Rep. Rick Boucher (D-Va.), chairman of the House Communications Subcommittee said at a subcommittee hearing on video competition Thursday that among the things the committee wanted input on was whether the FCC's program carriage complaint process works or whether the Congress should try to fix it.
His question was driven by carriage complaints about program distributors favoring their own programming over unaffiliated programming (the FCC currently is considering such complaints from Wealth TV and the MidAtlantic Sports Network [MASN] for example).
The hearing was scheduled opposite the FCC's "historic" vote on proposing network neutrality rules, and provided a platform for some Republican members to weigh in on that issue as it related to the implications for Web video.
The hearing provided a platform for a host of issues, from retransmission consent and broadband deployment to satellite carriage issues and even one legislator's complaint that the cable company did not reach homes "some distance" from the road.
Boucher pointed out that Hulu and major network Web sites offer full episodes of programs that aired as recently as the day before. "The more such programming migrates to the Internet," he said, "the less consumers may need to subscribe to a multichannel video provider at all."
He also cited ESPN360's availability to subscribers of only some programming distributors. "What are the implications of these emerging business models?" Boucher asked. For his part, ranking member Cliff Stearns (R-Fla.) said that the multichannel video marketplace has been "robust." He pointed out that cable's market share has dropped from almost 100% 20 years ago to about 63% today.
Stearns cited a variety of providers including telcos and DBS. He pointed out that DirecTV has more subs than any one cable company except Comcast, and DISH is number three.
"It is a truly amazing thing how far we have come in such a short amount of time," he said. Even the FCC has acknowledged that competition, he said, citing the 2009 video competition report "confirmed growth and entrenchment of competition in the video marketplace, the decline of vertical integration between cable operators and program networks, and the emergence of new video competition from programming distributed on the Internet."
Perhaps, but the FCC also continues to defend its 30% cap on cable subs with the argument that there remains room for more competition and that the balance could swing back without continued government regulations.
Cablevision COO and NCTA Board Chair Thomas Rutledge, a witness at the hearing, agreed that cable competition is healthy. He said that the program access rules "are no longer appropriate," and expanding the satellite-delivered programming access rules (by doing away with the terrestrial exemption) should be dismissed out of hand. "If you take a risk and develop creative and often costly new programming and you fail, you alone bear that cost," he said. "But if you succeed, you must share the fruits of your risk and innovation with your competitors."
Stearns used the hearing as an opportunity to get in a shot at the FCC's network neutrality proposal. He said that network neutrality mandates deter, or at least chill, investment. "Anti-discrimination and openness mandates have limited companies' ability to differentiate themselves from the competitors and provide their customers with unique products and the high level service they demand."
That was by way of arguing that with all that competition going on, and no clear winning business model for digital delivery, it was even more important to depend on market forces, rather than government, for that model.
Stearns also argued against closing the so-called terrestrial loophole. "Congress wanted to give providers an incentive to invest in local programming," he said, an incentive that would be "diminished" if providers were "forced to share the content they develop with their competitors."
Commerce Committee Chairman Henry Waxman (D-Calif.) said his interest in the video competition issue, which he said the hearing would help frame, was in insuring "diversity, competition, choice and access."
He said viewers' and users' interest should be paramount.
Waxman said program carriage and access issues remain despite what he conceded was new competition from the Web and broadcast multicast channels.
"As with other areas of telecommunications policy," he said, "the advantages of historic incumbency can be difficult for new entrants to overcome absent government intervention."
Rep. Fred Upton (R-Mich.) questioned the need for the hearing, particularly when the FCC was at the same time launching its network neutrality proposal. "We should be putting closer scrutiny on the proposals pending before the FCC."
He then proceeded to do so. Upton said consumer control expectations fuel investment and competition, and that the proposed network neutrality rules "seek to alleviate a problem that doesn't exist and threatens to deter the investment necessary to enable consumers to enjoy additional, exciting new features that the Internet could offer."
Upton said FCC Chairman Julius Genachowski's proposed new regulations would "stifle" investment. "How does the FCC think the U.S. will achieve ubiquitous broadband deployment after the agency imposes onerous regulations that will drive investment out of the broadband sector," he said.
Rep. John Dingell (D-Mich.) put in a plug for local broadcasters. He said his participation in the debate would be informed by his belief that "all people, regardless of income, are able to view free, over-the-air TV with local programming."
Rep. Bart Stupak (D-Mich.) used his opening statement to praise Comcast for striking a carriage deal with the NFL. Following a hearing last year on access to sports programming, Stupak had asked the FCC to appoint an independent third party to arbitrate the dispute, but pointed out they had come to agreement on their own. "I want to express my appreciation to Comcast for working with the NFL network to insure that sports fans were not denied access to content they demand," he said, adding that it was "an example of how these issues can be resolved to the benefit of consumers without direct government intervention."
Stupak said that the government should step in to regulate competition "only as a last resort."