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ACA to FCC: Video Market is 'Broken' While Broadband Market Is 'Thriving'

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(Image credit: FCC)

WASHINGTON D.C.—In a new filing with the FCC, the ACA Connects group representing smaller cable operators argues that the “broken multichannel video market,” particularly the process of negotiating retransmission agreements with larger broadcast station groups, “disproportionately harms small and rural MVPDs and their customers.”   

The ACA made the comments in reference to an Public Notice issued by the FCC seeking comment on competitive issues and trends in communications markets as part of the Commission producing its “2022 Communications Marketplace Report,” which will be the third of these biennial reports.

In the filing the ACA noted that “the marketplace for multichannel video service is rife with dysfunction, and that smaller MVPDs and their customers suffer the most….Broadcasters and programmers continue to saddle ACA Connects Members with unreasonably high and ever-increasing fees for programming, along with onerous conditions that result in escalating rates for the declining share of consumers that continue to receive traditional cable television.”

The ACA has particularly harsh comments on retransmission consent. “With respect to retransmission consent, the Commission’s `buying group' rules implemented under the Television Viewer Protection Act of 2019 (TVPA) have improved matters to some degree by enabling smaller MVPDs to work through the National Cable Television Cooperative (NCTC) to negotiate deals with large station groups, but the fundamental problems that plague this market have not changed, especially for smaller MVPDs," the ACA said. “Both the 2018 and 2020 reports revealed—unsurprisingly—that small MVPDs pay significantly higher retransmission consent fees than their large MVPD counterparts.”

“The problems in the MVPD market are particularly dire when it comes to retransmission consent," the ACA added later in the filing. “The situation has always been bad, but has become worse over time as more station groups have grown larger across markets and within them. Indeed, broadcasters have increasingly evaded the media ownership rules to amass duopolies, triopolies, and even quadropolies of `Big Four' networks in some markets. With their consolidated market power, broadcasters have been able to extract escalating fees from MVPDs in exchange for access to their Big 4 network programming. For providers, the options are either to accept the record-setting retransmission consent fees or face a blackout that can wreck a small business.”

To help resolve the problem, the ACA said the FCC needed to collect better data. “In the forthcoming Report, we encourage the Commission to further improve its reporting on the retransmission consent size disparity by accounting for the number of retransmission consent stations carried by MVPD systems of different sizes,” the ACA wrote. “According to the 2020 report, smaller systems paid on average 37.3 percent more per subscriber. On average, small operators paid $178.13 per subscriber per year, whereas large operators paid $124.67 per subscriber per year” even though the smaller systems were “carrying 2.72 fewer stations. Hence, the true `size penalty’ is likely greater.”

In the same filing the ACA included its report on broadband competition, which argues that the fixed broadband market is competitive and needs no further regulation. 

Citing FCC data, the ACA argued that “fixed broadband competition is thriving in the United States and will become only more intense in the near future. Specifically, the vast majority of U.S. households either already have or soon will have access to at least two providers of fast and reliable fixed broadband service. Furthermore, even for those households that may not have access to two such providers in the near future, most of these households either already have or soon will have access to a subsidized provider of fixed broadband service whose prices and other terms of service are already subject to regulatory oversight. Thus, there is no need to impose additional heavy handed common-carrier-style regulation on fixed broadband providers as a whole. Doing so would yield few, if any, tangible benefits while discouraging entry, investment and innovation, to the detriment of consumers. Finally, a strong case can be made for exempting smaller providers from any such regulation even if it were to be imposed on larger providers.”

The full filing is available here (opens in new tab)

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.