Smaller cable operators and telecom companies Monday drew a direct line between program bundles and program diversity, high-speed broadband upgrades and access to online video, all hot-button issues at this commission.
That came in an FCC workshop on independent programmer access to distribution platforms, where witness after witness fingered bundling practices, most-favored-nation contracts and more. They said being required to carry channels their viewers don't want—in order to get the ones they do—means less room for independent voices, for high-speed broadband, and for developing over-the-top video services to move where the market is going.
Heather McCallion, VP of programming at Atlantic Broadband; Chris Kyle, VP of industry relations and regulatory for Shentel; and Judy Meyka, executive VP of programming for the National Cable Television Cooperative (NCTC), agreed that bundling was a big problem.
The two main problems, they said, were bandwidth constraints and cost. Consumers were paying for channels they did not want, and providers had less bandwidth for channels they did and other services.
McCallion pointed to being forced to carry a regional sports network outside of its immediate market, so outside of the area where subs would have a particular rooting interest. All talked about "take it or leave it" deals that sometimes included channels "to be named later" that had not even launched yet and penetration requirements that prevented them from offering the skinny bundles their consumers want.
Then there are the "most-favored-nation" clauses that allow programmers to "cherry pick" the best terms, which smaller operators have to meet but sometimes can't.
They advised the FCC officials at the workshop that new regs were needed, including fixing the problems via the FCC's good faith negotiation retransmission consent proceeding.
The American Cable Association, which represents small and midsized operators, has called on the FCC to make bundling a de facto violation of good faith negotiation.
The witnesses also asked the FCC to allow NCTC to file FCC complaints as a collective—it is a consortium of smaller operators who leverage those numbers to strike master agreements (collective carriage deals). Currently they must file complaints individually.
Kyle said bundling has an adverse affect on his company's ability to offer the broadband speeds and quality his customers need. He said every bundled channel reduces capacity and hinders its ability to provide over-the-top video, which the FCC is trying to promote.
He said even with 705 MHz of capacity on all its systems, forced bundling was a capacity constraint. And there were even only a handful of channels left on their 1 gig systems.
A top official pressed them on the capacity constraint issue. McCallion said that deploying DOCSIS 3.0 took 32 channels and that it was a challenge to keep up with digital video demands. Kyle pointed out that they had more internet than video subs but that when a bundled channel went on it didn't come off, and it didn't get to be moved.
An audience member asked whether the larger programmers were trying to reduce the space for their competition. The consensus was that though they could not be in the programmers' heads, that appeared to be the result.