Hot-Button Business

Video franchising, à la carte, more are on cable's plate

The biggest Washington issue facing the cable industry as it gathers in Atlanta this week is a national video-franchising bill that House Telecommunications Committee Chairman Joe Barton (R-Texas) has promised is going to become law.

The national franchise bill is more cable-friendly due to NCTA lobbying against a couple of key provisions: uniform pricing and a 15%-penetration head start for telcos before cable operators could have applied for their own national franchise.

But if it does become law—and there is no guarantee despite Barton's assurances—it eases the way for competition at a time when the cable industry is looking for a return on the $100 billion it spent in the past decade to ready its plant for the vaunted triple-play option: voice, video and data.

Still, “the House bill shaped up to be a lot better product than it was a couple of months ago,” says National Cable & Telecommunications Association President Kyle McSlarrow. He is hopeful that it will ultimately contain a provision NCTA seeks to boost cable's ability to compete for phone service.

There has been much talk about à la carte—selling channels individually—but action is unlikely, even with FCC Chairman Kevin Martin pushing for it.

Cable may not be under the FCC's indecency-enforcement regime—and McSlarrow thinks it will stay that way—but indecency is behind calls for family-friendly programming tiers and à la carte cable service.

Cable operators have begun to offer family tiers, but NCTA continues to fight à la carte. McSlarrow says in is making progress in “communicating the fact that à la carte is anti-consumer. We still have more work to do, but I believe we are getting there.”

FCC Chairman Martin, a committed indecency-rule enforcer, has been pushing à la carte as a way for the cable industry to provide subscribers more control of their TV channels, but there is not likely to be any forced à la carte, says Legg Mason media and telecom analyst Blair Levin.

“If by à la carte you mean, will the government intervene in the marketplace to require multichannel video providers to make an à la carte offering, I would say, very little,” he says.

The Congressional Research Service (CRS), which provides confidential research for legislators, gave the cable industry a boost last week with a study that called into question an FCC report released under Martin that suggests à la carte is economically viable.

According to a copy provided to B&C by a House staffer, the CRS study finds à la carte could “undermine the economic feasibility of large tiers.” It also finds that the Martin report's criticisms of an earlier FCC report condemning à la carte were either “not supported by available market data or cannot be proven one way or another.”

Another hot-button issue: programmer access to cable systems. Some independent programmers have formed a trade group, the Association of Independent Television Programming Net­works, to lobby for regulatory help in getting carriage, including conditions on the still-pending purchase of bankrupt Adelphia by Comcast and Time Warner.

Two other big issues are proposed changes to retransmission-consent negotiations and carriage of regional sports networks. Barton has said the former, pushed by smaller operators, is a nonstarter. McSlarrow expects it to be raised when the Senate considers its own version of a telecom-rewrite bill.

As for the sports issue, the House Government Reform Committee scheduled a hearing April 7 on the lack of carriage of Washington Nationals games, which stems from a sports-rights fight involving Comcast.

Video franchising, à la carte, more are on cable's plate e-mail comments to jeggerton@