American Cable Association Chairman Bob Gessner warns of a time when unregulated edge provider gatekeepers withhold their contents as a negotiating tactic, but signaled that time is already here.
Being interviewed for C-SPAN's Communicators series, Gessner, president of MCTV, which has has about 47,000 customers in Massilon, Ohio, said that if he had a "grave concern" about the Internet, it was that the FCC's Open Internet order, which prevents ISPs from blocking or throttling or paid prioritization, does not address the entire network.
Just this week, FCC Chairman Tom Wheeler reiterated that recent revelations about Netflix slowing traffic were not a net neutrality issue because the rules don't apply to content providers like Netflix.
"I think many consumers have fooled into thinking that network neutrality applies to the entire network, and it does not," said Wheeler.
Gessner conceded that, as an ISP, he was one of the gatekeepers of the Internet, but said that at the other end of the net there is another gate, the one that lets content onto the Internet. He said that was controlled by the so-called virtuous edge providers like Netflix, Google, Viacom and CBS.* He said ISPs' gate is regulated, while an edge provider is totally unregulated and free to block, throttle and redirect.
"It is definitely a tilted playing field and my concern is that edge providers are about to 'Cable-ize' the Internet," he said, a "time when edge providers come to the ISP and demand payment otherwise their content won't be available. And that has already happened. It has happened for cash and it has happened as leverage in negotiations."
He said he feared when a Facebook gets hold of that model it will add dollars of cost to broadband subscribers over content over which they have no control and in which they have no interest.
Gessner also talked about set-top boxes, saying he agrees with National Cable & Telecommunications Association President Michael Powell that his members would love to get rid of their set-top boxes.
He pointed to all the talk about boxes recently given the FCC's proposal to make set-top data and programming available to third parties.
Gessner said he thought there was some misunderstanding about what a set-top is. "It's not just a $250 mini-computer that we're buying and putting in somebody's home," he said. "There are data costs associated with it. There are user interface costs that we pay for that box every month. Then, there is the service element. A call center that will answer your calls and explain how to use your remote control. Technicians that will come to your home and plug it into the wall." He said all of those costs add up fast, then the box will be replaced in five or six years.
He said the set-top charges cover the cost of the box, but is not a highly profitable enterprise.
If there was an easy interface on a tablet or smart TV or computer that consumers like and want, he is fine with that, he said, rather than the investment in millions in customer premises equipment each year.
Also in the interview was ACA President Matt Polka, who said they were in complete agreement with the NCTA and other industry players saying the FCC's proposal was a solution in search of a problem.
"Chairman Wheeler talked about unlocking the box. In our view, it is opening a Pandora's box," in part because the proposal is vague about a yet-to-be-determined standard for the boxes, what technology will be used, how headends will have to be reconfigured, and more. Polka said they have no idea what the capital costs will be--he says hundreds of millions of dollars if not billions--that could take away from investment in broadband, which he points out the FCC is pushing broadband providers to deliver.
* CBS online content was unavailable to Time Warner Cable subs during a 2013 carriage impasse that included rights to both on-air and online content.