NARUC Panel Urges Ending Unfair Content Pricing, Tiering, Tying
LOS ANGELES - Regulators need to fix video content price discrimination, tiering and tying practices, panelists said at the National Association of Rural Utility Commissioners summer meeting. Small Multichannel Video Programming Distributors (MVPD) are the victims
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of widespread price discrimination, said Ross Lieberman, vice president of government affairs of the American Cable Association. That would ultimately lead to higher pay TV rates for consumers and the depletion of valuable resources from operators that could otherwise be used to deploy other advanced services and fund additional deployment, he said.
Many small and medium-sized operators pay, on average, double the retransmission consent fees of larger operators for carriage of broadcast stations, Lieberman said. These operators also pay significantly more than larger operators for carriage of regional sports networks and national cable networks, he said. He urged addressing the pricing issue as part of the FCC’s current retransmission consent rulemaking.
Meanwhile, programming costs started getting embedded in broadband access fees, driving broadband costs even higher, Lieberman said. He cited ESPN3, an online streaming site, which requires broadband provider partners to pay directly for the services so that when customers sign up for broadband, they are already signed up for the content. It’s uncertain if the new business model will succeed, but the cable group’s very concerned, he said. Some popular regional programming offerings like regional sports are very pricy, said Tom Dominico, business development manager at the Sebastian Corp.
States have the statutory authority to encourage deployment of advanced telecom capability and on a reasonable and timely basis and remove barriers to infrastructure investment, said Larry Landis, Indiana Utility Regulatory Commissioner. Video is a critical new revenue source for rural providers, he said, calling content neutrality a rural issue. As regulators revamp the Universal Service Fund and Intercarrier Compensation system, a potential risk for rural players is loss of a source of revenue, he said, noting USF/ICC could count half of a provider’s revenue in Indiana. Being able to offer video at an affordable price is crucial for rural operators, he said.
Tiering and tying are the two biggest issues that small and rural operators face today, said Dominico. It might be helpful to implement obligations on programmers to give smaller MVPDs most-favored-nation rates and eliminate non-disclosure agreements to give more transparency on wholesale pricing, he said. More flexibility is also necessary for video providers to package programming in ways that best serve their interest, he said. Video providers also need flexibility to not have to carry programming that they don’t want in exchange for programming that they do want, he said.