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Lawmakers Divided Over Whether to Overhaul Cable Rules Lawmakers Divided Over Whether to Overhaul Cable Rules

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Lawmakers Divided Over Whether to Overhaul Cable Rules

July 24, 2012

A Senate panel on Tuesday appeared as divided as the industries it regulates over whether lawmakers should change a 1992 law aimed at promoting competition in the cable television market.

Cable firms joined by satellite providers have been calling on Congress to make changes to the 1992 cable act, which set up the "retransmission" process under which cable firms negotiate fees to use broadcaster signals and also imposed a "must-carry" provision requiring cable firms to carry various local broadcast stations within each operators market.

Cable firms told the Senate Commerce Committee Tuesday that the law's goals of fostering competition have been achieved and that they now face competition from both satellite provides and new online video distributors such as Netflix. At the same time, they argued that broadcasters are taking unfair advantage of retransmission process by demanding ever increasing fees for their programming. They also noted that consumers are being hurt by disputes in recent years that have led to blackouts in some cable markets after broadcasters have yanked their programming over fee disputes.

"Since 92, the title wave of media consolidation between broadcasters and cable networks has given enormous bargaining power to the big four networks, power that abuses the government sanctioned protections that may have made sense 20 years ago in a completely different business environment but they do not today," Colleen Abdoulah, CEO of WOW Internet, Cable and Phone, told the committee.

Broadcasters have countered that the current system is working as intended and that most retransmission negotiations do not result in blackouts. CBS Executive Vice President Martin Franks noted that his network has successfully negotiated deals with both Abdoulah's firm and with Time Warner Cable, which also testified at the hearing. Broadcasters also say that the fees they demand are aimed at recouping the costs of their programming and help to pay for local coverage.

"No one begrudges our pay TV friends the right to make a profit. But when it comes to programming costs, fair is fair. Even after almost 20 years, television broadcasters still do not receive compensation commensurate with their ratings," National Association of Broadcasters President and CEO Gordon Smith, a former GOP Senator from Oregon and Commerce Committee member, said.

Under current law, the Federal Communications Commission has limited power to intervene and so cable firms and other pay television providers have appealed to Congress to address their concerns.

But if both sides were looking for clear direction from the Commerce Committee, they didn't get it Tuesday. While lawmakers voiced concern with blackouts that have occurred as a result of retransmission disputes, there was little agreement over how to address the issue.

Sen. Jim DeMint, R-S.C., who is in line to become the top Republican on the Commerce Committee in the next Congress, has introduced legislation that would repeal many provisions in the 1992 Cable Act and other regulations imposed on cable providers including the retransmission consent and must-carry rules. "The best protection for consumers is competition and choice," DeMint said, adding that the 1992 cable act is "obsolete" today.

Senate Commerce Communications Subcommittee Chairman John Kerry, D-Mass., however, said he worries that eliminating such rules may hurt local broadcasters. Still, he has called for some changes to the current process, including requiring that cable providers be allowed to continue carrying broadcaster programming even when negotiations break down.

At the same time, Senate Commerce Chairman Jay Rockefeller, D-W.Va., lamented the rise in cable rates and lack of choice of channels consumers have but offered few thoughts on how to address such concerns. "Real competition should be bringing rates down," he said.

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