need for Washington to start regulating the edge, since that is where the video will be coming from? You seem to have a hard enough time getting program-access attention in Washington with traditional video, which does have access regulations.

MP: That’s exactly right. We have always feared that simply because of size. We have fought consolidation on the content side for many years and have seen the ills that have happened when content companies come together and get bigger and own the programming or become vertically integrated.

Now, when you are talking about the Internet and literally two or three companies, maybe four, that control internet traffic and deal with consumer privacy data and access to content with no regulation whatsoever — these things we talked about a few years ago as the “cableization of the internet” — it’s not a stretch to envision that a Google could say to an ISP: “We know, because we have the data, that 92.783% of your customers use Google as a homepage. So, now we want you to pay us $3 or $5 per month per ISP subscriber or we will block access to Google as their homepage.” That is not farfetched.

Same with Facebook conditioning access to its network or Amazon conditioning access to its network. There are many concerns that we have shared, which is why we have said that any solution on open internet policies must include edge providers, given the massive control they have over internet traffic, data and access. If we are going to be talking about a solution that focuses on no blocking, no throttling, no discrimination, no paid prioritization, as well as protection of privacy, it makes no sense, and would not be supportable, if such a plan did not include the edge providers.

MCN: So, are you in the Sen. Elizabeth Warren “break up Big Tech” camp?

MP: It is not necessarily a dodge to say this, but I had [Public Knowledge president] Gene Kimmelman on a podcast recently where he said that breaking up the big companies might be more trouble than it was worth. He cited Ma Bell and an effort that took years to break up, only to eventually result in re-consolidation. So, I am not necessarily convinced a breakup is the best route simply because of the time it would take and the complexity. This is why I think sensible net neutrality/open internet legislation that protects consumers and applies reasonably to ISPs and edge providers is the preferred method.


MCN: What other major issues will your members be focusing on in discussions with Congress?

MP: There are two in particular. One is this year’s reauthorization of the STELAR satellite bill. We have been encouraged by people like Senate Commerce Committee Chairman Roger Wicker — despite broadcasters’ attempts to dismiss it — that there should be a reauthorization [of the compulsory license that allows satellite operators to import distant TV station signals without negotiation individually for them].

Other leaders have said this as well. So there is a recognition that the reauthorization is necessary and important to our members because it is an opportunity to reexamine existing broadcast carriage rules. I am very happy to see people like Congressman Steve Scalise and Congresswoman Anna Eshoo continue to support bills they have introduced before, whether it is Congressman Scalise’s Next Generation TV Marketplace act, which would eliminate outdated retrans and copyright regulations, or Congresswoman Anna Eshoo’s Video Choice bill, which would allow for tiering of broadcast channels and standstills during disputes. These are good ideas that won’t eliminate the retrans regime, but would provide for a meaningful update reflecting a changed marketplace.

MCN: But, traditionally, STELAR-delivered reforms start big, but wind up being more nibbling around the edges. Do you see a political difference this time?

MP: I would disagree with that. I look back five years ago [STELAR comes up for renewal every five years] and, because of ACA’s efforts, we were successful in winning bipartisan language that prohibited joint negotiations by broadcasters in a marketplace.

That was a big deal. At the time we also had limitations placed on some joint services agreements. And even that has been relaxed to some degree, there continues to be great skepticism that, when companies that are non-commonly-owned come together to share services, they could be violating antitrust principles.

So, we definitely believe there could be significant change this year. I think the time has come for bold ideas to be considered rather than living with outdated regulations in 2019.

The fact is that even broadcasters’ distribution world has fundamentally changed. We had members recently involved with retrans disputes, where for example Nexstar blacked them out for more than a month, where our members found ways to give alternative programming to their customers through the [broadcast] networks that allowed for streaming of their content and even sports.

MCN: You mentioned a second big Hill issue?

MP: Yes, we will be talking to Congress and the FCC about the move to 5G and using the C-band spectrum [which operators use to get cable nets from programers]. From a 5G perspective, all forms of broadband deployment to give consumers more choices are good, whether satellite, 5G, fixed wireless, wired, you name it.

As the FCC is looking at the C-band spectrum, there are a couple of things. First, just using C-band for 5G will create interference for our members in receiving programming signals they get using satellite, so there is that issue. The satellite companies say they have filters to fix this, but our members are saying the filters don’t work. So, you have to figure out how to get signals reliably without interference, and maybe one of the ways to do that is terrestrially, but there is a cost to that.

So, our view is that if the FCC, in order to further 5G, is going to auction off C-band spectrum and bring in some $60 billion to $70 billion, it seems reasonable — just as the broadcasters have been reimbursed for repacking — that MVPDs should be reimbursed to ameliorate the negative impact of 5G, whether that is through equipment for satellite delivery or for terrestrial delivery.

MCN: Are you talking about just covering costs, or something more?

MP: It is developing. We are working with the FCC on proposals that would cover out-of-pocket costs for transition to whatever technology means are necessary to avoid the harm. There are some other elements. Broadcasters, in typical fashion, maybe asked for more than they deserve [TV stations use the C-band to receive programming from their networks, too]. We are focused on what would make an MVPD whole for capital outlay to avoid interference.

MCN: What do you hope to hear from FCC chairman Ajit Pai at the summit and how would you handicap his first two years?

MP: I will say this first: we have really enjoyed working in association with chairman Pai because of his depth of experience at the commission and what he has put into practice with his policies. And we have not always agreed with him. I mean, we are not exactly enamored with greater broadcast-ownership relaxation that gives them more power to take advantage of outdated retransmission-consent rules.

But his approach has been one we have been able to trust, rely on, and work together on. I expect him to say: “Thank you for doing what you have been doing since the Restoring Internet Freedom Order.” We told him that if those rules were lifted our members would invest and deploy, and by gosh they did.

And they are working with or without federal funds to connect their communities. Certainly I think he will recognize that what we have done together has worked.

Second, I think he will be focused on how we reach the places that still need to be reached and how we can work together to do that.

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