National Cable & Telecommunications Association President Kyle McSlarrow talked with B&C before the NCTA Show in L.A. (click here for complete coverage), weighing in on convergence, the government's broadband stimulus program, cable operators and online content, and must-carry. Excerpts of the chat follow.
Broadcasters are done with their digital transition, at least until the FCC starts reclaiming spectrum. Where is cable in its transition?
I would say we are midstream in the digital convergence. Some companies are further along than others. But I think the one takeaway I have is, if nothing else, the enormous success of DOCSIS 3.0 and HD programming.
I think people are already planning to accelerate the move to all-digital as quickly as possible, or at least reclaim as much bandwidth as possible and use it efficiently.
What is your assessment of the broadband stimulus funding program?
I probably should be more politically correct than this, but I just think it is a disaster.
Why?
There probably are very meritorious awards that are being received, in particular the ones recently that [have gone] to adoption. But you can look at $7 billion and say, Gosh, $5 billion is going to really good stuff, but there is still a lot of money that clearly--and I don't doubt the good intentions of the people making the awards--is going toward overbuilding services that are already being provided by private investment.--John Eggerton
Why is it important to get rid of the must-carry rules and what would operators do, or be able to do, that they can't do now?
First, there is an important principle at stake. So, even if there weren't a practical consequence, I think it is important to continue to make the case that the First Amendment rights of operators, with enormous implications, should be respected, and that the must-carry regime, whatever the rationale that carried the day narrowly in the Turner decision, doesn't exist today. So, I just think it is important to make the case that the original rationale in terms of having the government place a burden on your business is not warranted and shouldn't pass muster under the First Amendment.
The practical consequence is an open question. There was a day when the implications of must-carry were staggering. It was a huge burden on capacity that was much more limited.
Going forward, we're getting more capacity and becoming more flexible, but it is not like it is unlimited capacity. Operators and distributors still have to make choices about what services they are offering, what kinds of programming. And anytime the government puts its thumb on the scale and says, "I am telling you that you have to do this and this," somewhere else there is something else that you might have preferred to do but are not doing.
You have said that, theoretically, broadband networkscan do whatever they want while the FCC is figuring out what it can do with network management. Should operators take that uncertainty as an invitation to push the envelope?
As a practical matter, I think our industry historically, and continuing today, has behaved very responsibly toward its customers when it comes to managing networks. I don't know of a single instance where an operator is doing anything other than managing the network for the benefit of the customers. Whether it is managing consumption at peak usage to ensure that everybody is getting the best experience possible, whether they are fighting spam or malware or any of those things in a thousand different ways that the consumer never sees, that is what they are focused on.
No one is sitting around thinking, "Gee, let's figure out a way to block our competitors," or to do other kinds of nefarious things. It's just not happening.
What is wrong with retrans?
I try to play a constructive role in this kind of debate because I obviously have members with different [views]. But what is different from every other negotiated programming contract is that retransmission consent is a very highly regulated government regime. It was developed as part of a statute that was designed, almost by definition, to punish the cable industry. It just can't be the case that whatever one thought about the world in 1992 and the relative imbalance among cable operators and broadcasters, that whatever that answer was should be the right answer today.
I think we all have the responsibility to try to work toward solutions that avoid consumer disruption. I am very conscious of the fact that people have the right to negotiate, and I can't get in the middle of that. But I don't think our industry is helped, generally--programmer, operator, broadcasters, cable operator--by having disputes where consumers are essentially being put in a hostage situation.
There is actually an increasing threat of it, where [MSOs] have notified their customers of the possibility of a signal coming off, so there is a lot more churn out their than probably policymakers understand. But it is not susceptible to a quick, easy answer.
What should the cable industry be excited about as it gathers in L.A. this week?
Every year I stand up and say, "We are on the verge of a really exciting time." I think it is here now. We have been saying that and rolling out the services and doing new things. But it is actually stunning how many things are happening right now. Not fully baked yet in every case. But this day of convergence and integration is happening right now.
I also think that if you look at the earnings calls taking place, it is early but it is encouraging. It feels like maybe the economy is not out of the woods, but the consumer is responding to our entire set of services either on the programming or operating side. So, I think there is a little more bounce in their step as they come into the convention.
