Numbers Game Far From Over


Kevin Martin’s plan to heap new regulations on cable blew up in his face last Tuesday.

But the Federal Communications Commission chairman is still trying to get the last word. Cable operators now have 60 days to provide the commission with complete rundowns of how many homes their systems pass and how many of those households subscribe to their basic video service.

Martin’s plan collapsed because a majority of the agency’s commissioners refused to accept the validity of statistics presented by Martin that showed that 70% of homes passed actually subscribe to cable.

If the penetration exceeds 70%, that would trigger a provision in federal law that allows the FCC to “promulgate any additional rules necessary to provide diversity of information sources.” That could have given Martin the ammunition he needed to, for instance, try and impose a mandate to sell channels of programming a la carte, i.e., one at a time.

The internal battle was fierce, forcing Martin to delay the start of the meeting until just after 9 p.m., a 12-hour lag which meant some agency staff had to stay put until midnight.

“It’s a shameful thing for the commission. It shows that we are in general disarray working through these issues,” said FCC Democrat Jonathan Adelstein, who accused Martin of withholding data that showed cable penetration well below 70%.

The agreement reached calls for the cable industry to supply data for 2006 and 2007, while the agency committed to base any future judgments solely on the cable-generated data. Martin’s one source showing cable penetration at 71.4% — Television & Cable Factbook, published by Warren Communications News — was jettisoned.

Instead of solving a divisive issue, the FCC’s compromise may, in fact, end up only perpetuating the numbers war.

Two reasons:

  • The FCC did not insist on a uniform definition of a subscriber and a home passed. The data provided the agency could vary greatly without standards because not all cable subscribers in apartment buildings under bulk contracts are counted the same way, and some cable operators might include unoccupied homes and others might not in their homes passed calculation. According to the Census Bureau, the U.S. has 17.4 million unoccupied housing units, a larger number than the homes that rely exclusively on free, over-the-air broadcasting.
  • Small operators do not keep historical homes-passed data. That means they probably can’t furnish 2006 numbers, according to American Cable Association president Matt Polka. The FCC exempts cable systems with fewer than 20,000 subscribers from filling out Form 325, which annually seeks subscriber- and homes-passed totals.

Martin’s credibility took its biggest hit when McDowell and Adelstein had to pry from his office last Monday night the latest cable penetration data collected in 2006 through Form 325. After that data showed 54% penetration, Martin came under attack for hiding inconvenient evidence.

“They tried to hide the ball from their own team,” Adelstein said. “We can’t cook the books to pursue a political agenda without dismantling our very institution.”

The meeting wasn’t a complete rout. Martin was able to pass new rules that will force cable operators to charge no more than 10 cents per month, per subscriber to leased access programmers.

A day later, Martin told his FCC colleagues to be prepared to adopt cable-ownership limits at the agency’s Dec. 18 meeting. Martin is seeking to revive a court-rejected rule in 2001 that stops any cable operator from serving more than 30% of all pay TV subscribers nationally, or about 29 million subscribers. Comcast has 26.1 million subscribers attributable under FCC rules.