ACA tells FCC that move to an all-IP distribution paradigm would kill off smaller cable operators

FCC headquarters

FCC Chairman Tom Wheeler’s movement towards a pay-TV industry counter proposal on set-top box regulation is worrying the American Cable Association, which says smaller MSOs won’t be able to keep up in an apps-based pay-TV economy. 

"Smaller pay-TV providers, many of whom serve rural America, confront a video business where margins are declining rapidly and even turning negative,” said Matthew Polka, president and CEO of the ACA, in a statement. “As a result, these providers cannot afford the added burden of complying with new set-top box regulations that would force them to spend substantial amounts of capital and many years of time launching a simulcast of their video service in all-IP. If the FCC goes ahead with rules that force smaller providers to go all-IP, it would eliminate a wireline video service provider in many rural areas throughout the country, as well as inhibit investments in new, higher performance broadband infrastructure.”

The ACA detailed its concerns in an ex parte filing

Earlier, as he championed his own proposal, the controversial “Unlock the Box” NPRM, Wheeler offered assurances to smaller operators that they would be exempt from the plan to open pay-TV’s proprietary set-top box business to third-party operators.

As Wheeler has lost support for his proposal, however, a counter-proposal led by the National Cable Telecommunications Association called “Ditch the Box” has gained traction. Wheeler is rumored to be moving toward regulatory policy that incorporates key portions of the NCTA agenda. 

“ACA found that nearly all smaller MVPDs would need to make major investments to increase the capacity of their existing networks to free up bandwidth to enable simulcasting in all-IP,” the lobbying org said in its statement announcing its ex parte. “That would be in addition to having to purchase and deploy all-IP enabling equipment into their master headends, which ACA estimated would cost at least $2 million per system as noted in a mid-July meeting with the FCC.”

Polka added, "In all of my time representing smaller cable operators before the FCC, I cannot recall the FCC ever contemplating a rule that would impose on small cable operators so great a direct financial and operational cost. This burden of the proposed rules dwarfs that of the FCC's 2007 integration ban, which was imposed on these operators when they were better able to absorb it because they made far greater margins on their video business."

For more:
- read this ACA ex parte filing

Related articles:
Wheeler: 'Unlock the Box' will exempt small analog cable systems
AT&T: CCIA proposal just a ‘thinly veiled repackaging’ of Unlock the Box
Wheeler may be losing FCC Democratic support for set-top proposal