Cable Show 2012: Genachowski Praises Cable for Wi-Fi Efforts

Says FCC is looking closely at shared service agreements in retrans negotiations; has no problem with usage-based pricing experimentation

By John Eggerton -- Broadcasting & Cable, 5/22/2012 12:02:56 PM

Complete Coverage: Cable Show 2012

FCC Chairman Julius Genachowski lent his support to a cable industry effort to share Wi-Fi hot spots, said the FCC had real concerns about broadcasters conducting joint retrans negotiations via shared services agreements and gave cable operators a shout-out for their broadband build-outs, particularly with the speed boosts from Docsis 3.0.

The chairman also said he had no problem with cable operators and others experimenting with usage-based pricing, pointing out that the result can be lower prices for those using less bandwidth.

That came in a conversation between Genachowski and NCTA President and former FCC Chairman Michael Powell at the Cable Show in Boston Tuesday morning.

Talking about the open retransmission consent rulemaking proposal, the chairman said: "One of the things that has come up in the proceeding that is getting closer attention at the FCC is shared services agreements."

He said that while it was perfectly proper for broadcasters to seek compensation for their programming, what was more problematic was that in addition to negotiating retrans for a "permissible" duopoly, a shared services agreement "all of a sudden [means] it is three stations negotiating together for retrans. That raises real issues and it is something we are looking at closely at the FCC."

Powell said he appreciated that attention, but added that maybe Congress might find a way to accommodate those and other issues in a rethinking of the 1996 Communications Act. Various legislators have signaled that might be on the docket for 2013.

Usage-based broadband pricing has been under the microscope as of late. Comcast just last week moved from a hard cap and cut-off policy to a more flexible approach, though that did not assuage usage-based pricing critics. But just as the chairman was apparently not allied with those who criticized the Wi-Fi sharing deal as an example of reduced competition, he was not joining those who slam the industry over usage-based pricing.

Powell pointed out that cable operators were wrestling with getting that pricing right, the idea being to balance funding investment in their networks with being fair to consumers and consistent with the law.

Genachowski said business model innovation is very important, particularly in "new areas" like broadband. He said he has never shared the point of view that there was "only one permissible pricing model for broadband." That was the same view that was at odds with the FCC's decision under Genachowski not to treat differential pricing as a violation of Internet openness rules.

"We said that usage-based pricing could be a healthy and beneficial part of the ecosystem," he said. "It could help drive efficiency in networks, increase consumer choice and increase fairness," the fairness being that it could lower prices for some consumers. "Experimentation with those goals in mind is completely appropriate," he said.

On the need for speed, the chairman pointed out that only three years ago, about 12% of broadband networks were able to deliver broadband of at least 10-20 Megabits, while today, with the roll-outs of Docsis 3.0, about 80% of subs have access to speeds of 100 Mbps or more. He pointed out that the FCC had a goal of 100 Mbps to 100 million by 2020, and that with cable's Docsis 3.0 efforts, "we are well on our way to hitting that goal."

Powell also pointed out that cable has increased its speeds by 900% in the past decade.

Powell framed his question on the pace of broadband build-outs skillfully, asking whether, under his chairmanship, the combination of government and industry efforts had produced satisfactory results. The chairman said it was "moving in the right direction," and went on to praise mobile broadband innovation and leadership before circling back to the wired medium, which Powell pointed out had built out to 93% of the country.

Genachowski said he was not sure what the role of mobile broadband would play in the broadband ecosystem, because it wasn't clear what speeds people would want.

The chairman said one of the very exciting facets of wireless is Wi-Fi, which he called one area where cable was making a big impact. "Cable has been leading the way in innovating around Wi-Fi," he said, said, giving a shout-out to the announcement by Comcast, Bright House, Time Warner Cable, Cablevision and Cox that they were coming up with a Wi-Fi standard that would allow their subs to share some 50,000 Wi-Fi hot spots.

Genachowski said he was pleased they were offering their customers that roaming capability. "I think that is great," he said. Powell asked whether cable Wi-Fi had an important role in relieving the spectrum crunch by helping offload traffic, getting it off the towers and into the ground. "Absolutely," said the chairman. That could be a big part of the solution, he said, though he also said that in a sense that mobile congestion was a problem the country wanted to have, because it stemmed from an explosion of innovative apps and consumer desire for service.

He said the government did not anticipate that hunger, and would have to look harder at freeing up government spectrum. And perhaps for the first time, he did not give a shout-out to reverse incentive auctions when pitching the need for more spectrum, though that is primarily a broadcaster issue. He did not talk about inefficient users of spectrum or anyone hoarding spectrum -- a charge leveled by some against cable and telco companies. He did talk about sharing government spectrum and freeing up more of that. But he focused on the positive. "We have a spectrum crunch because incredible people in this country have innovated exciting apps, people are using them and they are hungry to use them everywhere, anytime, anywhere."

What Powell and Genachowski agreed was not so great was the broadband adoption rate. Approximately two-thirds of the population do not subscribe to broadband service at home. "That isn't anywhere near good enough," said the chairman. He praised the cable industry's efforts to bridge that gap, including Cox's early initiatives, Comcast's Internet Essentials program and the Connect2Compete government-industry partnership.

He said the cable industry offering low-cost ($9.85 a month) broadband to low-income homes with school-aged children was "a big deal" and commended the cable industry for "stepping up." They also agreed that digital literacy was a problem, with the chairman taking the opportunity to announce that the Ad Council has agreed to help with the adoption/literacy effort, launching a multilingual PSA campaign on broadband adoption in January. The council will be seeking commitments of airtime and Web ad space from cable and broadcast outlets for the campaign.

It was clearly a mutual admiration society between the current and former FCC chairmen. While Genachowski had essentially nothing but positive things to say about cable, Powell praised Genachowski as a tenacious and honorable leader, advancing a broadband plan that can provide a platform for every citizen to achieve the American dream, and helping bring about Universal Service Fund reforms, which Powell admitted he had tried, but failed, to achieve. "I think you have struck the proper balance," said Powell, adding that he thought it one of the chairman's "crowning achievements."

Genachowski praised the other commissioners and the cable industry for supporting that reform.