The FCC chairman has tasted an immense backlash from the lobby power of the cable operators and has failed to win the support he felt was assured on his own 5 man Commission to push through major cable reforms.
We said in a recent issue that Kevin Martin, the FCC chairman may find that the US cable operators have more friends than he realized, when 24 members of the House Commerce Committee openly criticized him, calling the reforms “misguided and harmful.”
The key issue that he has fallen over are statistics that say that the cable industry passes 70% of homes and has reached 70% penetration with a service of at least 36 TV channels, and therefore can now be regulated by the FCC. The figures Martin was working with say that cable has qualified on all three points but his source for this was an industry analyst, not the numbers of the cable industry itself. Perhaps that’s the reason Comcast and co have remained relatively static in terms of numbers these past four years, not wanting to extend to the point where the FCC could run their lives.
Back in the mid 80s the cable companies were tiny and convinced Congress they should not obey the same rulings as the RBOCs in order to give them oxygen to grow. However with around 68 to 70 million homes taking cable across the US, out of around 111 million homes, that’s a penetration of 63% at best and although Martin makes a great point that cable has been unaffected by competition and has indiscriminately raised pricing without losing customers, the Congress ruling stands.
What happened this week instead was that the FCC agreed to one or two of the changes that Martin was after, specifically a proposal to make it less expensive for independent programmers to lease cable channels, but the effect of that was put back a year, and an agreement that the cable operators had achieved industry dominance and the demand that they agree to be bound to arbitration in disputes with broadcasters, were not passed.
The failure to conclude that industry dominance had been achieved also means that Martin cannot stop cable operators merging or growing, or introduce unbundled programming charges.
The data saying that cable had reached 71.4% market penetration was put forward by Warren Communications News, but since it was disputed, the Commission has instead called for each cable operator to submit the number of homes passed and subscribing to service, especially those with 36 channels or more, which is the specific test laid out in the mid-80s legislation. This has to be done within 60 days, and guess what? If it’s under 70% then the FCC can go back to twiddling its thumbs over cable.