House Gets Preview of Video Future

Legislators, witnesses agree it's a whole new digital ball game
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There were a few sparklers but no major fireworks at the
House Communications Subcommittee's Future of Video hearing Wednesday. But a
couple things were clear: The future of video will prominently feature online,
and communications regulations will need to reflect that.

Retransmission consent, the need for review of
communications regulations and the impact of over-the-top video were the hot
topics of the day.

Among the highlights:

National Association of Broadcasters witness David Barrett
of Hearst TV, responding to a question about whether retransmission consent
blackouts were fair to consumers, said no, joined by Michael Powell of the
National Cable & Telecommunications Association.

Since they were asked for yes or no responses, in a
follow-up, Dennis Wharton, spokesman for NAB, elaborated: "It's not fair
to consumers that some pay TV providers are manufacturing a fake crisis and
resisting paying a fair price for our most-watched programming."

Witness Dish Network chairman Charlie Ergen accused
broadcasters of playing MVPDs off each other in a retrans system skewed in
their favor. He also said that retrans money is increasingly going to networks
rather than to the local programming of their affiliates. He called it an
"unfair food fight."

Rep. Diana DeGette (D-Colo.) gave a shout-out to constituent
Ergen at the hearing's opening, but was more cautious about wading into
retrans. She said there was no "one size fits all" solution and that
Congress should not put too heavy a finger on the scale.

Barrett said that local stations continued to invest retrans
money in local news and expanding multicasting offerings. He also said it was
baloney to suggest, as witness Gigi Sohn of Public Knowledge did, that
broadcasters should not be paid for retransmission for their signals because
broadcaster had not paid anything for them. Barrett said that was baloney, and
that they compensated the public through the public service programming that
was part of their public interest mandate. In fact, he said it was that mandate
that distinguished broadcasters from all other video providers at the table,
which also included representatives of IPTV provider Sky Angel and over-the-top
service Roku.

NCTA president Powell Powell fielded a series of Rep. John
Dingell's famous one-word-answer questions, establishing that the cable
industry "ultimately" supported the FCC's open Internet order, that
that order had allowed for usage-based billing and managed services, that
Powell believed cable operators were complying with that order, and that cable
operators were taking steps to make sure its analog viewers could continue to
view must-carry stations in the wave of the FCC's decision to sunset its
viewability mandate.

As earlier reported by B&C/Multichannel News (http://www.broadcastingcable.com/article/486423-Ergen_to_Congress_Parents_Can_AutoHop_Over_Booze_Junk_Food_Ads.php)
Ergen pitched his AutoHop ad-skipper as a change for parents to skip alcohol
and junk food ads. But Dingell was concerned about another type of spot. He
said both his incumbent colleagues and their challengers in the upcoming
election were both concerned about a technology that would allow viewers to hop
over their political spots. Ergen said he could understand where they were
coming from, but defended the service. Sohn joined that defense, saying it was
simply reducing three clicks of a remote -- to skip ads with a DVR -- to one.

There was general agreement that technology had outpaced
regulation and a revisit was needed. But there was disagreement on how far that
should go.

Sohn was ready for lots of regulations to be scrapped, so
long as the government nurtures online video. In fact, she said, growing video
competitors would be a prerequisite from starting to hack back other regs,
which she said would include, eventually getting rid of the retrans, must-carry
regime, syndicated exclusivity, nonduplication, and sports blackout rules- -s he
would support continuing must-carry for noncom stations, however.

Rep. Steve Scalise (R-La.), who has introduced legislation
to sweep away most communications regs, took umbrage at written testimony from
Barrett suggesting his bill -- which would scrap the retrans system that means
billions of dollars in a second revenue stream for broadcasters -- would turn
back the clock to a time when cable operators could confiscate TV signals
without compensation.

Scalise said his bill would do no such thing, and asked
Barrett to reread it. Barrett courteously agreed, but also stuck to his guns
that rolling back retrans was the wrong way to go.

NCTA's Powell said his members were not looking to abandon
all regulation, but instead wanted a regulatory model -- more like a
deregulatory model -- that better fit the current marketplace where cable
operators no longer had a 98% share of the MVPD marketplace or had an ownership
stake in the majority of networks, as was the case when the Cable Act was
passed two decades ago. Subcommittee Chairman Greg Walden (R-Ore.) used the
same stats in opening the hearing, saying the regs were for a bygone era and
need to be revisited.

Rep. Joe Barton (R-Texas), who is also looking for a major
revamp, said that while one was not likely in this Congress, it should be on
the committee's to do list in the next one. He pointed out that while he used
to have access to one channel at best, now there were thousands.

As signaled by the Democratic staff memo on the hearing, the
Verizon-SpectrumCo deal got some attention. Rep. Ed Markey (D-Mass.) asked
Sohn, a critic of the deal, to elaborate on its impact on the video market. She
said it would allow Verizon and cable operators to divvy up their respective
businesses through associated cross marketing agreements, and discriminate
against competitors, like Ergen, through a joint operating entity that would
research integrating wired and wireless broadband. Ergen agreed that could be a
concern.

Walden said that it appeared that everyone wanted a
different deal, and that it would be the committee's job to figure out the
right regime.

The hearing was the second in a series of three called by Walden.
It held a Future of Audio hearing earlier this month. Next up, Future of Data.

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