GOP's FCC Naysayer Sees No Bottlenecks

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At least one member of the Republican majority on the Federal Communications Commission — Kevin Martin — is keeping a close eye on the business practices of cable operators that offer high-speed Internet access. Martin, not always the easiest vote for FCC chairman Michael Powell to line up, said he is waiting to see whether cable operators end up restricting subscriber access to Internet content. Martin discussed this issue and others in a recent interview with Multichannel News Washington News Editor Ted Hearn. An edited transcript follows.

MCN: Democratic Commissioner Jonathan Adelstein was recently confirmed. Some say the FCC's politics are going to change now that there's an odd number of members. How do you see things?

Kevin Martin:
I think that the ability of the agency to function is increased when there are five commissioners here. And I think that ultimately, the opportunity for us to integrate another commissioner's perspective and views on issues will be beneficial and will increase the debate, and it'll be helpful.

MCN: There are issues bottled up here on the eighth floor because of a 2-2 vote. If Adelstein makes the outcome 3-2, do things move forward if FCC Chairman Michael Powell is in the minority?

Martin:
You'll have to ask the chairman directly. I think that that's always an issue at the commission, what ends up happening. I don't remember when the last time that might have happened was.

But I think that the more important issue would really be just having an additional voice at the agency. And with an additional person in the mix, actually, in some ways, I think it'll make it easier to achieve a majority in certain circumstances.

I think that when there might have been some divisions, I think it'll make it easier … in essence, for the chairman to try to get to a majority, because there'll be another person that he can go try to get their vote on a particular issue.

MCN: There has been a lot of debate over multicasting. Can you explain your stance on primary video as it relates to multicasting?

Martin:
Prior to my arrival, I guess it was in January of 2001, I think that is when the commission adopted its first ruling that said that it concluded that primary meant one signal. And then there were immediately some petitions for reconsideration that were filed, and there was a record developed on those petitions for reconsideration.

I think I first gave a speech on this last February, where I said that I thought that there were some significant issues raised in those petitions for reconsideration and that I thought the commission should act on them.

I think that ultimately trying to determine the broadcasters' carriage rights in the digital world and providing certainty on that, one way or another, is going to help facilitate the digital transition because it's going to allow the broadcasters to develop their business plans around however those carriage rules are going to work.

In many cases, they can't finalize some of those business plans until they're able to have an understanding of the regulatory lay of the land, and so I think that it's going to provide additional certainty and help in that digital transition by us just deciding on those rules.

Now, I personally think that the statutory language is not as clear as that order from January of 2001 that said that primary had to mean only one. I think that the commission should try to act on this issue no matter what.

MCN: Do you think that primary video means not one signal, or does it mean many signals and you're willing to put a finite number on it?

Martin:
I think that the question is more, does primary mean only one? And I think what the previous commission said was that primary meant just one. One of the analogies that's been used is primary colors. Primary colors mean the basic colors that are used as building blocks for others, but it doesn't just mean one color.

I think that that's the question, was primary being used to mean a single signal or to some basic set of signals? But I don't think it's a numerical definition.

MCN: What's your response to cable's argument that multicasting is just dual must-carry by another name?

Martin:
I think that they're very different issues. They're both important. But dual must-carry is actually the question of what the commission is going to require, or whether the commission is going to require both the digital signals and the analog signals be carried at the same time.

The issue of multicasting, in the context of the digital signal, [is] what if, instead of doing one broadcast signal, they do two higher resolution standard definitions, so they're still higher at some resolution than the current analog signal, but that they are not the same resolution as a full high-definition signal? That would be two digital multicasts. Those are very different issues, and they actually are significantly different when you're talking about the impact on the cable side.

In the dual must-carry context, the burden on the cable system would be significantly greater than what the multicasting burden ends up being. In dual, you would end up having to have a certain amount of the capacity of the cable system dedicated to carrying that analog channel, and a certain amount of capacity dedicated to carrying the digital cable channel.

Actually, in the context of a digital platform, the broadcast signals can be compressed so that actually, whether it's a high-definition signal or two broadcast signals in that same amount of broadcast space that's used to carry a high-definition signal, you can compress that down into a significantly less amount of spectrum on the cable system.

So I think actually the dual must-carry would have a significantly higher burden on cable systems than a potential multicast carriage requirement.

MCN: The FCC was once agnostic on HDTV. Why is the FCC pressing for HDTV on a voluntary basis now?

Martin:
I think the desire to push for HDTV is trying to get some additional kinds of broadcast services out to consumers to demonstrate what the benefits will end up being when they make that digital transition, and [in] getting consumers wanting to get to that digital world, where they're going to get some additional broadcast capabilities because of that switch.

The commission under the Powell plan, which has done a lot to spur the digital transition, has been trying to get the broadcasters to put additional digital content out there and getting some of the cable operators to put forth some high-definition signals, either their own and/or some of the broadcast signals. But no matter what, it's trying to give a sense to the consumers about what the alternative is really going to be like in a digital world, and get them excited about buying digital television sets.

MCN: But clearly this commission is pushing HDTV and past commissions didn't. Do you think that prior commissions should have been more aggressive in getting industry players to promote HDTV?

Martin:
I think actually the commission has been pushing for a digital transition, and part of that has been trying to get some high-definition content out there.

This goes to the issue that we were talking about before, about the meaning of primary — that there are circumstances in which, I think, consumers will want and demand and be excited about high-definition content — you know, the sporting events that can be broadcast in high-definition. But I think that there are other kinds of video programming that it might not be as important to have it in high-definition. People have talked about the news.

And it's exactly that kind of other video programming that maybe we would be better off having multiple news segments being broadcast, and then the rest of the time having high-definition. I think that the petitions that asked the commission to reconsider what it meant by the broadcaster's carriage rights in a digital world … raised a lot of significant issues that could have a big impact on that digital transition.

MCN: What happens if the direct-broadcast satellite providers drop local TV stations if they're required to carry local TV stations in HDTV?

Martin:
The DBS providers, in that sense, have been on the forefront by already trying to carry the analog signals in a digital capacity. So they've already had some of those benefits, some of the compression that's possible when you're carrying something in digital today.

This was Congress's choice. The law was pretty clear saying there's a "carry-one, carry-all" kind of approach, that if you decide you're going to carry a single broadcast signal from the market, you're going to have to carry them all. So once those broadcasters make that transition over to high-definition television, and there's no longer a standard-definition television signal for them to carry, I think that they'll still be faced with that same choice that Congress gave them.

MCN: EchoStar is saying it will cut off local service to West Palm Beach, Fla., if forced to carry an HDTV station there. Eventually, EchoStar plans to integrate HDTV signals using an off-air antenna.

Martin:
In the end, I think the commission should be trying to make sure that the consumers have access to all of those signals in an ease of platform and interface. I don't know enough about the details of the technical proposal that's being put forth, but in the end, I think what the commission should be most concerned about — and what consumers are concerned about — is that they've got access to both those off-air signals and to the signals that are being provided by the satellite carrier.

MCN: I noticed you didn't put out a statement in connection with the AT&T Broadband-Comcast Corp. merger. What should one read into that?

Martin:
I had some concerns. As commissioners frequently do, I [had] proposed some edits to the item and they had all been incorporated, so I was satisfied that all the concerns I had on the internal side had all been addressed.

I think that just as in the satellite merger, I think that the marketplace is the multichannel video-programming marketplace, and I think that this item, for example, is very clear about saying that that was the MVPD market.

I thought that in this circumstance, and I think the item addressed this, there wasn't a diminution of competition, because those two cable operators weren't competing and there was no evidence they had any plans to compete. So I didn't think that there was any negative impact on the marketplace.

MCN: No concerns about a couple of guys in Philadelphia being able to raise cable rates in 22 million or 27 million homes?

Martin:
I think that the commission should be concerned about the ability of cable operators everywhere to raise rates. But I'm not sure that concern is merger-specific.

But I don't think that concern should just be what's going on in Philadelphia or with a company that's headquartered in Philadelphia. I think the commission should be concerned about that on the whole industry.

MCN: On broadband, where do you stand on mandatory cable carriage of multiple ISPs, excluding Time Warner Cable?

Martin:
I think that that's something that the commission does have to take a hard look at to make sure that consumers are getting access to the kind of ISP services, and that they're not being discriminated against by any of those cable operators.

But I think what we've seen is — and I don't think it's just in the context of the AOL Time Warner [Inc. merger] —some of the other cable systems are also having agreements that they've made with different ISPs and different ISPs are able to use that cable facility to provide service to end-user customers.

MCN: Is cable moving fast enough voluntarily on ISP choice?

Martin:
I haven't finished looking at the record in that proceeding. I think that the likelihood of the cable industry making sure that consumers have that access involves two issues that I think need to be teed up. What I mean is that the cable company can both have multiple ISPs that have an agreement to serve end users with the same cable facility. And the other issue that arises is, are they restricting end users from accessing multiple ISPs once they have that first initial interface?

Are cable companies moving fast enough toward signing agreements with multiple ISPs? I think that's one aspect the commission needs to look at. And then the commission also needs to make sure that cable companies aren't moving fast enough or at all in the direction of restricting a customer's use to other ISPs even once they get on. So in other words, they subscribe to AOL and then I decide I want to go use another ISP through AOL, is that in any way restricted? Or are there any restrictions on content just in general?

MCN: Microsoft Corp. is leading a coalition that sent a letter to Chairman Powell basically saying, OK, if multiple ISPs isn't the answer, at least make sure that the network operators don't discriminate as to content.

Martin:
That's why I'm sorry that I hesitate so much when you said are cable companies moving fast enough. And that's why I was saying it depends on which direction, and it's two different issues.

In the end, consumers need to be able to have access to all of the different kind of content that's available out on the Internet, and that can be through multiple ISPs or through making sure there's nondiscrimination, no restrictions on content. And I think the commission needs to evaluate what's occurring in both places in the marketplace, and is the marketplace moving in one direction in a bad way or one direction in a good way?

MCN: Should MSOs contribute cable-modem revenue to local phone companies' universal-service programs?

Martin:
I don't think so. I think that one of the commission's No. 1 priorities should be trying to get advanced services deployed to consumers all across the country. And I think that the additional financial obligations that would then accompany those advanced services would, if anything, deter deployment and certainly will not encourage it.

No. 2, I think it's important to note that currently the universal service joint board just considered and rejected having any universal service funds going to support advanced services on the recipient side. And it seems to me that it's particularly unfair to require advanced services to contribute, but not be on the recipient end, and cable modem wouldn't be able to be received.

MCN: Why does it make sense for dial-up ISPs to enjoy an access-charge exemption when this commission is trying to promote broadband? If there were no exemption, wouldn't consumers then be able to make a true economic comparison between dial-up and broadband?

Martin:
If you have a broadband DSL service but you're still calling a local number to access your ISP, you still have the benefit of that access-charge exemption that you're talking about with ISPs, but you're having to pay for the broader, fatter pipe coming to your house.

I think that in mixing broadband and ISP connections, I think that the access-charge exemption has actually been something that's been very beneficial in trying to encourage the consumers to actually take full advantage of access to the Internet in general — whether you're talking about it through a mere dial-up or through other facilities. So I think that's been a positive.

I just think that some of the other steps the commission could take in the advanced-services area, whether you're talking about not adding on fees to cable modems … DSL shouldn't be contributing to the universal service fund, either. I think broadband shouldn't be contributing to the universal service fund.

MCN: Competitive local voice and data carriers fear this FCC is going to adopt rules that are going to put them out of business. Do you see it that way?

Martin:
I hope not. I think the commission needs to make sure that we maintain a local competitive environment on the telephony side, and that that's really a necessary prerequisite to the kind of deregulation that the 1996 Telecommunications Act had as its ultimate goal.

I certainly hope that there are other players that enter this field beyond just the current [competitive local-exchange carriers], including the potential of cable providers to also enter into offering, either on a bundled basis or not, the telecommunications services.

Some of them are going to do it through an [Internet-protocol] basis, as potentially some of the cable companies have looked at. But you've also got companies like Cox [Communications Inc.] going into it on more of a traditional switch basis. I hope that there are some other new players that get involved as well, but I certainly don't think the commission is trying in any way to get rid of the local competition. We've got to make sure we keep it in place.

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