Verizon (NYSE: VZ), CenturyLink (NYSE: CTL), AT&T, Netflix and other players in the telecommunications market have filed comments with the FCC over its investigation into the rules governing broadcast retransmission licensing negotiations and the definition of "multi-channel program video provider" (MVPD). The comments generally reflect the desire of companies across the industry to obtain more favorable regulations for their respective businesses.
For example, Verizon is urging the commission to loosen regulations on the content it is able to distribute through its services. "The Commission should use its upcoming rule-making on retransmission consent to take a holistic look at the broken retransmission consent regime, which today harms consumers through rising prices and increasing instances of blackouts," said Verizon attorneys William Wallace and William Johnson in public comments relating to the FCC's annual "Video Competition Report" to Congress.
"The commission can restore balance to retransmission consent negotiations by addressing abuses that have emerged in the retransmission consent context and adopting targeted standards to ensure good faith negotiations, including revisions to its 'totality of the circumstances' test," the Verizon lawyers added.
For its part, CenturyLink lauded FCC Chairman Tom Wheeler's proposal to end "exclusivity" rules, which restrict pay-TV operators from pulling in signals from distant network affiliates when negotiations with local stations bog down and blackouts occur.
For example, currently experiencing a blackout of 153 Sinclair Broadcasting network affiliates, Dish Network (NASDAQ: DISH) would have significantly more leverage if exclusivity rules were taken out of its current talks with the station group. For example, in markets like Bakersfield, Calif., where the local CBS affiliate is blacked out on the satellite service, Dish could provide its customers with a feed of Los Angeles' KCBS-TV and save itself plenty of angry phone calls and lost subscribers.
"Eliminating the exclusivity rules is an important step in curbing the market power of local broadcasters that is raising the cost of programming to consumers," said CenturyLink attorney Tiffany West Smink. "It will remove an unwarranted regulatory advantage that allows broadcasters to use the regulatory process to enforce exclusivity agreements and could spur change in retransmission consent negotiations."
AT&T, in its filings, also voiced similar concerns. "In particular, the Commission's outdated retransmission consent regime has resulted in skyrocketing retransmission consent fees and a rising number of local broadcast station blackouts, leading to higher prices and service disruptions," AT&T said in its filing. "The Commission should take action in the pending rulemaking proceeding,4 as well as the proceeding to be initiated soon pursuant to the STELA Reauthorization Act of 2014,5 to quickly and thoroughly revamp the retransmission consent regime to reflect the realities of today's marketplace and benefit consumers."
Netflix, for its part, sidestepped the retransmission issue and urged the FCC to make it easier for streaming video companies to interconnect with Internet service providers in order to more quickly deliver their content to subscribers. "Demand for online video is increasing the amount of traffic traversing the Internet and content providers are doing their part to increase efficiency by localizing content with CDNs [content delivery networks]," Netflix said. "But video competition also depends upon FCC oversight of interconnection -- and putting in place policies that keep the Internet a free and open platform for expression."
Meanwhile, both Verizon and CenturyLink used their respective comments also asked the FCC to expand its definition of MVPD to include over-the-top service providers.
"Competitive video providers, including over-the-top video distributors, need reasonable access to must-have programming to field meaningful alternatives for consumers," Verizon's attorneys said. "The program access rules are instrumental in enabling existing and emerging competitive providers to obtain reasonable access to programming within the control of incumbent cable operators."
Dish loses 153 Sinclair TV stations after retrans negotiations fail to produce deal
FCC's Wheeler thrills pay-TV operators, proposes removal of exclusivity rules from retrans negotiations
NAB accuses 'bad actor' pay-TV operators of ginning up retrans disputes, targets Dish, Mediacom, DirecTV