A Powerful Pipe


The cable industry goes into New Orleans for its annual convention with big headaches but bigger opportunities.

As National Cable & Telecommunications Association President Kyle McSlarrow points out to B&C this week, the association has a flurry of lawsuits against the FCC. McSlarrow thinks Chairman Kevin Martin is intent on constraining the cable industry.

But it seems to us cable is something of a victim of its own success, because of its reach and the increasing popularity of its programming. The government nannies forget that viewers voluntarily pay to receive cable.

The explosion of cable channels offers viewing choices for everyone, so much so that Martin's embrace of a la carte seems logical from afar. With all those choices—ranging from channels for gay viewers to separate networks for golf and tennis—why can't viewers just pick and choose? If the increasingly interactive and on-demand marketplace, rather than government, demands it, cable will most surely embrace it or face the consequences.

From retail a la carte, it was a short ideological trip for Martin to hop on the unbundling issue, which is a wholesale version of the same business practice.

Some cable operators are forced to buy carriage for networks they don't care about to get the ones their viewers want. Martin has gone to war against that practice, too, and that's a somewhat more problematic issue because smaller operators agree with Martin. They say they are defenseless against big programmers and vertically integrated programmer-operators. But that's not an issue for the FCC, which has no role regulating how programming deals are made on any level.

So far, the industry has dodged some bullets, with Martin lacking a majority for multicast must-carry and the FCC's last-minute reversal on a regulatory finding that could have triggered major re-regulation of the industry.

As McSlarrow points out, there is no silver stake to drive into the heart of the regulatory beast, but time and timing argue against a program unbundling push. Martin's congressional bosses now urge him to pay more attention to the DTV transition and legislators are now turning their attention to getting re-elected.

Cable's biggest concern isn't about carriage, anyway. It's about the Internet. The issue of network neutrality has morphed into “network management.” If it morphs again into legislation or regulation, that could well chill investment at a time when the economic downturn/recession is doing a good job of that already.

The cable industry needs to demonstrate that regulation is unnecessary, which means networks must be transparent in how they manage all that bandwidth-hogging video traffic and let customers know exactly what they will and won't be getting and why. Cable is well-positioned to make its case as the high-speed carrier of choice.

If we're right and the model for video delivery eventually moves to the Web or mobile devices, cable is already there, offering a bundle of services that has become a quadruple play, with video, voice, data and wireless. That's one powerful pipe.