Hearing Recap: The Cable Act at 20

The Senate Commerce Committee held a hearing exploring the future of online video. The Committee considered the impact of the Cable Television and Consumer Protection Act of 1992 on the television marketplace and consumers twenty years after its passage. The witnesses were Time Warner Cable’s Melinda Witmer, WOW! Internet, Cable, and Phone CEO Colleen Abdoulah, Martin Franks Executive Vice President for Planning, Policy, and Government Affairs for the CBS Corporation, National Association of Broadcasters CEO Gordon Smith, Dr. Mark Cooper, the Director of Research at the Consumer Federation of America, and former lobbyist Preston Padden.

Committee Chairman Jay Rockefeller (D-WV) said, “I want to take a close look at several core questions about the Cable Act. Why hasn’t competition succeeded in bringing rates down and more programming choices? Should the protections in the Cable Act for various entities be maintained? How do we make sure that consumers are protected and see real benefits as video moves to the Internet?” He blasted television providers for rising cable prices, forced bundles and disputes over retransmission agreements between broadcasters and cable providers that have left millions of customers in the dark during business standoffs. “Overheated rhetoric alleging greed and bad faith is little comfort for someone paying for service they are not getting,” said Chairman Rockefeller, adding that cable providers should refund consumers when channels are turned off during fee disputes. Chairman Rockefeller and Sen. John Kerry (D-MA) said local broadcasting is a public service that should be preserved. But they agreed that disputes over retransmission consent agreements — obligations by cable companies to pay broadcast networks to carry their channels — have spiraled out of control into high-stakes business battles.

Cable companies blame broadcasters for charging too much for their channels and forcing bundles of channels on them. Broadcasters say it is expensive to create shows and they need to be compensated fairly.

Sen. Jim DeMint (R-SC) said it may be time to rethink the whole 1992 law. He said broadcasters shouldn’t be protected by government rules. Instead of new rules, broadcasters and cable companies, he said, should be stripped of rules in the same way online video providers are.

Cable firms said that the law's goals of fostering competition have been achieved and that they now face competition from both satellite provides and new online video distributors such as Netflix. At the same time, they argued that broadcasters are taking unfair advantage of retransmission process by demanding ever increasing fees for their programming. They also noted that consumers are being hurt by disputes in recent years that have led to blackouts in some cable markets after broadcasters have yanked their programming over fee disputes.

CBS Executive Vice President Martin Franks noted that his network has successfully negotiated deals with both Abdoulah's firm and with Time Warner Cable, which also testified at the hearing. Broadcasters also say that the fees they demand are aimed at recouping the costs of their programming and help to pay for local coverage. "No one begrudges our pay TV friends the right to make a profit. But when it comes to programming costs, fair is fair. Even after almost 20 years, television broadcasters still do not receive compensation commensurate with their ratings," National Association of Broadcasters President and CEO Gordon Smith, a former GOP Senator from Oregon and Commerce Committee member, said.