McSlarrow Down on Broadband Stimulus

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National Cable & Telecommunications Association president Kyle McSlarrow
says all that convergence he has been talking about at previous shows is finally
here, and that operators ought to be able to experiment with various models
of on-air and online delivery. In an interview on the eve of the The Cable Show
in L.A., McSlarrow tells Multichannel News that given increases in cable capacity,
must-carry is more about the principle than the practical effect, but he says
that principle is still a good enough reason to push the government to take
its thumb off the scale. And while “vendetta” was the word McSlarrow used to
describe the cable-regulation regime of Kevin Martin, “collegial” and “professional”
are more the order of the day for the current FCC chairman.

MCN: Broadcasters are done with their
digital transition, at least until the FCC
starts reclaiming spectrum. Where is
cable in its transition?

Kyle McSlarrow:
I would say we are midstream
in the digital convergence. Some
companies are further along than others.
But I think the one takeaway I have
is, if nothing else, the enormous success
of DOCSIS 3.0 and HD programming.
I think people are already planning on
accelerating the move to all-digital as
quickly as possible, or at least to reclaim
as much bandwidth and use it as efficiently as possible.

MCN: What is your assessment of the
broadband stimulus funding program?

I probably should be more politically
correct than this, but I just think it
is a disaster.

MCN: Why?

There probably are very meritorious
awards that are being received, in
particular the ones recently that go to
adoption. But you can look at $7 billion
and say, gosh, $5 billion is going to really
good stuff , but there is still a lot of money
that clearly — and I don’t doubt the good
intentions of the people making the
awards — is going toward overbuilding
services that are already
being provided by private

MCN: How many NCTA members have
put in for the money?

Not many. Maybe a couple. But to
be clear, we are not an applicant but are
part of a consortium that has applied for
adoption money.

MCN: Speaking of which, where is the APlus
low-cost broadband-service effort?

Well, they didn’t want to incorporate
the rules. The feedback from the FCC was
incredibly positive. The chairman has
said repeatedly very nice
things about A-Plus. But at
the end of the day, they really
required [the National
Telecommunications and
Information Administration]
or [the Rural Utilities
Service] to simply adopt
the rules of the road that
we had proposed and incorporate them
somehow with the stimulus projects.
But I think that by the time we
made the proposal, they were
kind of locked and loaded in a different
direction. And while they
were open to adoption proposals,
they weren’t either able or willing
to incorporate those rules, which
were predicated on the assumption
that there was a need for
some government funding, not
for us, but for digital literacy going
to school districts.

If there are further rounds of
simulus funding, I think that opposed
to a national program that
I was hoping for, I think it will be
left up to individual operators
working with individual school
districts to apply in a particular

MCN: Why is it important to get
rid of the must-carry rules and
what would operators do, or be
able to do, that they can’t do

First, there is an important
principle at stake. So, even if
there weren’t a practical consequence,
I think it is important to
continue to make the case that
the First Amendment rights of
operators, with enormous implications,
should be respected,
and that the must-carry regime,
whatever the rationale that carried
the day narrowly in the
Turner decision, doesn’t exist
today. So I just think it is important
to make the case that the
original rationale in terms of
having the government place a
burden on your business is not
warranted and shouldn’t pass
muster under the First Amendment.

The practical consequence
is an open question. There was
a day when the implications of
must-carry were staggering. It
was a huge burden on capacity
that was much more limited.

Going forward, we’re getting
more capacity and becoming
more fl exible, but it is not like it
is unlimited capacity. Operators
and distributors still have to
make choices about what services
they are off ering, what kinds
of programming. And any time
the government puts its thumb
on the scale and said, ‘I am telling
you that you have to do this
and this’, somewhere else there
is something else that you might
have preferred to do but are not

MCN: So are you saying that
must-carry is now more about
the principle than the practical
drag on the industry?

I think as we have increased
capacity, you could probably
make the case that it is less of a
drag than it might have been 15
years ago. But I think that assumes
that there aren’t going to
be enormous demands on capacity
coming down the pike.

I think how you manage your
bandwidth, and the imperatives
to use the band more efficiently,
all of those things are being done
because, although it is a hugely
robust pipe, it is a pipe with, at
some point, a limitation on the
capacity and the kind of service
you can offer.

And in a world that has an
abundance and diversity of voices
that are clearly being carried,
clearly being accessed by the consumer,
I think it is a perfectly legitimate
question to be raised as
to whether or not there is a better
way to use that capacity without
the government making the

MCN: You once said that former
FCC chairman Kevin Martin had
a vendetta against the cable
industry. What is the difference
under Julius Genachowski, and
what word would you use to
describe his philosophy

I don’t want to put words
in his mouth, but I view this relationship
as very collegial and
very professional. They have
made some decisions that we
are not going to agree with. And
they have already made some
decisions we have agreed with.

But that is just the normal give
and take. Regulators have a vision
and their job is to carry out that
policy vision. Our job is to advocate
on behalf of our members as
best we can.

We have the opportunity to make
that case. They are very respectful;
they listen. Obviously, you would
like to win every issue. I think that
is the best-case scenario and I think
that is what we have.

MCN: The chairman talked
about rising cable rates in his
speech to the National Association
of Broadcasters
month, but did
so in the context
of rising retrans
fees. Does that
suggest to you
he has a more
nuanced view
than his predecessor?

I don’t know. He was talking
there in the context of retransmission
consent, which is a more
recent issue that has caught his
attention. But I do think there is
a healthy respect for the value of
the services we offer. And while
I don’t ever expect to see a day
when a policy maker is not going
to say they are not concerned
about the prices of any telecommunications
services, I don’t
feel the same kind of intensity
of pressure today as we did over
the last couple of years.

The agenda seems to be very
consumer-focused in a way that
is more focused on what the services
consumers are getting,
how they are treated in terms of
transparency and disclosure, and
whether the plans of the broadband
plan are being met, which
obviously at some point is all designed
to inure to the benefi t of
the American public, but is dealing
with bigger issues than just
the pricing of a specific service.

MCN: You have said that, theoretically,
broadband networks
can do whatever they want
while the FCC is figuring out
what it can do with network
management. Should operators
take that uncertainty as an invitation
to push the envelope?

As a practical matter, I think
our industry historically, and
continuing today, has behaved
very responsibly toward its customers
when it comes to managing
networks. I don’t know of a
single instance where an operator
is doing anything other than
managing the network for the
benefit of the customers. Whether
it is managing consumption at
peak usage to ensure that everybody
is getting the best experience
possible, whether they are
fighting spam or malware or any
of those things in a thousand
different ways that the consumer
never sees, that is what they
are focused on.

No one is sitting around thinking,
‘Gee, let’s figure out a way to
block our competitors,’ or to do
other kinds of nefarious things.
It’s just not happening.

MCN: What is wrong with retransmission

I try to play a constructive
role in this kind of debate because
I obviously have members
with different [views]. But what
is different from every other negotiated
programming contract
is that retransmission consent is
a very highly regulated government
regime. It was developed
as part of a statute that was designed,
almost by definition, to
punish the cable industry. It just
can’t be the case that whatever
one thought about the world in
1992, and the relative imbalance
among cable operators and
broadcasters, that whatever that
answer was should be the right
answer today.

I think we all have the responsibility
to try to work toward solutions
that avoid consumer
disruption. I am very conscious of
the fact that people have the right
to negotiate, and I can’t get in the
middle of that.

But I don’t think our industry
is helped, generally — programmer,
operator, broadcasters, cable
operator — by having disputes
where consumers are essentially
being put in a hostage situation.

There is actually an increasing
threat of it, where [MSOs] have
notified their customers of the
possibility of a signal coming off .
So there is a lot more churn out
there than probably policymakers
understand. But it is not susceptible
to a quick, easy answer.

MCN: What should the cable
industry be excited about as it
gathers in L.A. this week?

Every year I stand up and
say, ‘We are on the verge of a
really exciting time.’ I think
it is here now. We have been
saying that and rolling out the
services and doing new things.
But it is actually stunning how
many things are happening
right now. Not fully baked yet
in every case. But this day of
convergence and integration is
happening right now.

I also think that if you look at
the earnings calls taking place,
it is early but it is encouraging.
It feels like maybe the economy
is not out of the woods, but the
consumer is responding to our
entire set of services either on
the programming or operating
side. So, I think there is a little
more bounce in their step as they
come into the convention.