Seemingly at issue; an appeal brought by Comcast with the D.C. Court of Appeals and the subsequent defeat of the FCC’s perceived role as a broadband regulator, ruling the communication had no authority under current legislation to sanction Comcast over a 2008 Internet throttling incident. That defeat prompted the FCC to go back in an attempt to move broadband under its umbrella of regulated services. In a recent YouTube video commissioner Julius Genachowski stated that his intentions in moving to regulate broadband was to foster an environment that would encourage competition, lower prices, increase Internet speeds, and increase access to quality broadband.

Division on Capitol Hill

Regulation of any industry is seen as anti-business and a jobs killer by Republicans, See (Boehner slams FCC for ‘takeover of Internet’) while Democrats, See (FCC’s Democrat members rally behind Genachowski on broadband reform) see the need to regulate big business as more of a tool to reign in prices and create options for consumers. Both sides have points of contention from runaway mergers with resulting job losses, to a (hands off) approach, in letting the market determine competitive outcomes. Each thinks they are right, and while a healthy debate is stamped in our government system, the resulting stalemates can prove too problematic. It’s is time to work on a compromise, a win-win for all concerned, and if not, why not?

Regulatory Ramifications

The thinking of FCC commissioners center on the idea that the Internet has become a necessity for both consumers and businesses, like electricity, telephones, water, sewer which must be cultivated, tended too, and watched over as a “mother hen”, and its authority regarding our communications infrastructure should be regulated to ensure equality for all. It is just too important of an entity not to regulate, and it has the votes to do so. While it has the votes to create regulation without going through congressional approval, it will certainly be challenged in court over this authority again. See (FCC Understating Systemic Risks of “Third Way” — Why It’s a Disaster Waiting to Happen)

Is not regulation after all, a “slippery slope”, which does not distinguish between the inherent ramifications of mandating competition, pricing, access, and Internet speeds? Genachowski made the point that only six of forty-eight current Title II rules would be applied to broadband, See (Who’s more neutral? Republican bill would forestall FCC’s ‘Third Way’), leaving one to think lightness in regulatory oversight, but just the mention of future regulation sent broadband provider stocks tumbling on Wall Street.

Without any legislative update of the Title II rules for many years, the FCC is viewed as being forced to adopt its own rules for broadband which will promote its established agenda for the National Broadband Plan. Once you go down the regulatory path it is hard to pull back on the reins, and the FCC has taken those first steps. Be careful what you as for and what you do with it once obtained. It will be slippery and may turn into mud very quickly.

Related articles by Zemanta

• Editorial: Broadband and the F.C.C. (nytimes.com)
• The FCC re-classifies in response to Comcast (inpropriapersona.com)
• The FCC rebounds on broadband (seattletimes.nwsource.com)
• FCC’s GOP: New Broadband Rules Would Ruin FCC Credibility (huffingtonpost.com)

The Bottom Line: Court Decision on Comcast Vs FCC

…

A Common Sense Approach to Net Neutrality

…

Broadband Competition and Pricing: Lessons Providers must Learn

…

With the recent battle between Cablevision and Disney over Retransmission Consent in New York regarding WABC-TV carriage on Cablevisions 3.1 million subscribers, and thereby producing a coalition of Cable Providers to petition the FCC to intervene in negotiations, is akin to the saying: (be careful what you ask for).

It seems to me, this is a business market negotiation best handled through competitive market forces rather than asking the FCC to get involved in a dispute between two companies. The (ax can cut both ways) when it comes to oversight of the pipeline distribution and broadcasting industries. Yes, consumers are caught in the middle, wanting pertinent and relevant programming for a reasonable price, while public negotiations and threats of signal cuts dominate the headlines; see (Cable firms seek FCC help in fee disputes).

The issue remains, how much is WABC-TV worth to Cablevision for carriage and distribution of their signal. Retransmission Consent was formulated years ago when broadcast stations wanted assurance that cable companies would carry their local signals, and be compensated for their original programming.  In the beginning most broadcasters just asked for Must-Carry, or assurance their signals would be distributed by pipeline providers for 3 years, see (Moody’s expects to see more retrans battles).

Fast-Forward to today and times have changed. Providers are paying substantial sums per month to distribute most of their programming to consumers. Cable Programmers have reaped the benefits of these carriage agreements in producing top-quality programs through carriage fees along with ad supported revenues; a dual revenue model. Broadcasters are struggling to stay afloat with the single, Ad Revenue Model . Therefore, Retransmission Consent has become a battleground for demanding monthly carriage fees, just as most Cable Programmers ask for, and receive. Broadcasters have seen a significant drop in Ad Revenues in recent years along with a lose network subsidies. Without additional revenue streams, broadcasters are looking to lucrative distribution agreements to make up the short-fall.

This is a market demand negotiation, not a regulation matter for the FCC to consider. If Cable Providers want to lessen the impact of these carriage fees, they should consider (Tiering) Broadcast signals to accommodate and moderate fee increases. Yes, if negotiations demand an unreasonable price for most customers, negotiate for the signal to be on a Tier where consumers can pay an extra cost if they value the programming. Some consumers will lose in this scenario, but overall consumer rates would be adjusted for those who can afford the additional cost.

This is not a regulatory issue, but one of market demand and supply. In my opinion the coalition of cable providers should think twice before asking the FCC to intervene in their business negotiations, or risk having regulations that regulate them into non-existence. This is a Free Market System, let it work as intended.

Related articles by Zemanta

• Time Warner Cable to ask FCC for new rules on negotiating programming deals (latimesblogs.latimes.com)
• Cable and satellite operators take their case to Congress (latimesblogs.latimes.com)
• Cable Companies Petition FCC (online.wsj.com)
• Washington weighs in on Disney – Cablevision fight (latimesblogs.latimes.com)

Cable Industry: at a Cross-Roads

…

Genachowski to Broadband: reduce prices•increase speeds•increase access•embrace competition

…

Industry Demand calls for quick approval of FCC’s Wireless Spectrum recommendations

…