The Wall Street Journal-20080118-FCC Chief Taking Cable-Industry Fight to Final Bell
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FCC Chief Taking Cable-Industry Fight to Final Bell
WASHINGTON -- Few customers enjoy paying ever-higher cable rates charged by Comcast Corp. and other operators, but rarely have any pushed back as strongly as Federal Communications Commission Chairman -- and Comcast subscriber -- Kevin Martin.
Last May, when Mr. Martin spoke at the cable industry's trade show in Las Vegas, he joked about the widely reported belief that he has a vendetta against the industry. "I would like to set the record straight. I do not dislike cable," Mr. Martin told the crowd. "I subscribe to digital cable, have three set-top boxes, two DVRs, high- speed [Internet] access and Wi-Fi, all provided by cable."
Yet Mr. Martin says he believes something needs to be done to bring cable rates down, and he has tried in several ways as chairman to make that happen, albeit with limited success. With the FCC chairman giving every indication that he intends to stay until a new administration takes over, Comcast and other cable operators are bracing for a fight.
"I don't see any lessening over what he's been trying to do over the past few years," said Kyle McSlarrow, head of the National Cable & Telecommunications Association, the cable industry's trade group. Comcast CEO Brian Roberts and other company executives declined to comment.
Mr. Martin's efforts over the past few years to persuade the cable industry to sell channels to consumers individually instead of in tiered bundles haven't been successful. But he might have more luck this year, at least at the wholesale level, with a proposal designed to unbundle cable programming by requiring that channels be sold individually to cable operators. The cable industry remains divided on the issue. Networks and programmers are unhappy about the idea. Some smaller cable operators favor it, believing it may give them an edge in negotiations and lead to lower costs.
The FCC may propose mandating which technology is applied in the next generation of plug-and-play equipment, which is intended to bypass the set-top box and make more televisions cable-ready. It also may push to increase rates that cable companies pay to attach their lines and equipment to poles throughout the country.
Mr. Martin has said he isn't gunning for the cable industry and repeated the denial this week to reporters. Other industries complain about him, too, Mr. Martin says. Broadcasters grouse about the multimillion-dollar indecency fines his FCC has proposed, and wireless companies don't like his efforts to open their networks to outside devices and applications. Mr. Martin didn't respond to requests to comment.
But much of the powerful FCC chairman's three-year tenure heading the agency has been spent advocating plans to rein in the cable industry, and that effort doesn't appear to be flagging.
Less than a month ago, Mr. Martin persuaded a majority of the five- member FCC board to institute a 30% national cable-ownership cap, despite a federal court's rejection of a similar cap several years ago. It would mostly affect Comcast, the nation's largest cable operator, preventing it from adding more than about four million more customers.
And this week, Mr. Martin's staff opened an inquiry into whether Comcast has been improperly blocking or delaying some Internet traffic on file-sharing networks -- such as BitTorrent -- which Internet service providers complain take up too much bandwidth.
Free Press, a public-interest nonprofit group, asked the agency to find that Internet providers can't slow or block traffic in the name of "reasonable network management" and should be stopped. It isn't clear anything will come of the inquiry, but it has rekindled a debate over the issue of net neutrality, which would ensure Internet providers offer equal service to everyone.
"These are the kinds of technical decisions that will send us into one future or another, to an open Internet or a closed Internet," said Ben Scott, Free Press's policy director. Consumer groups want the FCC to take a more active role in enforcing rules to stop changes in how Internet traffic flows. "The [FCC] enforcement bureau is there for a reason, and if this isn't a good use of that, I don't know what is," Mr. Scott says.
Comcast says it has delayed some Internet traffic associated with those file-sharing services to improve its network performance but has denied completely blocking traffic.
One operator, Time Warner Inc.'s Time-Warner Cable unit, is testing the concept of charging excessive downloaders in new ways. In Beaumont, Texas, the company will offer a plan to charge them by the amount of data they consume, rather than a monthly flat fee for unlimited downloads.
Like the rest of the cable industry, Comcast has relied heavily upon support on Capitol Hill to beat back many of Mr. Martin's proposals, including his idea that indecency rules should be extended to cover cable programming and his efforts to promote a-la-carte programming, which would let consumers buy individual channels instead of bundles. Mr. Martin's suggestion late last year that the cable industry has grown large enough to warrant more FCC regulation faltered after cable lobbyists and executives persuaded a bipartisan group of lawmakers to complain about the plan, helping to scuttle it.
A good defense doesn't come cheap in Washington, however, and cable companies have significantly increased their spending here. In the first half of last year, Comcast spent almost $4 million on lobbying, just $1.5 million shy of the company's lobbying expenditure of the previous full year. Comcast executives and family members also have kept up a steady stream of personal donations to lawmakers, presidential candidates and political committees on both sides of the aisle.
The industry also is showing more interest in challenging the FCC's decisions in court. Comcast has asked a federal appeals court to reverse an FCC decision denying its request for a waiver to lease low- end set-top boxes to new digital subscribers. Comcast complained the FCC took 503 days to act on its request and then denied it several months after a deadline requiring that certain technology be in all cable boxes had passed.
Comcast and other cable companies also are expected soon to challenge more actions by the FCC, including its recent decision to ban cable companies from holding exclusive contracts with apartment and condo buildings and the new 30% national cable ownership cap.
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Dionne Searcey contributed to this article.
