ACA tells FCC new set-top rules could affect smaller MSOs' ability to borrow from banks

As the debate rages on over FCC Chairman Tom Wheeler's proposal to "unlock the box" and open up linear TV services on third-party devices, the ACA is now saying that the proposal could potentially hurt smaller MSOs' ability to borrow from banks.

Chris Hilliard, president of USA Communications, said if the proposal is adopted it could negatively impact ACA member companies' rates, terms and conditions on existing loans as well as their ability to raise capital in the future for network investments, adding that banks serving smaller MVPDs are always carefully watching for any regulatory actions that could burden their borrowers' financial circumstances.

According to Hilliard, "sizable new costs imposed on smaller MVPDs through new regulatory mandates…could constitute a 'material adverse change,'" and impact current and future loan rates and terms.

The ACA chalked up the potential impact to borrowing ability as a "soft" cost that cannot yet be quantified.

The ACA's comments come after U.S. Rep. Kevin Cramer (R-N.D.) last month sent a letter to the FCC on the topic. Cramer, who co-authored the letter with Rep. Kurt Schrader (D-Ore.), said that the cost of the system upgrades required by Wheeler's proposal would mean that smaller MSOs would have less money to use to expand coverage and increase broadband speeds.

Both small and large MSOs, along with industry groups, continue to argue against Wheeler's proposal while seeking an alternative solution. Last week, a large group of pay-TV companies offered up a proposal dubbed "Ditch the Box," which would require major pay-TV operators to make their services work on HTML5-based apps so customers are able to access their TV service on third-party devices. 

For more:
- see this ACA filing

Related articles:
Google-backed group says 'Ditch the Box' proposal a ploy to delay negotiations with FCC
Pay TV pitches open, apps-based set-top alternative to FCC: 'Ditch the Box'
ACA, lawmakers hammer away at set-top proposal burden on small MSOs
Cable industry mobilizes biggest lobbying push since 2009