Cable not stifling online competition, NCTA's Powell says

Complaints that the cable industry impedes online video competition are "simply not borne out by the facts," NCTA President Michael Powell will testify today to the U.S. House Energy and Commerce subcommittee on Communications and Technology's examination of the future of video.


Rather than investigate how cable might be impeding online video competition--which Powell stridently insists it is not--the NCTA boss challenged the subcommittee to "do away with rules predicated upon market conditions that no longer exist" and allow a competitive free-for-all.

"A new dialogue is essential because the continued application of outdated rules creates uncertainty and marketplace distortions, encourages unproductive attempts at regulatory arbitrage, and dampens incentives to invest," Powell said in remarks prepared for delivery, essentially turning an investigation of cable's online policies into a plea for less government regulation.

Online policies, and whether cable restricts or inhibits online video competition, however, are at the crux of the hearing and the investigation of how cable handles the online video traffic its broadband networks have spawned. Powell's answer is that a consumer-oriented cable industry is doing the best it can.

"The exploding growth of online video usage undercuts any argument that cable is standing in the way of this business. To the contrary, cable's broadband networks are the engines that have enabled online video service to emerge and flourish. Indeed, there is simply no way to reconcile such claims with the wealth of content, services and devices that are available for accessing and enjoying online video," Powell said in a statement released prior to his testimony.

The NCTA chief, who previously chaired the FCC, plans to make it clear that the industry does consider online video is a competitive threat to cable--"online video offerings are good enough for some consumers--currently a small minority"--and, therefore, there's no need to stifle it.

"If consumers want to access video content via their laptop, their Xbox, their iPad or their mobile device, it's our job to make that possible for them," he said. "If they want to obtain video content from Netflix (Nasdaq: NFLX), (Nasdaq: AMZN), Hulu, YouTube, Apple (Nasdaq: AAPL) or any other online content provider, it's our business to make that possible as well."

Online video providers--who will also appear before the subcommittee--have argued that cable operators use their broadband networks to determine how over-the-top content is delivered--and at what cost. Powell argues that it's not strictly in the control of the cable operators.

"There are capacity constraints arising from the growing demands on the network imposed by services and offerings that require more throughput," Powell said. "Any network that is shared by many users--as all residential broadband networks are--must cope with congestion and ensure all users get quality service."

That means, he said, that cable operators must balance how to effectively deliver increasingly heavy video loads across networks profitably and that may require "potential models that require heavier users to pay more for the additional network resources they use rather than have lighter users subsidize the power users."

However things shake out, Powell insisted, cable's "path to continued growth … is to enhance and expand its customers' use and enjoyment of the broadband platform we offer" and that will "require investment and innovation to make it happen."

For more:
 - see Powell's written testimony

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