Powell: Distinctions Disappearing Between Cable, Web

Says NCTA has been "very engaged" in the privacy bills currently making the rounds on Capitol Hill
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National Cable & Telecommunications Association president and former FCC chairman Michael Powell says the association has been "very engaged" in the privacy bills currently making the rounds on Capitol Hill, driven by the fact that, over time, there will be fewer distinctions between what cable does and what the Web does. To that point, he says he agrees that in a technical sense cable companies are now broadband providers, but that he thinks video is still a compelling service that operators will be in for a long time to come.

That came in an interview for C-SPAN's Communicators series, which airs over the weekend. Powell said he thought the retrans debate was a bit overblown and would not get to the heart of a bigger issue, sports rights and escalating league rights deals.

Powell said examples of the cross-pollenization of cable and Web were the use of metadata and providing more tailored advertising.

"These are things that cable industries will want to do as well, so we're very focused on making sure we're not left out of that equation."

He said the Telecom Act of 1996 could use a rewrite and is "fading" in its relevance. He reiterated his long-standing criticism of the FCC regulating in "balkanized buckets," says leads to jurisdictional disputes, litigation. He says it contains heavy inefficiencies and will likely "die of its own weight." He says that, at some point, Congress has to migrate us out of there" and to a "bit is a bit" world.

Asked whether Time Warner Cable Chief Strategy Officer Peter Stern was correct when he described his company as a broadband provider and that the TV shows it delivers are essentially a convenience. Powell said that, from a technology and architecture standpoint, "it's certainly true. A pipe is a pipe now; data is data." He said in one configuration zeroes and ones are a picture, and in another video, and in another a conversation. He said that was another reason to stop balkanizing the government's approach to them.

From a business standpoint, he said, broadband is the growth part of the business and the higher margin part of the business. "It is definitely the 21st century architecture. " Powell said it sounds exciting to say TV is an app, but it is also a "compelling service that people like," and that it will morph in the way consumers interact, but will still be a compelling offering and cable will still be in that business for a long time.

Powell said that the retransmission consent regime is based on a legacy regulatory environment and the premise that there was a social compact with commercial broadcasters serving the public interest (he put "hand quotes" around "interest") needs of communities in exchange for free spectrum and must-carry rights. Powell said he has always been cynical about the social compact. He said it has wound up being more theoretical than real. "I think a lot of horse trading goes on as to whether there are real real burdens associated with that or not."

In any event, he says, major companies have come out, in part, from that space, and have added cable programming and studios and are now well-funded and effective media companies that provide phenominally good programming and want to come into the market and negotiate for fees just as others do. But the disconnect is the advantages they have in the negotiations stemming from that social compact that arguably isn't "there or fair."

Powell said he thought the issue was a little overblown. He said specific rule changes would probably not radically or dramatically change the nature of the cable/broadcast relationship, and would not get to the heart of a growing challenge. He suggested that was the was the price of sports rights, with leagues with antitrust protection driving up prices that are passed along by, say an ESPN to operators, who want to pass it along to consumers, many of whom aren't sure they want it. "That is OK up to a point," he said, but "is there some point where it breaks the compact, where it is too much." He said he didn't know. But he said there was anxiety that "maybe not today, maybe not tomorrow, maybe not even next year, but this seems like an infinite trajectory that at some point we can't absorb, and what happens when we can't."

But he said he thought there was a healthier round of discussion about the issue, and some "rich business discussions," which he said was preferable to a government attack on pricing and a la carte. He did not point any fingers, although his success as FCC chairman, Kevin Martin, who did attack cable pricing and push for a la carte.

Asked how spectrum figured into cable's plans -- particularly in the wake of the Verizon deal to buy cable spectrum -- he said the real issue is not spectrum but capabilities like mobility and nomadic functions that spectum is the vehicle for. But he also said wireless was a way to "glue" cool stuff together via home networking, He said his home was "littered" with things that talked to his broadband and wi fi connection to run a music system, or TiVo, or thermostat he can change remotely.

"I think any industry in the information space has to be working on a wireless strategy," he said. He says the challenge is to make sure cable is part of all the wonders folks like Steve Jobs created. "I think the [Verizon] deal represents that the cable industry is coming to the conclusion that we have a strong interest in wireless but we are probably not well positioned to be a terrestrial cellular tower-based wireless company. That is as really hard business." But he said the sale to Verizon should not be mistaken for thinking those companies are done with the wireless business. "They can't be."

He warned against companies who mistake a new business for another extension of their product line. He said those operators will likely partner with terrestrial wireless, which he did not see as being these enormously powerful, dynamic-changing entities. Powell said he thought the competition was more fierce than had been recognized, and said it was not going to go away.

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