The cable lobby issued a mid-year report this week that restated the case for a "light regulatory touch."
The touch-phrase is the new mantra at the National Cable and Telecommunications Association, held over for an extended stay after being employed for the Brand X court battle. Having won Brand X and maintained the sovereign rights of MSOs over their high-speed data service, the lobby is now using the "light touch" to prepare for an overhaul of the telecommunications act.
Several lawmakers have said they intend to rewrite the telecom act, although it's not likely to happen this year with a Supreme Court confirmation scrap brewing and various DTV deadline bills floating about. However, when telecom reform does come down the pike, it's likely to include cable regulations, given the calls on Capitol Hill for a la carte pricing and indecency standards. Cable phone service is also making inroads that are not yet on the regulatory charts.
The NCTA 2005 mid-year overview states that by the end of Q1'05, cable had 3.5 million phone customers and had a 55 percent increase in takers from the previous quarter. Since cable phone service is 'Net-based (Voice-over-Internet-Protocol) and not circuit-switched like the Bells', it is not subject to the universal service fees or things like wiretapping by law enforcement officials. A bill to keep VoIP deregulated was introduced last year, but it was subsequently amended to give states limited regulatory rights. It was not adopted, but the bill's author stated his intent to reintroduce it in telecom reform.
The NCTA report illustrates why cable is so desperate to keep the regulatory mitts off the biz. Growth is coming from existing subs taking new services such as VoIP, digital cable and high-speed data service. Cable ended Q1'05 with 22.2 million data subs, up from 17.3 million a year ago; and 26 million digital cable customers, up from 22.9 million a year ago.
Meanwhile, the number of households subscribing to cable appears to have peaked last year at somewhere near 70 million. This year, with DBS and other noncable multichannel providers eating up more than 30 percent of the market, cable's tally stands at 64.3 million homes.
The cable industry is also taking the competitive threat of telcoTV seriously. The Bells have proven vicious in the high-speed data fight, with promotional packages that are nearly half the price of cable modem offerings, according to a report from SG Cowen & Co. The competition on the video side is in its earliest stages, with Verizon building out its FiOS infrastructure and signing up networks along the way.
Just this week, Verizon cut a deal for the Turner nets, which include TBS, TNT, CNN, Headline News, Cartoon Network, Turner Classic Movies (TCM), CNN International, CNN en Espanol, Boomerang and TNT in HD. In April, the telco sealed an agreement for the Starz channels.
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