Differences in Video Regulation
As innovative sources for video content and distribution have emerged and developed, our nation's communications laws have remained largely the same. As a result, participants in the video marketplace are subject to a range of different statutory and regulatory regimes depending on the distribution technology they use. What requirements attach to delivery of the very same program depends on whether it is offered by a broadcaster, cable operator, other MVPD, or online video distributor. Indecency rules also vary depending on whether a program is being shown on a broadcast channel, basic cable, or pay-per-view.
Some of the regulatory differences are grounded in distinctions that warrant particular treatment. Broadcasters, for example, receive free and exclusive use of the public airwaves, and in return must use this public resource to serve the public interest. Cable operators, as users of communities' local rights-of-way, have obligations to ensure that installation and operation of their facilities does not cause property owners uncompensated damages.
Other regulatory disparities, however, echo outdated notions of market power. Twenty years ago, cable was effectively the sole provider of multichannel video programming service in the country, serving 98 percent of all multichannel households. Today, incumbent cable's share of the multichannel marketplace stands at 56 percent and 4 of the 8 largest MVPDs in the country are non-cable.
And twenty years ago, of course, there was no Internet and no broadband connections capable of delivering high definition video to America's households.
Despite the array of new competition, choice and service offerings for consumers, cable operators continue to be subject to requirements that are based on aging snapshots of the video marketplace. There are rate regulation rules designed to serve as a proxy for market-based pricing, even though most American households have a choice of at least three MVPDs and millions may opt to forego multichannel subscriptions altogether in favor of Internet-delivered video.
There are program access rules designed to nurture facilities-based competition to cable. But cable's main MVPD competitors -
There are also content carriage obligations, such as leased access, the usefulness of which has been obviated by the Internet.
In light of the fundamental changes that have occurred in the marketplace over the last 20 years, we applaud Chairman Walden and this Subcommittee for starting the dialog on the appropriate regulatory framework for video services.
What is the Role for Policymakers?
A natural question for this Committee is what type of regulatory framework will best promote consumer choice. There are clearly many provisions in today's communication laws that are outdated and unnecessary. Two areas ripe for reform are retransmission consent and the so-called navigation device "integration ban" that applies to cable operators alone among video competitors. When the retransmission consent regime was first enacted, for example, broadcast stations could reach viewers only through cable systems or over-the-air broadcasting, and it was feared that absent a fair retransmission consent system, over-the-air broadcasters could be forced into extinction. Changes in the video marketplace since 1992 also have skewed retransmission consent negotiations. While those changes have included the development of programming sources that compete with broadcasters, broadcasters still control marquee events. The combination of those events and the availability of DBS and telcos as alternatives to cable has substantially increased the leverage that broadcasters can exert over MVPDs in retransmission consent negotiations. Consumers bear the brunt of this imbalance: the number of retransmission consent-related shutdowns increased from 12 in 2010 to 51 in 2011 to 91 in 2012. And we are at 80 in 2013 - and still counting.
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