Analysis: Cable Doesn’t Face Easy Choice With McCain Or Obama


Washington — Sen. John McCain voted to regulate cable rates in 1992 and refused to deregulate the industry in 1996. Sen. Barack Obama would regulate the Internet for the first time by telling cable operators how to manage their broadband networks.

The 2008 presidential election won't be an easy choice for the cable industry. McCain is one of cable's toughest critics on pricing and packaging of channels. Obama's regulatory vision for the Internet is one that cable's been fighting for more than a decade.

Would McCain, for example, try to force cable to break up its programming bundles and start selling channels on an a la carte basis? And how fast and how far would Obama push to restrict the actions of broadband access providers? Answer: Unclear.

Even cable's top lobbyist — National Cable & Telecommunications Association president Kyle McSlarrow — is unsure what awaits his industry when the White House gains a new occupant next January.

“I guess the good news is that after the last couple of years, I'm kind of ready for anything now,” quipped McSlarrow, referring to cable's repeated clashes with Federal Communications Commission chairman Kevin Martin. McSlarrow is personally backing presumptive Republican nominee McCain and is one of his biggest fund-raisers.

“I think what matters is that we have members of the FCC and people in key positions in the administration who have some appreciation for the extraordinary change and dynamism of this industry across the board,” McSlarrow said.

McCain has been staking out positions on media and telecommunications policy for decades. Obama, the presumptive Democratic nominee and a senator for just three and a half years, is new to the scene and has been selective in terms of the issues he has decided to address, making it hard to compare the two on a long list of issues.

Net Neutrality Wedge

But the clearest example where Obama and McCain are split is network neutrality, the idea that broadband access providers should allow consumers to use any application and access any legal content they want, subject to reasonable network-management practices.

“It is true that on net neutrality, which is really the only place I can think of where we have sort of a specific issue, Sen. Obama has been much clearer and much sharper about the need for net-neutrality legislation,” McSlarrow said. “Sen. McCain has been on the opposite side of that. So that's a divide.”

McSlarrow cautioned that the net neutrality debate has never been fought on stable terrain.

“As I think all of us who cover and work in this field know, net neutrality has meant 10 different things in the last three years alone,” McSlarrow said.

Whoever wins, 2008 will go down as an historic election. At 71, grey-haired McCain is old enough to be Obama's father. A war hero and former Navy pilot, McCain spent nearly six years in a North Vietnamese POW camp, following a plane crash and prison torture that left him with badly crippled arms. McCain, an Arizonan, jumped from the House to the Senate in 1986.

Obama is the first African-American to earn the nomination of a major political party. Elected to the Senate from Illinois in 2004, Obama, 46, galvanized Democratic primary voters with his vision of hope and change and his steadfast opposition to the Iraq war. A Harvard Law School graduate, Obama was a community organizer, law professor and an Illinois state senator before setting his sights on Washington, D.C.

It's the first election in U.S. history in which the two leading contenders were not born in the lower 48 states. McCain was born in the Panama Canal Zone; Obama in Hawaii.

But what makes cable's choice so difficult in the 2008 election — at least for now — is that party labels don't necessarily mean that much in the complex world that communications policy has become.

“It's not actually very clear what a new administration might mean for any specific set of issues,” McSlarrow said, net neutrality being the chief exception.

In a debate last week in Washington designed to annunciate the two candidates' positions, former Democratic FCC chairman Reed Hundt, an early Obama supporter and fund-raiser, identified a number of policies where Obama and McCain differ. Former Republican FCC chairman Michael Powell, the McCain campaign's top telecommunications policy adviser, portrayed McCain as someone far more cautious than Obama when it comes to embracing government intervention in media and telecommunications markets.

Obama is a leading supporter of a Senate bill (S. 215) that would authorize the FCC to ensure that providers of high-speed Internet access cannot use bottleneck control to discriminate against all legal content and applications.

“Common carrier worked in this country to provide an absolute rule against discrimination and it worked for decades and decades and decades,” Hundt said. “Only those who are not willing to embrace the future are reluctant to [take] that same principle and apply it to broadband.”

Avoiding Censorship

The rationale for net neutrality stems from concern about what can go wrong in highly concentrated markets. Proponents argue that because cable and phone companies dominate the residential broadband-access market, they have the incentive and ability to exploit that power to achieve financial gain and perhaps restrict political debate through censorship.

Hundt said a perfect example regarding political speech was Verizon Wireless's initial decision to deny the National Abortion and Reproductive Rights Action League (NARAL) a text-messaging short code to communicate abortion topics to members with cell phones. For most of the year, the FCC has been investigating Comcast's treatment of peer-to-peer file sharing traffic.

“Net neutrality is a principle of free speech, free choice and sound economics,” Hundt said.

McCain, Powell said, would rely on the Justice Department to enforce antitrust laws against broadband network providers that acted in an anti-competitive fashion.

“We don't think common carriage has produced a model for great innovation,” Powell said.

McCain, he added, supports a free and open Internet, but having the FCC draft anticipatory rules and regulations McCain regards as “dangerous” because the FCC is incapable of putting into words exactly what is and what isn't a reasonable network management practice.

“He approaches the need for legislation quite skeptically,” Powell said. “Senator Obama's policy paper talks about net neutrality being needed as legislation because carriers will be tempted to do those things. Well, I say leave the regulation of our temptations to preachers, pulpits and religion.”

Media ownership is another issue that sharply divides Obama and McCain. In 2003, when Powell was chairman, the FCC adopted rules that would, at their most flexible point, have allowed one company in a market with at least 18 TV stations and at least 45 radio stations to control three TV stations, one or more daily newspapers and eight radio stations, plus the local cable system.

McCain voted against a Senate resolution designed to overturn the rules. A federal court ultimately blocked the rules from taking effect. More recently, the FCC relaxed a rule to allow some TV and newspaper cross-ownership in the top 20 markets. That rule is now before a federal appeals court.

McCain and Obama don't even agree on the definition of the issue. For Obama, media ownership is about control of TV and radio stations; for McCain, it's all that, plus all relevant mass media voices, including cable operators, newspapers, satellite TV and the Internet.

“Without reaching a specific conclusion where those limits should be, Sen. McCain feels passionately that we have led ourselves to a relatively irrational and incoherent regulatory regime,” Powell said. “Is it really sensible that we somehow don't count in the market definition even cable television when setting broadcast ownership limits, as if it somehow just doesn't even exist?”

Obama, according to Hundt, would oppose any change in TV- and radio-station ownership rules, mainly because the FCC has encouraged consolidation while ignoring whether companies with free use of the public airwaves have been meeting the needs of their local communities.

“[Obama] doesn't think there should be any more media consolidation until new policies are developed to promote diversity and localism,” Hundt said.

Content regulation is one area that the candidates have addressed in their own words. But Dan Isett, public policy director of the Parents Television Council, a pro a la carte group, said Obama needed to speak out more about indecent media content and channel-choice options for cable customers.

“We have a lot better track record to work off of with Sen. McCain. I'm not prepared to say that he's better,” Isett said.

In November 2005, Obama gave a speech in which he backed senatorial “pressure on both broadcasters and cable companies to do a better job of fighting indecency.”

In June 2006, both Obama and McCain voted to raise the maximum broadcast-indecency fine from $32,500 to $325,000 per offense. That bill passed the Senate unanimously.

In speeches and on the campaign trail, Obama has raised concern about children seeing TV content meant for adults.

In a February debate in Los Angeles, Obama stressed two points: Parents must be the first line of defense and industry must make their job easier by not inserting adult-targeted messages in programming seen by kids.

“I'm concerned about sex, but I'm also concerned, you know, [with] some of the violent, slasher, horror films that come out — you see a trailer, and I'm thinking, 'I don't want my 6-year-old or 9-year-old seeing that trailer while she's watching American Idol,” Obama said.

Obama has not announced support for a la carte mandates, an approach embraced by current FCC chairman Martin. McCain has been a long-standing advocate of a la carte, but on a voluntary basis.

Obama Still Open

Angered by rising nominal cable rates, McCain has called on the cable industry time again to break up their the programming packages and allow consumers to pick their channels on individual basis.

McCain has been nearly relentless on the subject. In 2002, he asked the Government Accountability Office to report on the feasibility of a la carte; in 2004, he demanded an FCC study; and in 2005, he asked cable to conduct an a la carte pilot program.

At the Cable Show in New Orleans in May, Powell reassured cable representatives that in his a la carte advocacy, McCain has never tried to impose such a regime.

Stanford Group cable analyst Paul Gallant said cable shouldn't worry about McCain's support of the 1992 Cable Act and opposition to the 1996 Telecommunications Act. McCain, he explained, supported cable regulation before direct-broadcast satellite TV hit the market and opposed the 1996 law for non-cable reasons.

“Cable was a monopoly in 1992, and I think he voted against the 1996 Act because of telecom issues,” Gallant said.