[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
INNOVATION VERSUS REGULATION IN THE VIDEO MARKETPLACE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 11, 2013
__________
Serial No. 113-81
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
7_____
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
LEE TERRY, Nebraska DORIS O. MATSUI, California
MIKE ROGERS, Michigan BRUCE L. BRALEY, Iowa
MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont
STEVE SCALISE, Louisiana BEN RAY LUJAN, New Mexico
LEONARD LANCE, New Jersey JOHN D. DINGELL, Michigan
BRETT GUTHRIE, Kentucky FRANK PALLONE, Jr., New Jersey
CORY GARDNER, Colorado BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois JIM MATHESON, Utah
BILLY LONG, Missouri HENRY A. WAXMAN, California (ex
RENEE L. ELLMERS, North Carolina officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 4
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. John Dingell, a Representative in Congress from the State of
Michigan, prepared statement................................... 10
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 15
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 15
Hon. Steve Scalise, a Representative in Congress from the State
of Louisiana, opening statement................................ 16
Hon. Peter Welch, a Representative in Congress from the State of
Vermont, opening statement..................................... 16
Hon. Ben Ray Lujan, a Representative in Congress from the State
of New Mexico, opening statement............................... 17
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 119
Hon. Leonard Lance, a Representative in Congress from the State
of New Jersey, prepared statement.............................. 121
Witnesses
Sandra M. Aistars, Executive Director, Copyright Alliance........ 18
Prepared statement........................................... 21
Answers to submitted questions............................... 122
R. Stanton Dodge, Executive Vice President and General Counsel,
Dish Network, LLC.............................................. 31
Prepared statement........................................... 33
Answers to submitted questions............................... 129
Edward L. Munson, Jr., Vice President and General Manager, KPHO-
TV, on Behalf of the National Association of Broadcasters...... 42
Prepared statement........................................... 44
Answers to submitted questions............................... 132
Dave Rozzelle, Executive Vice President, Suddenlink
Communications................................................. 53
Prepared statement........................................... 55
Answers to submitted questions............................... 172
James Campbell, Vice President of Regulatory and Legislative
Affairs, Midwest Region, CenturyLink, Inc...................... 66
Prepared statement........................................... 68
Answers to submitted questions............................... 179
John Bergmayer, Senior Staff Attorney, Public Knowledge.......... 77
Prepared statement........................................... 79
Answers to submitted questions............................... 182
Submitted Material
Letter of September 10, 2013, from Matthew Zinn, Senior Vice
President, General Counsel and Chief Privacy Officer, TiVo,
Inc., to Mr. Walden and Ms. Eshoo, submitted by Ms. Eshoo...... 8
Report, undated, of the Motion Picture Association of America,
submitted by Mr. Walden........................................ 12
Advertisement, undated, of the American Television Alliance,
submitted by Mrs. Blackburn.................................... 102
INNOVATION VERSUS REGULATION IN THE VIDEO MARKETPLACE
----------
WEDNESDAY, SEPTEMBER 11, 2013
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 2:04 p.m., in
room 2123 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Terry, Blackburn, Scalise, Lance, Guthrie, Gardner, Kinzinger,
Long, Ellmers, Barton, Eshoo, Doyle, Welch, Lujan, Dingell,
Pallone, and Matheson.
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Sean Bonyun,
Communications Director; Matt Bravo, Professional Staff Member;
Andy Duberstein, Deputy Press Secretary; Kelsey Guyselman,
Counsel, Communications and Technology; Grace Koh, Counsel,
Communications and Technology; Andrew Powaleny, Deputy Press
Secretary; David Redl, Counsel, Communications and Technology;
Charlotte Savercool, Legislative Coordinator; Tom Wilbur,
Digital Media Advisor; Roger Sherman, Democratic Chief Counsel;
Shawn Chang, Democratic Senior Counsel; Margaret McCarthy,
Democratic Professional Staff Member; Kara van Stralen,
Democratic Policy Analyst; and Patrick Donovan, Democratic FCC
Detail.
Mr. Walden. We will call the subcommittee to order in just
a moment if we could take our seats and close the doors. They
are expecting votes on the House Floor in about 10 or 15
minutes, so we are going to call the subcommittee to order and
at least begin our opening statements so that hopefully we can
get through as much of that as possible so that as soon as we
get back from the votes, which will probably take, I don't
know, 45 minutes, an hour, then we can get to you all, who we
invited here and appreciate your attendance. It is always most
helpful.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
So I want to thank our witnesses for joining us and sharing
their experience on innovative in the video marketplace.
You know, the Telecommunications Act in 1996 is old enough
to get a driver's license, the Cable Act is old enough to drink
alcohol legally, and the Communications Act of 1934 has been
eligible for Social Security for a long time. While age is an
asset to a fine Willamette Valley pinot noir, in a technology
statute, age can portend irrelevancy. In the on-demand world of
the internet and mobility, the statutes that govern the video
marketplace are blissfully ignorant of the changes that have
taken place around them.
Today, we will examine the legal regimes governing how
video content is regulated from creation through distribution
and finally to consumption, asking one simple question: in a
world where video technology is rapidly changing, are the laws
keeping pace and are they fostering a free market?
The video marketplace has changed significantly in the last
40 years. From the network news era of the 1970s to the
dominance of cable in the '80s and the rise of the direct
broadcast satellite industry in the '90s, each decade has seen
a new video distribution competitor and a new attempt by
Congress to manage the market.
Today, as a result of competition, at least 35 percent of
American households have a choice of subscribing to either of
the two satellite DBS providers, their local cable company, or
the local telephone company for video services. Broadband is
nearly ubiquitous, allowing consumers to access Netflix,
Amazon, and Hulu. Tablet and smartphone apps produced by
content creators allow baseball enthusiasts to watch live games
or movie fanatics to stream the newest releases. And there is
more innovation coming. New entrants like Intel and Google and
Sony expect not only to enter the video distribution
marketplace but to transform the way people watch television.
In this diverse and evolving marketplace, one thing remains
true: you should be compensated for your content, network
investments, or intellectual property. If you lay fiber, you
should receive fair compensation in the marketplace for your
investment. If you create content--movies, TV shows, or apps--
you should receive fair compensation in the marketplace. And if
you create smartphones, tablets, dongles, screens, or the
software that runs on them, you should receive fair
compensation in the marketplace.
Given these technological changes and the multitude of
options available to American consumers, our laws should
reflect the operation of the free market in a competitive
environment. Instead, we have a satellite law that finds its
origins in ensuring access to content for a fledgling industry,
a cable law that was passed when cable controlled over 90
percent of the video market, and broadcast rules that ignore
the rise of alternatives to over-the-air reception.
We can and should be engaged in a lively discussion--and I
think we will be based on the testimony you all have--of how to
unshackle the free market, how to remove the government from
the business of manipulating the marketplace.
These are complex issues, and they are of great importance
to consumers and to the industries, and everything should be on
the table for discussion. We will hear from representatives of
the content community, the major distribution networks, and
from a representative from the public interest perspective to
get a clearer picture of how our laws impact the video
distribution business, affect consumers and how they could be
changed to better reflect marketplace realities.
I want to thank our witnesses for being here. We are
looking forward to hearing ideas on how we can improve the
video marketplace by getting government more out of the way.
This early stage of the process is a good time for us to take a
larger look at the video marketplace; it takes time and process
to develop good policy and even more to build consensus. Yet
the deadline for reauthorizing STELA looms large, and we must
continue to make progress there.
With that in mind, I expect to circulate a discussion draft
on these issues no later than the first quarter of next year. I
am looking forward to continuing to engage with my colleagues
and the many industries represented here today on these
important issues.
[The prepared statement of Mr. Walden follows:]
Prepared Statement of Hon. Greg Walden
I thank our witnesses for joining us and sharing their
expertise on the innovative video marketplace. The
Telecommunications Act of 1996 is old enough to get its
driver's license, the Cable Act is old enough to drink alcohol
legally, and the Communications Act of 1934 has long been
eligible for Social Security. While age is an asset to a fine
Willamette Valley Pinot Noir, in a technology statute age can
portend irrelevancy. In the ondemand world of the Internet and
mobility, the statutes that govern the video marketplace are
blissfully ignorant of the changes that have taken place around
them. Today, we'll examine the legal regimes governing how
video content is regulated from creation through distribution
and finally to consumption asking one simple question: in a
world where video technology is rapidly changing, are the laws
keeping pace and fostering a free market?
The video marketplace has changed significantly in the last
40 years. From the network news era in the 1970s, to the
dominance of cable in the 1980s and the rise of the direct
broadcast satellite industry in the 1990s, each decade has seen
a new video distribution competitor and a new attempt by
Congress to manage the market.
Today, as a result of competition at least 35 percent of
American households have a choice of subscribing to either of
the two satellite DBS providers, their local cable company, or
the local telephone company for video services. Broadband is
nearly ubiquitous, allowing consumers to access Netflix,
Amazon, and Hulu. Tablet and smartphone apps produced by
content creators allow baseball enthusiasts to watch live games
or movie fanatics to stream the newest releases. And there is
more innovation coming. New entrants like Intel, Google, and
Sony expect not only to enter the video distribution market but
to transform the way people watch TV.
In this diverse and evolving marketplace, one thing remains
true: you should be compensated for your content, network
investments or intellectual property. If you lay fiber, you
should receive fair compensation in the marketplace for your
investment. If you create content--movies, TV shows, or apps--
you should receive fair compensation in the marketplace. If you
create smartphones, tablets, dongles, screens, or the software
that runs on them, you should receive fair compensation in the
marketplace.
Given these technological changes and the multitude of
options available to American consumers, our laws should
reflect the operation of the free market in a competitive
environment. Instead, we have a satellite law that finds its
origins in ensuring access to content for a fledgling industry,
a cable law that was passed when cable controlled over 90
percent of the video market, and broadcast rules that ignore
the rise of alternatives to over-the-air reception. We can and
should be engaged in a lively discussion of how to unshackle
the free market and remove the government from the business of
manipulating the video marketplace.
These are complex issues of great importance to consumers
and industry and everything should be on the table for
discussion. We'll hear from representatives of the content
community, the major distribution networks, and from a
representative from the public interest perspective to get a
clearer picture of how our laws impact the video distribution
business, affect consumers and how they could be changed to
better reflect marketplace realities. I want to thank our
witnesses for being here; we are looking forward to hearing
ideas on how we can improve the video marketplace by getting
the government out of the way.
This early stage of the process is a good time for us to
take a larger look at the video marketplace; it takes time and
process to develop good policy and even more to build
consensus. Yet, the deadline for reauthorizing STELA looms
large, and we must continue to make progress. With that in
mind, I expect to circulate a discussion draft on these issues
no later than the first quarter of next year. I am looking
forward to continuing to engage with my colleagues and the many
industries represented here today on these important issues.
Mr. Walden. And with that, I would yield to the vice chair
of the committee, Mr. Latta.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Well, thank you, Mr. Chairman. And I also want
to thank our distinguished panel of witnesses for being with us
to testify today. And today offers us the opportunity to
continue a thoughtful and productive policy process by
examining an important issue that affects all of our
constituents.
The video marketplace continues to evolve faster than most
consumers, let alone government, can keep up with. However,
many of the existing provisions in the Communications Act
either no longer apply to the existing marketplace or are in
need of serious updating. I look forward to a thorough
discussion among our subcommittee members and the stakeholders
as we grapple with the issues in the ever-evolving video
marketplace, as well as the most appropriate legislative
vehicles to move any proposed changes.
I look forward to hearing from you all today, and with
that, Mr. Chairman, I yield back.
Mr. Walden. I thank the gentleman. I now turn to my friend
and colleague from California, Ms. Eshoo, for an opening
statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman. And good afternoon to
you, all the members of our subcommittee, and most especially
welcome to all of our witnesses. Thank you for being here today
to help enlighten us along this path.
You know, despite the title of today's hearing, innovation
and regulation, I don't believe, have to be in conflict. I
don't think it is an either/or. I think we have to have a very
adult discussion about where we are today, where we need to go,
understanding that what was written in the past served us well
for a long time. But obviously, we need an update.
A vibrant video marketplace is one with competition,
consumer choice, and basic protections to ensure the consumers
have access to a competitive set-top box marketplace and aren't
caught in the middle of a retransmission consent dispute they
have no control over.
Time Warner Cable and CBS reached a resolution--we all know
this, thank God--earlier this month that returned programming
to more than 3 million consumers after 32 days of blackout. I
applaud both companies for reaching an agreement, but
unfortunately, this is not the first time such a dispute has
occurred and it certainly, I don't think, will be the last.
Since 2005, there have been 70--that is 7-0--disputes involving
392 stations in 297 markets for a total of 3,853 days of
retransmission blackouts. Now, if someone out there wants to
start defending this, I think it would be really interesting
because I just don't think that it is defensible.
Some will say that legislating in this area is akin to
picking sides or interferes with a retransmission consent
mechanism that is working just fine. I don't think it is
working just fine; I think it is broken myself. The reality is
is that the data paints a very different picture. The
discussion draft I released earlier this week is not a full
rewrite of the law but instead represents a series of ideas
intended to spur constructive and actionable debate on ways to
improve the video marketplace for video content creators, pay-
TV providers, and most importantly, consumers. They are picking
up the tab. They are the customers. It is in everybody's
interest I think.
Specifically, my discussion draft would give the FCC
explicit statutory authority to prevent broadcast television
blackouts; ensure greater choice in cable programming by
allowing consumers to decide whether or not to subscribe to the
broadcast stations electing retransmission consent; prohibit a
television broadcast station engaging in a retransmission
consent negotiation from making their own or affiliated cable
programming a condition for receiving broadcast programming;
instruct the FCC to determine whether the blocking of a
television broadcast station owned or affiliated online content
during a retransmission consent negotiation constitutes a
failure to negotiate in good faith; and five, require the FCC
to study the programming costs for regional and national sports
networks in the top 20 regional sports market.
Now, this discussion draft doesn't purport to have all the
answers, but as we embark on our third STELA-related hearing
this year, I think we need to have a substantive dialogue about
potential solutions to a constantly evolving video marketplace.
I want to thank the witnesses in advance for the testimony
that you are going to give and for the feedback I hope that you
will give this discussion draft that I just raised.
And I would also like unanimous consent, Mr. Chairman, to
place into the record a letter to you and to myself from TiVo
related to this hearing and their views on some of the issues
that they feel strongly about. And I don't see----
Mr. Walden. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. I would like to place Mr. Dingell's statement in
the record. I ask unanimous consent.
Mr. Walden. Without objection.
[The prepared statement of Mr. Dingell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. And I have 17 seconds left if any of my
colleagues would like to use it. All right. With that, I will
yield back the balance my time.
Mr. Walden. The gentlelady yields back. And I ask unanimous
consent to enter into the record a graphic and statement from
the Motion Picture Association of America detailing the
economic impact of video content and the rise in online options
for consumers. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. I now turn to Mrs. Blackburn, the vice chair of
the full committee, for 5 minutes. And we have a couple other
Members who would like time on that as well, if possible.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. That is correct. And I thank you, Mr.
Chairman. I thank all of you for being here to visit with us
today, and I kind of like the titling of this hearing,
``Innovation Versus Regulation.''
And I have to tell you what I hear from so many of your
product consumers in Tennessee, my constituent, is they feel
like that innovation sometimes is harder to get to because of
cost and because of regulation, especially when you are looking
at some of the archaic video regulations that are stifling them
from getting the content that they would like to have access to
at fair market prices.
Innovation isn't happening as rapidly as we would like
because we don't always have a free marketplace if you will in
all of those areas. That is because the video marketplace is
saddled with a 20-year-old law that unfairly treats competing
video distributors with different rules. At the last video
hearing, one member called the video marketplace a ``vast web
of regulations.'' That is correct. Another colleagues said,
``the video market is rapidly changing. Today, the government
intervenes in various ways.'' That is also correct. Our ranking
member correctly said ``much has changed since the '92 Cable
Act.'' Very true. And that ``we have a lot of work to do beyond
STELA,'' which is also very true. I think you are going to see
quite a bit of an agreement on these issues and I think the
chairman is very wise to start these hearings and to continue
through this process. As we look at the authorization of STELA,
we are not waiting until we get to the end of 5 years to begin
the work.
So thank you and we appreciate that you are here with us.
And at this time I yield to Mr. Barton 1 minute.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. I thank the gentlelady. I thought the
chairman's opening statement was excellent. I think Ms. Eshoo
and Mrs. Blackburn have enhanced it. I do think it is time to
do a complete review of our various telecommunications laws and
regulations. By definition, regulation stifles innovation and I
think by definition we can all assume that the more innovation
we have in the telecommunication marketplace, the better off
the country will be. So I hope these hearings, Mr. Chairman,
lead to concrete legislative action in this Congress. I
especially want to take a look today on some questions about
the way retransmission consent has been used most recently.
And with that, I yield to whomever I am supposed to yield
to.
Mrs. Blackburn. You yield back to me.
Mr. Barton. I yield back to you.
Mrs. Blackburn. And I yield at this time a minute to Mr.
Scalise.
OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Scalise. I thank the gentlelady from Tennessee for
yielding.
Mr. Chairman, I want to thank you for the process-driven
approach to reviewing the decades-old video marketplace
regulations, and I am particularly pleased to hear that you
will soon circulate draft legislation that addresses these
issues. I applaud you for successfully moving this subcommittee
beyond an initial information-gathering and educational phase
on these very technical and complex issues onto a strong
position upon which the subcommittee can act in the coming
months.
I also want to commend Ranking Member Eshoo for recently
putting her own reform ideas on the table with the release of
the Video Choice Act. While I am not in agreement with every
provision of her bill and have taken a different approach, I
view it as thoughtful and am encouraged by her strong interest
in tackling these issues.
I think we should all keep in mind that when these current
video laws were written, this was the modern-day version of the
smartphone, so clearly the laws are tremendously outdated that
deal with this important issue that we are addressing today,
and it is time to have this modernization.
The only way we can act in the best interest of consumers
is in a way that prevents the government from picking winners
and losers and it is when we start getting serious about a
free-market solution. I am pleased that is where these hearings
and conversations are headed, and I will look forward to
continuing the close dialogue with industry stakeholders and my
colleagues on this subcommittee.
So again, Mr. Chairman, I thank you for the hearing and I
am looking forward to hearing our panel. And I yield back to
the gentlelady from Tennessee.
Mrs. Blackburn. I thank the gentleman for yielding back and
I thank him for the appropriate prop that he brought to the
committee. And, Mr. Chairman, I yield back the balance of our
time.
Mr. Walden. I am just amazed that he uses that. Actually,
with Scalise I am not amazed. Oh, just kidding.
We are going to go to Mr. Welch now for 5 minutes. He is
going to control Mr. Waxman's time. And we have 7 minutes left
before the vote, but 404 Members have not voted.
OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VERMONT
Mr. Welch. Well, thank you very much. A couple things: one,
the comments are about the fact that the technology has so
outpaced the regulation or the law. We all know that we have to
make some significant changes and ask some basic questions.
Mr. Chairman, thank you for introducing or you are going to
introduce the draft discussion. And, Madam Ranking Member,
thank you for putting something on the table that is going to
get the discussion going.
The concern I have is one that has been identified by
everyone here, namely, we have got to get the law right; we
have got to get the regulations right. And right means there
has got to be a lot of space for innovation. It means that
there have to be rules of the road that are discernible and
fair. But it also means we have to have a business model where
the various players--the content providers, the broadcasters,
distributors--can pay their bills and make a reasonable return.
But my concern, too, is that we have got to look out for
the consumers. It is really getting out of hand. In the past 17
years the cost of cable and satellite TV has increased three
times the rate of inflation. And, you know, this is a big deal
for all of the people we represent, especially in rural areas.
And, you know, the consumers need their access to the content
in whatever manner they get it in their homes. And it is a big
deal for them. And you know that. But they have no power
whatsoever to affect what the situation is or what they are
going to be charged.
So if there is some business model out there where
executives can literally pay a couple hundred million dollars
to somebody who can't get to first base because they can pass
it on to the consumers that all of us represent, that is not
working. So having the basic questions here that have been put
on the table, I think that really makes a lot of sense.
The thing I hear from Vermonters, they are really getting
squeezed on the cost of cable and satellite. You know, we are
not going to have a proposal that is a panacea, but what we do
have to do is have some approach where, as I mentioned, it is
balanced because we have to have business models that work. We
have to have rules and regulations that don't stifle
innovation. But at the end of the day, we have got to do
something to give some reasonable, fair treatment to consumers
who have absolutely no ability to affect what some of these big
deals and big negotiations are.
So I commend the leadership on our committee for putting
these issues on the table and hope to have our committee be
successful in doing things that restore balance with laws that
are way out of date.
I have some time and I would be glad to yield it to either
of my colleagues.
Mr. Walden. Mr. Lujan.
OPENING STATEMENT OF HON. BEN RAY LUJAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW MEXICO
Mr. Lujan. Mr. Chairman, thank you so much. And I also
appreciate the fact that everyone has gotten together to
encourage a broader conversation in this space.
And I think the one thing that I have been talking about in
my office with some of my team members, and this was a result
of watching Monday night football, the first channel that I put
it on was on standard definition, and there were a lot of
pixels and blocks moving around the television. And I quickly
realized that there was a high-definition channel that we could
change to, and so once I moved there, everything was clear. And
when I thought my eyes were going, I realized that they
weren't.
But the question that I have as we talk about
retransmission fees associated with standard definition or low
definition, weak definition, whatever we want to call it,
versus high-definition is the complexities associated with what
is required to get that feed to the home to be able to use a
technology, but also the rates associated with those packages.
And quite honestly, if we are signing up for one package or
another, well, why are we getting the two channels as opposed
to the one?
And so I think that this is a question that I have just
from a cost perspective, from a spectrum utilization
perspective, from a space perspective with where we are
transforming and where we are going from an innovative
perspective. And I would just like to pursue a little bit more
and learn a little bit more. So I appreciate the time very much
and I yield back.
Mr. Welch. I yield back. Thank you.
Mr. Walden. Everyone has yielded back. We are going to go
into recess now. We will return after the votes as soon as
possible, and then we really look forward to hearing your
comments, your testimony and taking our questions.
So with that, the committee will stand in recess.
[Recess.]
Mr. Walden. I call this subcommittee hearing back to order.
I thank you all for your patience as we had the vote on the
floor.
And I think at this point we have been through opening
statements on both sides, and it is time to go to our
distinguished panel of witnesses.
And we will start with Sandra Aistars, the Executive
Director of the Copyright Alliance. And I would just counsel
you, pull that microphone pretty close, make sure the button is
lit on green, and you should be good to go.
STATEMENTS OF SANDRA M. AISTARS, EXECUTIVE DIRECTOR, COPYRIGHT
ALLIANCE; R. STANTON DODGE, EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL, DISH NETWORK, LLC; EDWARD L. MUNSON, JR., VICE
PRESIDENT AND GENERAL MANAGER, KPHO-TV, ON BEHALF OF THE
NATIONAL ASSOCIATION OF BROADCASTERS; DAVE ROZZELLE, EXECUTIVE
VICE PRESIDENT, SUDDENLINK COMMUNICATIONS; JAMES CAMPBELL, VICE
PRESIDENT OF REGULATORY AND LEGISLATIVE AFFAIRS, MIDWEST
REGION, CENTURYLINK, INC.; AND JOHN BERGMAYER, SENIOR STAFF
ATTORNEY, PUBLIC KNOWLEDGE
STATEMENT OF SANDRA M. AISTARS
Ms. Aistars. Great. Thank you. Chairman Walden, Ranking
Member Eshoo, and members of the subcommittee, thank you for
the opportunity to testify today about the exciting innovation
that is occurring in the video marketplace.
Innovation and the creation and distribution of video
programming is happening throughout our membership and all
across the spectrum of creators. From major motion picture
companies to indie filmmakers, audiences have never had as many
options for watching movies, television shows, and original
web-based programs as a result.
But creating audiovisual works with high production values
is an expensive proposition. The work is labor- and talent-
intensive and it can carry commensurately large costs.
Independent filmmakers, for instance, routinely spend
thousands, hundreds of thousands, or even millions of dollars
to create their works.
One of our members, the mother-daughter filmmaker duo of
Gail Mooney and Erin Kelly spent 3 years making a film about
individuals who are making a positive difference in the world.
After 6 months of preproduction work, it took 99 days, travel
to 6 continents and 17 countries, and then 30 flights, 14
vaccinations, 8 visas, 2,900 gigabytes of storage, 150 hours of
footage, and 5,000 still image captures followed by a year of
postproduction and another year of marketing and distribution
to produce and distribute the film. And this was done as a do-
it-yourself project.
The bottom line is that all creators make big investments
in their works and encouraging them to keep creating will
require ensuring that they have flexibility in how they
distribute their works. Happily, because creators are embracing
new modes of distribution, audiences have more choices than
ever before for viewing films and television programs. Services
such as Netflix, Hulu, VUDU, HBO GO, Crackle, MUBI, Amazon,
EpixHD; devices such as Apple TV and Roku; and technologies
such as UltraViolet enable consumers to watch what they want
when they want and where they want.
Five years ago, video streaming was still fairly rough in
terms of quality and reliability, but today, viewers are
enjoying a growing number of high-definition streaming
services, including scores of video-on-demand and TV-everywhere
models delivered by cable and satellite, and more households
than ever have access to this variety of programming through
the internet. These developments show that the video
marketplace is evolving daily and at an ever-increasing pace to
the benefit of audiences.
A couple of words about copyrights since I am a copyright
lawyer, copyright law recognizes that ensuring appropriate
rights to authors drives innovation and benefits society.
Ensuring the authors right to determine when and how to license
the distribution of his or her works is key to these benefits.
These principles have been confirmed over and over again by
Supreme Court decisions, and as Justice Sandra Day O'Connor
eloquently wrote, ``the Framers intended copyright itself to be
the engine of free expression by establishing a marketable
right to the use of one's expression. Copyright supplies the
economic incentive to create and to disseminate ideas.''
Compulsory licenses are a departure from normal copyright
principles. They are appropriate only in narrow circumstances
to address market failure and we restrict their use to such
cases because they abrogate the rights of property owners and
force them to license their works to government-favored
entities at rates sometimes set by the government.
Economists and policy experts alike criticize compulsory
licensing on three basic grounds: first, because the supposed
cost savings that compulsory licenses deliver in the short-term
are usually more than offset by the inefficiencies that they
can cause over time; second, because they limit the diversity
of services that would ordinarily develop via marketplace
licensing; and third, because the rates and restrictions
quickly become outdated and are difficult to change so they are
subject to legislative lock-in and result in price stagnation.
Accordingly, my message to you is that, given the creative
and compelling works and the new and innovative distribution
models that exist today, there is no need to impose new
compulsory licenses in the video marketplace or to renew STELA.
And as a closing note, I would just like to mention
positively some of the collaborative initiatives that are
currently happening across industry lines to ensure that
marketplace for use services is vibrant and safe. There are
numerous efforts that are ongoing with internet service
providers, with advertisers, with payment processors to educate
consumers about the diversity of programming options available
to them and to protect them from illegal sites and activities
online. These efforts are just the start. We need to do more.
But I would like to commend the efforts like the copyright
alert system as examples of how our mutual goal to provide
compelling legal services to consumers is being advanced
through cooperation, and I would urge the subcommittee to take
an interest in these efforts and encourage the success of these
initiatives.
Thank you.
[The prepared statement of Ms. Aistars follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. We thank you for your testimony. And now we
will go to R. Stanton Dodge, Executive Vice President and
General Counsel of the DISH Network, LLC.
Mr. Dodge, good to have you back before our committee. We
look forward to your testimony.
STATEMENT OF R. STANTON DODGE
Mr. Dodge. It is nice to be here. Chairman Walden, Ranking
Member Eshoo, and members of the subcommittee, and appreciate
the opportunity to testify today.
My name is Stanton Dodge and I am general counsel of DISH
Network the Nation's third-largest paid TV provider and the
only one to offer local television service at all 210 local
markets.
Since this is not the first hearing on the subject, I would
like to cut right to the chase. The retransmission consent
process is broken and in need of targeted reform. In the past
few years, we have seen an escalating number of blackouts, and
these blackouts are lasting longer than in the past and
impacting millions more subscribers. So not only are takedowns
occurring more frequently, they are also increasing in
magnitude. The recent headlines about the CBS/Time Warner Cable
dispute serve as a stark reminder.
In short, the retransmission consent problem has reached a
crescendo. It is perhaps the most destructive and outdated
remnant of the 1992 Cable Act and does not match up with the
vibrant, ever-changing, competitive landscape in today's video
marketplace.
Also of increasing concern, some broadcasters are
coordinating their negotiations with each other and colluding
on the rates that they demand from video distributors like
DISH. The American Television Alliance, known as the ATVA,
whose membership encompasses cable, satellite, and Telco
providers, independent programmers, and public interest groups
and of which DISH is a member, is unified in calling for
targeted changes to the outdated retransmission consent rules
as part of the STELA reauthorization.
We and many other members of ATVA have voiced support for
proposals such as interim carriage, and this solution would
temporarily permit a distant signal to be imported during a
retransmission consent dispute. That measure would alleviate
the problem of service disruptions and prevent the use of
consumers as pawns. And the broadcaster whose signal is
imported will be compensated under the already-established
distant signal royalty rate. If the broadcaster's local content
is as valuable to consumers as they assert, then the imported
distant network is an imperfect substitute and both parties
will continue to have sufficient incentives to reach an
agreement. The imported distant network signal simply fills the
void for network programming.
Members of the ATVA have also expressed interest in a
discussion of standalone broadcast station offerings, which
would give consumers the choice of whether to pay separately to
receive a particular local broadcast station. And some in ATVA
support the deregulatory approach embodied in Congressman
Scalise's legislation from the 112th Congress. When he released
his bill, ATVA and DISH lauded Mr. Scalise for his leadership
in kick-starting the much-needed retrans reform debate. We
continue to encourage Mr. Scalise's reform efforts.
And today, we applaud Ranking Member Eshoo for circulating
the Video CHOICE Act this past Monday. Critically, the
discussion draft proposes concrete legislative ideas to give
consumers greater choice over their programming, tackles the
growing problem of funding cable channels with network
channels, and empowers the FCC with significant authority to
curtail blackouts.
And we were pleased with Chairman Walden's announcement
last night that he expects to circulate a discussion draft on
issues impacting the video marketplace no later than the first
quarter of next year. We look forward to working with Chairman
Walden, Ranking Member Eshoo, Congressman Scalise, and the
entire subcommittee to ensure that meaningful legislation is
passed this Congress.
As one can see, there are many ways to address the broken
retransmission consent system, but without immediate action
from Congress, it is likely that the blackout problem will
continue to escalate, millions more screens will go dark,
prices will increase, and consumers will suffer. The time to
act is now.
Thank you and I look forward to answering your questions.
[The prepared statement of Mr. Dodge follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Mr. Dodge. We appreciate your
comments and testimony, as always.
We will now go to Mr. Edward L. Munson, Jr., Vice President
and General Manager, KPHO Television.
Mr. Munson, we are delighted to have you here. We look
forward to your comments.
STATEMENT OF EDWARD L. MUNSON, JR.
Mr. Munson. Good afternoon. I am honored to be here, sir.
My name is Edward Munson. I am the vice president and
general manager of KPHO-TV in Phoenix, Arizona. KPHO is owned
by the Meredith Corporation. We have 13 stations across the
country in places like Portland, Oregon; Nashville, Tennessee;
and Flint and Saginaw, Michigan. I am here today representing
the National Association of Broadcasters.
The topic of this hearing, ``Innovation Versus Regulation
in the Video Marketplace,'' touches on two concepts that are
part and parcel to being a local TV broadcaster. TV stations
exist in a highly regulated environment, more so than the other
witnesses on this panel. In fact, broadcasters must comply with
regulations not applicable to any other distribution platform.
For instance, TV stations must abide by decency rules and
children's programming requirements. We must give Federal
candidates reasonable access to air campaign advertisements,
and we must offer those spots at the lowest charge to any of
our commercial advertisers. We must maintain main studios
within certain geographic limits and with specific staffing
obligations, submit numerous quarterly, annual, and biannual
reports to the FCC, and compile quarterly lists of station
programming.
We proudly embrace many of these responsibilities but some
regulations place broadcasting at a competitive disadvantage to
the other video providers on this panel. For example, decades-
old ownership restrictions reflect a time when broadcasting was
the only game in town. It makes no sense to hamstring
broadcasters with outdated limitations when our direct
competitors are not restricted in any way.
Another example is the online public file regulation which
requires local TV stations to place sensitive pricing
information online when our direct competitors can see it, but
these direct competitors don't have that obligation. These
types of regulations, fundamental fairness requires regulatory
parity for the benefit of competition and consumers.
Based on our fundamental obligation to serve the public
interest, some in the pay TV industry are arguing that a
programming dispute means broadcasters are somehow not serving
their local communities. In the rare event that a broadcaster
has a dispute with one pay-TV company in a market, consumers
have multiple other options to get their video programming. We
understand that many of you are concerned about the impact
these disputes have had on your constituents, and we share that
concern. This is why it is important to remind this committee
that no broadcaster has ever stopped broadcasting because of a
dispute with a pay-TV provider. We are never off the air or
blacked out. Our signals are always being broadcast and they
are always free.
Over my career, I have personally been involved in many
successful carriage negotiations with companies like
CenturyLink, Suddenlink, and Mediacom. My experience, like the
experience of nearly the entire broadcast community, is that
deals get done all the time. Of course you don't hear about the
ones that go smoothly; you hear about the handful that don't.
And there is no doubt that the Time Warner/CBS dispute was
unfortunate. But it was predictable. The dispute seems almost
orchestrated out of the DC lobbying playbook: create a crisis;
then run to Congress to fix your crisis in your favor.
The pay TV industry will tell you carriage impasses have
dramatically increased, that the retrans system is broken and
needs to be fixed. Honestly, this is a bit disingenuous. In a
few instances where agreements have not been reached in the
last 2 years, there is the distinct and disturbing pattern: 89
percent of the disputes have involved only three pay-TV
companies: Time Warner Cable, DISH, and DIRECTV, nearly 9 out
of 10 disputes. That suggests to me there is not a problem with
the process; there is a problem with the players. And we
shouldn't be rewarding bad behavior.
It is not a coincidence that these are the very same
companies pressing Congress most aggressively for government
intervention. These pay-TV companies have ratcheted up their
efforts for government involvement in retransmission consent
negotiations because, despite having very healthy margins and
soaring stock prices, they are looking to Congress to help
control their programming costs. But pricing decisions are best
left to the marketplace.
Similarly, the government should have no role in deciding
when, how, or where an owner of video content distributes that
content. These carriage agreements are increasingly about the
digital rights for our popular programming. We want to make
sure the consumers using new and innovative platforms can
access our content, which, in turn, fosters more competition in
the video marketplace.
In conclusion, television broadcasters provided the most-
watched media out there by a wide margin. We are not running to
Congress to ask for preferential treatment in our negotiations
or for any legislative changes to benefit our side. We want to
negotiate freely in the market for the value of our content. We
only ask that Congress not tip the scales in favor of one
industry.
Thank you and I look forward to your questions.
[The prepared statement of Mr. Munson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Mr. Munson, thank you for your testimony. And
we will get to those very soon.
We will now go to David Rozzelle, Executive Vice President,
Suddenlink Communications.
Mr. Rozzelle, thank you for being here. We look forward to
your testimony, sir.
Mr. Rozzelle. Thank you, Mr. Chairman.
Mr. Walden. And again, please pull the microphone close and
turn it on. Just push the button right there.
Mr. Rozzelle. Thank you, Mr. Chairman. Good afternoon,
Chairman Walden, Ranking Member Eshoo.
Mr. Walden. Is it pushed on?
Mr. Rozzelle. It is. I have a green light.
Mr. Walden. There we go. You have to be pretty close to it.
STATEMENT OF DAVE ROZZELLE
Mr. Rozzelle. OK. Thank you. My name is Dave Rozzelle and I
am an executive vice president with Suddenlink Communications,
the leading provider of cable video services and broadband
internet access to approximately 1.4 million households in
second-tier cities, small towns, and rural communities. Thank
you for inviting me to testify today.
Speaking first: Innovation. As a company, Suddenlink is a
prime example of innovation in the cable industry. We have
increased the number of HD channels we offer, we deliver video
content to new screens like iPads, computers, and game
consoles, and we have a partnership with TiVo to distribute
their DVRs directly to our customers. Our broadband service
delivers residential customer data speeds in excess of 100
megabits per second in many of the communities that we serve,
including some very small rural communities.
From the consumer standpoint, the state of video has never
been stronger. Consumers today have many sources for video
content. In virtually all locations they can subscribe to cable
television, DIRECTV, or DISH and get 100 or more HD channels
and the ability to record and watch at their convenience on the
DVR. In some markets, they can also choose service from AT&T U-
verse, Verizon FiOS, CenturyLink's Prism TV, or Google Fiber.
They can watch online video from a myriad of sources, including
Netflix, Amazon, iTunes, and Apple TV, to name just a few.
Also, consumers can access video on an increasingly wider
range of devices. Cable TV everywhere lets consumers watch
video on their laptops, tablets, and smartphones. Sprint offers
its cellular subscribers access to popular programs from
networks like Comedy Central, Style, Discovery Channel, and
more.
The path to continued growth for cable is to enhance and
expand its customer's use and enjoyment of our networks. Cable
is investing billions annually to ensure that this potential
can be realized, and as a result, other providers of content,
services, or devices in the online video ecosystem can
flourish. Our partnership with TiVo is an example of such
efforts.
In contrast to this dynamic growth change and innovative
nature of the video marketplace I just described, our Nation's
communication laws have remained largely the same. Video
distributors are subject to a range of different statutory and
regulatory regimes. While some regulatory differences are
grounded in distinctions that warrant particular treatment,
others echo outdated notions of market power. Twenty years ago,
cable served 98 percent of all multichannel video households.
Today, cable serves 56 percent. Many of the regulations adopted
in the early years of cable video service linger and are no
longer justified.
Two areas ripe for reform are retransmission consent and
the so-called navigation device integration ban. When the
retransmission consent regime was first enacted, broadcast
stations could only reach viewers off air or through cable
systems. Today, the multiple MVPD environment has substantially
increased the leverage that broadcasters can exert in
retransmission consent negotiations by playing one video
provider off another. Their leverage is exacerbated because
broadcasters still control marquee events and because the
network affiliation structure guarantees that in almost all
circumstances only one provider will be available to local
viewers.
In retransmission consent disputes consumers bear the brunt
of this imbalance. The number of RTC-related shutdowns
increased from 12 in 2010 to 51 in 2011 to 91 in 2012.
Policymakers need to take a fresh look at retransmission
consent in today's marketplace.
Similarly, whatever justification there was for the
integration ban has long since been superseded by market
developments. Cable operators are required by FCC rules to use
a separate security module and set-top boxes they lease to
customers instead of being able to integrate the security and
channel-changing function of those boxes. This integration ban,
which applies only to cable, has cost operators/consumers more
than $1 billion since it went into effect in 2007 and wastes
hundreds of millions of kilowatt hours per year. It imposes a
material unnecessary cost on cable video services when
programming costs increases have stressed many household video
budgets in recent years.
How should legislative change be affected? While the
targeted changes I just mentioned would improve the consumer
video experience, the basic framework of the Act can remain in
place. Congresswoman Eshoo's draft bill is an excellent
example.
Thank you again for the opportunity to appear today and I
welcome any questions that you may have.
[The prepared statement of Mr. Rozzelle follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. And we thank you for your testimony and we look
forward to the questions and answers.
We will go now to Mr. James Campbell, Vice President of
Regulatory and Legislative Affairs, Midwest Region,
CenturyLink, Inc.
Mr. Campbell, thanks for being with us.
STATEMENT OF JAMES CAMPBELL
Mr. Campbell. Thank you, Chairman Walden, Ranking Member
Eshoo, members of the subcommittee, a special hello to
Representative Gardner from my home State. Thank you for giving
CenturyLink the opportunity to testify before you today as a
relatively new entrant in the video market.
Obviously, content is going to be a big topic today, but I
just want to assure you that CenturyLink does not seek to avoid
paying for its content but rather to create an environment
where we go back to true market-based negotiations. And we
actually have two parties that are sitting at the table with
some risk and giving something and taking something.
But we have a little background. CenturyLink is the third-
largest telecommunications company in the United States. We
offer voice, video, and data to over 14 million subscribers in
37 States. We offer the same service to businesses in all 50
States and some select international communities. And recently,
with our purchase of Savvis, we are one of the largest cloud
computing and data hosting companies in the world combined with
our cybersecurity solutions that we offer to the Federal
Government and multiple State and local governments. So we are
a true global player.
With that, we just recently got involved in the competitive
video business in the last 5 years where we have launched our
Prism TV in multiple markets, including Colorado Springs,
central North Carolina, and most recently in Omaha where we
launched a gig service. It is a competitive service and it
truly brings a choice to the market.
Consumers benefit from this choice. They get better quality
service; they get more innovation, more investment, and
ultimately lower rates. Unfortunately, the cost to broadcast
content is threatening consumers' ability to receive just any
of those benefits.
So the regulatory regime we are looking at was creating an
environment when the Federal policymakers were concerned that
broadcasters were going to be subject to market abuse by the
incumbent cable providers when they had virtually all of the
market. Now, today, what was the shield is now used as the
sword. So as we face negotiations for retransmission consent,
it becomes difficult for us to negotiate, and these rules are
used against us in a myriad of ways, including the fact that
national content can be forced down our throat along with the
local content through tie-in arrangements. We have virtually no
other option to get content in these markets. And the FCC's
interpretation of the good faith standard has rendered it
meaningless, essentially giving further de facto power to the
broadcasters. So that the scales that Mr. Munson spoke about
our already in the favor of one party over another, and we are
simply asking that they be returned to level.
In addition, the regulatory regime does not reflect the
explosive competitive nature of the video market and the
explosion of competitive providers over a myriad of networks
and methods. The current rules not only pose problems for large
providers but also more so for small providers like
CenturyLink. Every customer we obtain currently has a
relationship with someone else. We have to win them over.
And for us to sit and face these types of terms and
conditions from broadcasters, I know Mr. Munson said that
thousands of these retransmission consent negotiations go
smoothly, including with CenturyLink. I doubt there was a lot
of horse-trading and haggling in that negotiation. We
essentially have to take what we get.
Ultimately, the fees that are being charged are providing
windfalls for the corporate broadcasters and not the local
stations. Retrans was designed to promote localism and, you
know, ensure that there was a safety net for local stations.
Now, we have to buy these local stations along with multiple
other channels, and we have no choice but to take it because
these are products and content that our subscribers need. SNL
Kagan projects that by 2018 $6.1 billion will be gained in re-
trans fees over 2.4 billion from 2012. That is a 250 percent
increase over just two retransmission cycles. And this is all
at the expense of consumers that live and work in your
districts.
Congress has an opportunity with STELA to reform and return
this negotiation process into a true market scenario. We agree
with DISH that the carriage of distance signals, if there is an
impasse, would be one way to do that. You would essentially
return some leverage back to the providers so when we sit down
at the table, we both want something. Right now, it is not the
case. The reasons Congress conferred the regulatory advantage
to the broadcasters no longer exist.
CenturyLink favors a deregulatory approach. Again, distant
signals can come in for two reasons: again, it returns the
balance of the negotiations to both sides of the table equally,
and more importantly, it doesn't punish consumers while two
providers try and work out a deal.
To close, at the end of the day, this is not about winners
and losers; it is about protecting consumers from the
regulatory problems that exist today.
Again, we thank you for the opportunity to be here. We look
forward to working with this committee and Congress to come up
with a solution that is consumer-oriented. Thank you.
[The prepared statement of Mr. Campbell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Mr. Campbell, thank you for your testimony. We
will now go to our final witness this afternoon from Public
Knowledge, the Senior Staff Attorney, John Bergmayer.
Mr. Bergmayer, thank you for being here and we look forward
to your testimony.
STATEMENT OF JOHN BERGMAYER
Mr. Bergmayer. Good morning, Chairman Walden, Ranking
Member Eshoo, and members of the subcommittee. Thank you for
the opportunity to participate in today's hearing.
Today, I am going to talk about two things: First, I have a
few remarks on current video issues; then, I will present a few
ideas that will make the video marketplace more competitive and
affordable.
For years, Public Knowledge has met with both sides of the
aisle on video reform issues and we frequently find that we
agree with several proposals coming from Members of Congress
who come from very different political backgrounds. While there
are some real differences of opinion on how to proceed, there
is a widespread recognition that current rules and the market
structure they enable are not serving the viewer as well as
they should. We are in a window where reform is possible only
if members of this committee come together to find common
ground.
The month-long blackout the kept CBS programming, both
broadcast and cable, from appearing on the lineups of Time
Warner Cable subscribers has focused the attention of some
policymakers. Ranking Member Eshoo's draft Video CHOICE bill
puts forward a number of creative ideas that could move the
video marketplace in a good direction. Under the provisions of
this discussion draft, not only would viewers be protected from
the effects of corporate contract disputes that blackout
channels, they would get more choice on what channels they
subscribe to and could see their monthly fees go down.
Another approach, the Television Consumer Freedom Act is
being promoted by Senators McCain and Blumenthal. This bill
proceeds from the observation that programmers, broadcasters,
and cable companies all receive a number of special protections
from the government. It asks that they provide viewers with
more choice in exchange.
We have also been encouraged by efforts by Representative
Scalise in previous Congresses to look for outdated video
regulations that merit elimination in order to remove
unnecessary protections for video incumbents.
We should not overlook an important part of viewer choice.
That is choice in the devices that people can use to access
their cable programming. Cable set-top boxes often have high
rental fees and lack the innovation found in other areas of
consumer electronics. This is why Congress passed Section 629
of the Communications Act. Congress and the FCC should continue
to enforce the current cable card implementation of that
statute while moving to a more modern implementation that fixes
some of the shortcomings.
Congress must reauthorize STELA. Satellite has been a
success story where action by Congress and the FCC insured that
a new distribution technology could access content and reach
viewers. It should be a lesson for policymakers about the
importance of fostering new modes of video competition. The
success of STELA points to the best long-term approach for
improving the video marketplace. That is to promote competition
from new providers.
The internet is changing the video marketplace just as it
changed the market for other media. However, dominant players
in video have control over the content online competitors need
for their service and the pipes they need to reach viewers. New
technology will play a large part of video delivery but the
market may not reach its full competitive potential. Consumers
will still suffer from a lack of choice and independent content
producers will struggle to reach viewers.
But there is a solution at hand. Congress should make sure
that its pro-competition video policies are technology-neutral.
If it does this while protecting internet openness, it can
ensure that videos have more choices.
Like satellite, online video is a success story but it can
be much more than it is now. It is not driving down cable
prices. For most users, it is a supplement to cable, not a
replacement. Congress and the FCC can help online video develop
into a full competitor in three easy ways: First, they can
clear away some of outdated rules that slow down the evolution
of the video marketplace; second, they can extend the
successful policies that protect providers from anticompetitive
conduct to certain online providers; and third, they can
protect internet openness and prevent discriminatory billing
practices that hold back online video. This will increase
competition, meaning lower prices, better services, and more
flexibility and control for consumers.
To be sure, many of the regulations that permeate the video
marketplace can be repealed today. These rules include the
Sports Blackout Rule and prohibitions on distant signal
importation. Some other rules like the Compulsory Copyright
License are outdated but must be reformed cautiously. Measures
that are designed to mitigate the market power of certain large
video providers should not be repealed until effective
competition develops. Examples of these kinds of roles included
the Program Access and Program Carriage Rules.
In some respects, they should be extended. For example,
online video providers that wish to voluntarily operate as
multichannel video programming distributors should be able to
do so. This would ensure that consumers had more choices for
high-value content than they do today. It would eliminate the
incentives that keep certain content from being licensed
widely.
Finally, Congress can help ensure the internet remains open
to creators of all sizes by working to prevent the anti-
competitive use of data caps and other open internet
violations.
My brief oral testimony can only touch on a few issues. My
written testimony contains more detailed analysis and
recommendations.
Thank you for inviting me to speak and I look forward to
your questions.
[The statement of Mr. Bergmayer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Mr. Bergmayer, thank you for your testimony.
I want to thank all the witnesses for your testimony. We
will now move into the questions.
And I want to pick up on some things you said, Mr.
Bergmayer. And I have had some people say in the course of this
dispute between CBS and Time Warner Cable when you talk in
terms of the customers, do the customers deserve a refund in
any portion from your perspective if they didn't get the
programming that originally was there and all that?
Mr. Bergmayer. Yes, sure.
Mr. Walden. What's your view on that?
Mr. Bergmayer. I think it goes without saying that
consumers should receive compensation if they don't receive the
services that they pay for. And the details of what caused the
dispute, that is not any of their concern or business.
Mr. Walden. Right.
Mr. Bergmayer. However, I don't think that will actually
solve any of the underlying issues that lead to the blackouts
to begin with.
Mr. Walden. I understand that. Yes, but it is just
something people have talked about, you know, because this one
went so long.
Mr. Bergmayer. Yes, there is dispute.
Mr. Walden. And let me ask about because we are all having
this discussion about these rules and you heard my opening
statement. I am qualified for Social Security so I mean, you
know, old enough to get a drink legally. And so I want to talk
about the ownership caps a bit because it strikes me and I
would be curious to get your comments or any of you because
broadcasters clearly have an ownership cap limitation of, what,
39 percent or something or TV does, overall audience.
Satellite, you don't have any limitation on markets you serve
if I understand it, the two satellite providers. Are ownership
caps something that have outlived their usefulness? Cable
doesn't really have that, right, so what are your views on
that?
Mr. Bergmayer. Public Knowledge definitely thinks that the
media ownership rules serve an important purpose in ensuring
that people have a diversity--
Mr. Walden. So broadcasters should have an ownership cap
but the others shouldn't?
Mr. Bergmayer. I think, you know, the rules might need to
be revisited to be more technology-neutral absolutely. When you
are singling out a particular industry, that might be
problematic. But in general, media ownership serves a purpose.
And I have to point out that the issue that affects
retransmission consent in particular are ownership problems
that don't really trigger the rules because they are about
stations that are in different markets that still jointly
negotiate retransmission consent with large MVPDs. And I am
sure some of the cable companies can address that issue better
than I can.
Mr. Walden. They are not necessarily negotiating at all
times with mom-and-pop cable operators anymore either, are
they?
Mr. Bergmayer. There are many small cable operators
throughout the country----
Mr. Walden. Yes----
Mr. Bergmayer [continuing]. And rural areas that have
retransmission consent--
Mr. Walden. We have sort of gotten to the point where we
have got big organizations on both sides in many cases, right?
Mr. Bergmayer. Well, there are big organizations on both
sides, and unfortunately, sometimes there are still little guys
on both sides----
Mr. Walden. I don't dispute that.
Mr. Bergmayer [continuing]. That get forgotten in this.
Mr. Walden. Yes. So, Mr. Campbell, Mr. Dodge, and Mr.
Rozzelle, from what I understand, the MVPDs generally object to
the bundling of broadcast channels with cable networks during
retransmission consent negotiations. And at the same time, each
MVPD before us no doubt offers bundled packages of channels to
their customers. They also likely offer bundled video and voice
and data service or want to offer data. Everybody is kind of
getting into that. What is the difference from your perspective
between the bundles offered by the programmers and the bundles
that the MVPDs themselves offer?
Mr. Dodge, you look like you want to leadoff. Have at it.
Mr. Dodge. Sure. Well, you know, DISH, I think, it has been
very, very innovative in the bundles it offers----
Mr. Walden. Um-hum.
Mr. Dodge [continuing]. In the market creating family-
friendly-only packages that are smaller and more affordable for
families, and actually, the bundles offered by the programmers
and the bundles offered by the distributors largely are the
same thing. We wish we had more flexibility in how we could
actually package, but as the bundles are offered to us, they
also include restrictions on how we can actually create
packages.
Mr. Walden. All right. Mr. Campbell?
Mr. Campbell. One of the differences in the bundles we
offer to our subscribers if they don't like them or want to go
somewhere else, they can call a competitor. In these
retransmission negotiations, the bundles are forced on us and
if we agree to the terms and conditions, we carry the
programming. If not, then we have nowhere else to get it.
So, yes, to echo Mr. Dodge, we are very creative with our
bundling package as well in trying to make it as competitive as
possible. I think the real issue on the retrans side is the
one-sided negotiations of it.
Mr. Walden. All right. Mr. Rozzelle?
Mr. Rozzelle. The packages that we offer our customers are
structured as flexibly as we can given the program contracts
that we have with the distributors, including the broadcasters
under RTC. And that restricts us from doing a lot of things
that we would do were we left on our own in terms of offering
flexible packages. We are very mindful of the impact of video
cost on the affordability of video services. In many of our
small markets it is a big issue, and we wish we had more
flexibility, Mr. Chairman.
Mr. Walden. All right. Mr. Munson, did you want to comment
on that?
Mr. Munson. I do not work for a company that owns
multiple----
Mr. Walden. Um-hum.
Mr. Munson [continuing]. Cable networks, but if you look at
it holistically, there are over 1,200 television stations in
America. The networks themselves, let's say ABC, Disney I think
actually owns only 8 of those 1,200. So the effective bundling
of cable channels with broadcast stations is really a small
part of the regular negotiation.
Mr. Walden. All right. My time is expired.
I turn now to the gentlelady from California, Ms. Eshoo,
for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman. And thank you to each
one of the witnesses. I think you all gave really very fine
testimony obviously, with, you know, your own best wishes of
what you think is excellent for everyone. But that is the way
it is.
Let me start with Mr. Dodge. Although DISH wasn't part of
last month's dispute between Time Warner Cable and CBS, I
understand many of your customers were still impacted. Why were
they impacted?
Mr. Dodge. That is true because CBS ultimately blocked
anyone who had Time Warner broadband service from receiving
their online content regardless of whether they actually
received a video from----
Ms. Eshoo. So internet service was blocked as well?
Mr. Dodge. Correct. Regardless of whether you were----
Ms. Eshoo. Well, I think that is something for all of my
colleagues to keep under their hat as we consider this. I mean,
you know, it is metastasizing. I mean this isn't just one area
where people are affected. There is a multiplicity of impacts.
Thank you for that.
I would like to go to Mr. Munson. In Mr. Campbell's
testimony he points out that the FCC rules prohibit cable
providers from taking down broadcast signals during a Nielsen
ratings sweeps week. My discussion draft includes a similar
provision during a retransmission consent negotiation impasse.
Why is it unlawful for a pay-TV provider to pull your signal
during sweeps weeks but it is OK for a broadcaster to pull
their signal during a retrans dispute often time to occur
actually on the eve of a big sporting event?
Mr. Munson. First of all, I'll maybe answer the last
question first. And again, I wasn't involved in the CBS/Time
Warner dispute but----
Ms. Eshoo. No, but you are here representing the
broadcasters, so that is why I am asking the broad question,
excuse the expression.
Mr. Munson. As I understand, that retransmission consent
contract ended sometime in June or July. There were extensions
to it and the dispute ended up with CBS coming off the cable
system in August. And really the month of August we are kind of
in the doldrums of summer and we are in reruns.
Ms. Eshoo. So you don't find any disparity even on the face
of this? You don't see anything that is wrong with it?
Mr. Munson. Well, there is always----
Ms. Eshoo. Are you defending it?
Mr. Munson [continuing]. Marquee events that are going on--
--
Ms. Eshoo. But I mean are you defending it?
Mr. Munson. I am not sure I understand the question.
Ms. Eshoo. Well, you know, the whole issue. I already gave
you my question and, you know, maybe it is difficult for you to
answer it and I understand why. Maybe that is the real answer.
So thank you.
I would like to go to Mr. Bergmayer. Thank you for what you
said about the discussion draft. We appreciate it and we want
to work with everyone. We have to have a very good, sensible,
bipartisan approach on this thing. So we appreciate what you
said in your testimony.
Now, you stated that policymakers should reject attempts
whether at the SEC or in Congress to weaken the cable card
system or to make it more difficult for the FCC to implement
its successor. Can you explain why ending the integration ban
before adopting a successor technology would disrupt innovation
and harm consumer choice in the set-top box marketplace? Now,
this is an issue that I go way back on, way back on, and I
can't believe that that many years have gone by since we did
the legislation on it, but I obviously have a keen interest in
what that policy produced. So can you address it?
Mr. Bergmayer. Yes, absolutely. I mean people are relying
on cable card today and new devices from companies like Samsung
and TiVo.
Ms. Eshoo. Maybe just use one sentence to describe to set
it up for the Members. What does today's set-top box do and
then go to answering the question?
Mr. Bergmayer. Yes, I mean the set-top box is what allows
people to access their cable content. It might be the DVR. It
might have some other functions. And most people still are
renting their boxes from their cable company. You know, you
don't go into the store and buy a device like you do in a lot
of other markets.
Ms. Eshoo. Um-hum.
Mr. Bergmayer. And the Section 629 of the Communications
Act was intended to address that and make it a more competitive
market that is much more similar to other markets. And cable
card, years ago, was the technology that the FCC and the cable
industry and a lot of stakeholders came up with to implement
629. And it is still being used today. And as I was saying, you
know, there are new devices coming onto the market that are
using cable card not just from TiVo, which everyone knows, but
also from Samsung entering the cable card market.
Ms. Eshoo. Um-hum.
Mr. Bergmayer. So it remains an important platform for
innovation.
And the integration ban issue, I mean the integration ban
tries to assure that these third parties get the same level of
support as operator-supplied devices so that the first party
operator-supplied box can't do something that a TiVo or Samsung
can't also do.
Cable card isn't perfect and for years Public Knowledge has
been calling for the FCC to implement a more technology-
neutral, a better solution that we think solves a lot of the
problems that I think Members have identified with the cable
card system. But if the system is weakened now without a
successor technology in place, I think that essentially spells
the death knell for Section 629. It will still be on the books
but the FCC won't be able to implement it and it becomes less
likely that it will ever move forward. And the biggest problem
with set-top box is still the high cost of people renting them
every month.
Ms. Eshoo. Right. Thank you very much.
Thank you, Mr. Chairman.
Mr. Walden. Thank you.
The chair now recognizes the gentlelady from Tennessee,
Mrs. Blackburn.
Mrs. Blackburn. And thank you, sir.
Mr. Munson, I would like to begin with you. At our last
hearing on video reform that was in June and I asked a question
of Marci Burdick, who was here on behalf of the NAB. And I
asked her whether she thought the position the broadcasters
took on the radio side where they refused to recognize a
performance right for sound recording undermines their position
for retransmission. And we got kind of a convoluted response on
that one. I imagine you may have heard about that in
preparation for the hearing today, and it was something about
there has been a symbiotic relationship between radio and
artist but nothing really clear.
And the reason I bring it up again is because I am sure
that you saw this ad in yesterday's Politico, and it quotes a
broadcast executive who said, ``the idea that we have to pay
them to put up their music on our radio stations is absurd.''
So, Mr. Chairman, I would like to enter that into the record.
Mr. Walden. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE TIFF FORMAT]
Mrs. Blackburn. Thank you, sir. And so I am coming to you
now, and my question for you, sir, is can you square that up
for us and explain why the broadcast industry supports
compensating content owners in the TV market but not in the
radio market?
Mr. Munson. Thank you, Congressman. If you take a look at
it, in essence there are two different business propositions.
On the radio side--well, let's start with the TV side. On the
TV side we are creating content that multichannel video
providers want to buy and then resell to the consumer. So we
enter into negotiation, and by the way, they mark that up so
that they can make a profit on it. Then we enter into
negotiation whereby they buy the programming and then resell
it. At the same time, at all times, we are over the air free
and we provide that service for no fee if you want to put an
antenna up and watch it.
On the radio side that is a direct relationship between the
radio station who plays the music of the artist, the artist
then increases their--
Mrs. Blackburn. Sir, it is all still content. Your answer
doesn't square up so you might want to go back and listen to
that.
Mr. Dodge, have you got any thought on that?
Mr. Dodge. I don't see any difference.
Mrs. Blackburn. Thank you. Anybody else want to weigh in on
that?
Mr. Bergmayer. Public Knowledge has supported that radio
broadcasters should pay performance royalties, yes.
Mrs. Blackburn. Yes. OK. Thank you.
Mr. Campbell, I would like to come to you for just a
second. I am always amazed and I think you are probably hearing
this a lot, people talk about retransmission taking place in a
free market. And I look at some of what goes on and I am
thinking, you know, you look at the mandates, retransmission
consent, compulsory copyright, basic tier placement, required
tier buy-through, et cetera, et cetera. The list goes on. And
those are not necessarily what we would call free market terms.
So if you can, just give me kind of a thumbnail sketch when you
look at this and we want these negotiations to take place in a
free market. That may not be the case, and if not, what rules
do you suggest that Congress examine so that we come to a level
playing field? You know, in your perfect world what would we be
looking at?
Mr. Campbell. Representative Blackburn, thank you. You are
correct. I think in any free market negotiation both sides come
to the table with some risk and some benefit. And speaking as a
new entrant, it is completely skewed in favor of the
broadcasters, and that is largely as a result of the
regulations in place today. That is why I think the discussion
that Representative Scalise started last year is a great way
and I think that is probably what I heard today. And again, I
commend Ranking Member Eshoo for her draft this week. I think
people are realizing there is a problem.
Our proposal of a distant carriage, we think, brings the
scales up to a level playing field, and here is why: We need to
get local news to our consumers and the broadcasters want to
tie that together with national content. They probably want to
have all this tied together and us pay a premium price, 200,
300 percent increases.
I think if we are carrying another signal in an adjacent
market even though our consumers don't get the local news, the
broadcasters are incented to come to the table, get a deal, and
we are incented to come to the table to get a deal because we
both now have something that we want to offer our consumers
that is not there at that time. But just saying take it or
leave it or you will go black or there is nowhere for us to
turn is not a free market negotiation.
Mrs. Blackburn. I yield back.
Mr. Walden. I will now go to Mr. Doyle, I believe.
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Walden. Mr. Doyle for 5 minutes.
Mr. Doyle. Heavy on the Mister. Thank you, Mr. Chairman.
Well, I want to start out by reiterating something my
friend and colleague Ms. Eshoo said. And I am very concerned
about the blocking of online content in retransmission consent
disputes. This is new ground that is being broken here that we
have not seen before in any retransmission negotiations. And
the most recent one where the broadcast blackouts affected 3
million people, the online subscribers to CBS.com, we are
talking about 11 million people that were affected by that
outside the area that was being negotiated, and I hope this
doesn't become the new normal for our retransmission disputes.
Mr. Campbell and Mr. Rozzelle, you represent companies that
provide video and broadband services to consumers. What do you
think the reaction would be if your company blocked access to
internet content as part of a retransmission dispute?
Mr. Rozzelle. Congressman Doyle, I think it is very clear
to us what would happen. It would be argued that we violated
the net neutrality principles and that we were engaging in, if
not unlawful conduct, immoral conduct.
I will tell you that I was--perhaps I am naive here--but I
was very surprised in a way that the FCC didn't say to CBS in
this case you are a broadcaster operating as a public trustee
in the public interest. The programming involved here was
created as a result primarily of the licenses that you hold
from us, and now, you have withheld that programming in another
venue, but nevertheless, withheld that programming from members
of the public and we don't find that to be in the public
interest. And I am sorry they didn't do that. I think it would
have been appropriate.
Mr. Doyle. Mr. Campbell?
Mr. Campbell. Representative Doyle, I really don't have
anything to add. I think Mr. Rozzelle answered it quite well.
The only other thing I would point out is that, to go back
to Representative Blackburn's suggestion if it is truly a free
market, then the broadcasters maybe should return some of the
free spectrum they got to offer that and bid on it. But I would
have nothing to add to the online blockage other than Mr.
Rozzelle.
Mr. Doyle. Let me ask a question to again Mr. Rozzelle, Mr.
Campbell, and Mr. Dodge. There seems to be an increase in the
number of agreements between local broadcasters to co-own and
operate equipment and facilities, and I want to say I believe
in the value of local news and local programming and I believe
that broadcasters need to find innovative solutions to the
advances of technology in the marketplace.
However, both DISH and Suddenlink and Public Knowledge
mentioned in their testimony instances where joint agreements
have resulted in separately owned stations in a single market
jointly negotiating for retransmission consent. How have you
seen this trend develop and what do you think the consequences
have been?
Mr. Dodge. Well, the American Cable Association, or the
ACA, did a study that showed in those scenarios where
separately owned stations joined together in those so-called
local marketing arrangements that the resulting cost to the
distributors and ultimately consumers increased anywhere
between 22 and 160 percent. And it is also my understanding
that the Department of Justice starts to get interested in such
things at about the 5 percent mark. So I think the numbers are
pretty telling.
Mr. Doyle. Mr. Rozzelle?
Mr. Rozzelle. We have run into circumstances where in one
market that we serve the ABC affiliate and the Fox affiliate,
two of the big four, came to us together and it was a very,
very difficult negotiation for us as a result.
I would say to you, sir, that if we step back and take a
look at the result of the increasing retransmission consent
fees and try to correlate those increases with increases in
local programming as a result, which was the reason that this
whole system was put in place to begin with, as I understand
it, I don't think that correlation exists, not positive.
And so I think that this is a very difficult issue. I think
Ranking Member Eshoo's bill is therefore more valuable today
than it has ever been and we look forward to participating in
that process.
Mr. Doyle. Mr. Campbell?
Mr. Campbell. Representative Doyle, as a new entrant, we
are not in a lot of markets yet where we would probably be
subject to these sort of arrangements, but obviously, we have
heard about them. And, you know, as we grow, obviously if any
of this happens, then we will be sure and provide that data.
Mr. Doyle. Mr. Munson, I saw that you wanted to comment.
Mr. Munson. Yes, thank you. If I could make a few comments,
Congressman.
Mr. Doyle. Sure.
Mr. Munson. First of all, there is nothing illegal about
these arrangements between television stations. If there was,
the FCC wouldn't allow it. But the fact is that in my
experience of doing retransmission contracts of this sort,
there is never an option that is not given where a multichannel
video provider could pick up just one of the stations. They
always offer that. But there is a lot of exchange that goes
back-and-forth between the cable company and the television
station.
Mr. Doyle. Mr. Chairman, I see my time is up and I thank
you for your generosity.
Mr. Walden. We will now go to Mr. Barton for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman. I have got just one or
two basic questions, maybe three.
The first thing I want each of the panelists to tell me who
you think the primary stakeholder that you are representing is.
And I will start with Ms. Aistars.
Ms. Aistars. So I represent the Copyright Alliance and we
are a coalition of 40 institutional members who are copyright
owners, creators of all varieties. So I am speaking for the
creative community.
Mr. Barton. OK.
Mr. Dodge. Consumers.
Mr. Barton. Just consumers?
Mr. Dodge. Yes.
Mr. Barton. I hear chuckles at that but that is OK.
Mr. Munson. The National Association of Broadcasters and
KPHO television and Meredith Corporation.
Mr. Barton. Where is KPHO?
Mr. Dodge. We are in Phoenix.
Mr. Barton. Phoenix, Arizona. OK.
Mr. Rozzelle. Mr. Dodge stole my response, Congressman, but
I am here representing Suddenlink Communications.
Mr. Barton. Representing who?
Mr. Rozzelle. Suddenlink Communications.
Mr. Barton. What is Suddenlink Communications?
Mr. Rozzelle. Suddenlink Communications is a cable
operator. It serves about 1.4 million customers throughout the
United States. And we are a member of the NCTA but I am here
representing the company.
Mr. Barton. OK.
Mr. Campbell. Representative, Mr. Dodge once again stole my
thunder.
We are representing our subscribers who are trying to bring
a competitive choice in the marketplace against the incumbent
providers and other video providers.
Mr. Barton. So you are a cable company?
Mr. Campbell. We are a telecommunications company. We offer
video services over an IP TV network. We currently negotiate
cable franchises in some cities where we operate under
statewide franchising. But yes, it is a wire-lined facilities-
based that currently passes over 1.5 million homes.
Mr. Barton. OK.
Mr. Bergmayer. And Public Knowledge is here to represent
the interest of TV viewers.
Mr. Barton. TV viewers.
Mr. Bergmayer. Yes, sir.
Mr. Barton. Do people subscribe to Public Knowledge? I mean
is this kind of like Heritage Foundation or Common Cause?
Mr. Bergmayer. We are not quite at that scale but we are a
nonprofit public interest group.
Mr. Barton. OK. Well, you know, I asked the question
because the old days, you know, I knew who the broadcasters
were and I knew who Comcast was and I knew who AT&T was, you
know, and I knew who the local affiliate station was in my
district. But you could put a gun to my head and I wouldn't be
able to tell you without you telling me who you folks represent
because the marketplace is totally different, totally
different.
Now, I have at various times been a customer, which means I
pay money for services of Time Warner Cable, Comcast Cable,
Charter Cable. Currently, I am a paying customer for DIRECTV. I
just switched from Comcast to Verizon FiOS, and I am in the
process of switching from Charter to AT&T U-verse. OK. Both
Verizon FiOS and AT&T U-verse are bundled services, which I get
telephone service keeping my old telephone number, internet
high-speed so-called service, and what I would call cable or
television service. OK. And I pay a flat monthly rate, which is
lower than the old separate rates.
Who can tell me what body is the dominant regulator of the
bundled services that I now am receiving through Verizon FiOS
and AT&T U-verse? Is it the FCC? Is it the cable? I mean who is
it?
Mr. Campbell. Representative, I think the answer is yes. In
our case we offer the bundled telecommunications, video, and
data. From a telecommunications perspective, the FCC and the
State Public Utilities Commissions regulate that portion of the
service.
From the video perspective, local governments and the FCC
has some oversight but not as much as they used to--regulate
the provision of cable service. And then the broadband is kind
of out there in its own little world.
Mr. Barton. Well, my time is about to expire, but the point
of the first question and the point of the second question is
the laws that are on the books had no conceptual ability to
foresee what is now happening in the marketplace. And again,
when AT&T was a phone company, we kind of understood the law
regulating telephone service. And when Charter was a pure cable
company, we understood the law of regulating cable television.
Well, Charter has bundled services. All these groups have
bundled services. And I don't think even you folks, as smart as
you are, really can delineate who the dominant regulator is or
even how to regulate if you need to regulate.
So, Mr. Chairman, my time is expired but that is why your
hearings are so important and I really hope we can come up with
a way to bring the regulatory scheme if we need one into the
21st century.
Mr. Walden. I thank the gentleman.
And I am just going to exercise the chairman's prerogative
for just a minute because I think it is important we have a
little fun and frivolity in these hearings, but when asked who
you represent here, unless you are co-ops, you are probably
also representing your investors and shareholders through a
fiduciary responsibility. I recognize you are always
representing your customers, but fundamentally, is anybody here
not representing your owners?
Mr. Dodge. Yes, fair enough, Mr. Chairman. I wasn't sure
where the question was going, but of course, I represent DISH
Network.
Mr. Walden. That is what I thought you meant but I thought
everybody might want to qualify that unless you are a co-op,
right? Anybody disagree with that?
Mr. Bergmayer. Not at all, no.
Mr. Walden. There you go. All right. Now, we go to, I
believe, Mr. Latta.
Mr. Latta. Thank you, Mr. Chairman. And thank you again to
all of our witnesses today. I really appreciate hearing your
testimony.
And if I could start with Mr. Rozzelle, in your testimony
you state that whatever justification there was for the
integration ban has long since been superseded by marketplace
developments, and then you go on to state that consumers and
operators, this has cost them more than $1 billion since it
went into effect in 2007. I was wondering, could you expand and
elaborate on what you gave us in your testimony about the
integration ban?
Mr. Rozzelle. Thank you for the opportunity, Congressman
Latta. The figure, $1 billion, comes from a rough calculation
that the cost of adding a cable card to the boxes that we
distribute directly to our customers costs about $50 a box. It
also adds significantly increased electrical cost associated
with the operating of the box.
There are roughly 40 million cable cards out. The program
has been successful. It was passed in 2007 and the country is
full of cable cards. The relationship that we have with TiVo,
which uses cable cards, is an example of the success of that
program. And it is one of the big reasons why that experience
that we have had and our continued operating premise, which is
that any video customer that comes to us with a device from
wherever it came will be supported by us if it wants to take
our cable television services. Video services are so highly
competitive that if we do not support them, they will go
someplace else.
Mr. Latta. Let me ask real quick when you say that you will
support anything that is brought to you, does that put a
technological strain on you or on your tech crews?
Mr. Rozzelle. You know, I am no engineer, sir, so it is
possible, I suppose, someone could show up on our doorsteps
with something that simply wouldn't work, but if it is a device
that was designed to work on our network, I can tell you that
we would do everything that we reasonably could to make certain
that we kept that customer happy.
Mr. Latta. Thank you. And kind of following up if I could
maybe ask everybody this question what Mr. Barton had brought
up, you know, really where the laws are out there today. For
each of you sitting out there today, you know, and we pretty
much have heard from everyone that, you know, the laws are
either outdated or we have problems. If each of you could just
kind of briefly say if you had the opportunity, what law on the
books would you want to get rid of or change today? And I will
start ladies first.
Ms. Aistars. I think as I said in my testimony, the
Copyright Alliance represents largely copyright owners, and
from a copyright perspective, statutory licenses are
disfavored, and I think to a greater or lesser extent most of
my members would agree that the existing licenses are an
anachronism, but we also recognize that there are business
practices that have grown up around them and so to unwind them
we would have to, you know, give some further thought as to how
to do that in a way that is not disruptive.
Mr. Latta. OK. Mr. Dodge?
Mr. Dodge. So if the choice was completely getting rid of
something versus targeted reform, then we would say get rid of
the retransmission consent scheme to the core along the lines
of what Mr. Scalise has proposed.
Mr. Latta. Mr. Munson?
Mr. Munson. I guess I would say the ownership caps would be
the first thing, but if I could mention one other thing.
Mr. Latta. Oh, sure.
Mr. Munson. Thank you. And that is that there has been a
lot of talk about whether the retransmission consent is broken
or not, but I don't know if I am the only one on this panel--I
think I am--that actually has negotiated a retransmission
consent contract, and I find that it works. It ends up going
down to the wire, as many negotiations with businesses do, but
what is not broken here even though we have brick cell phones
and everything else, but what is not broken here is when two
companies get together, one company wants what the other one
has and they get together and negotiate a deal, and then only
1/2 of 1 percent of the deals go public and end up with an
impasse.
Mr. Latta. I am running out of time here. Mr. Rozzelle?
Mr. Rozzelle. Congressman Latta, I have also negotiated
retransmission consent contracts and I would tell you that in
the case of Suddenlink, they were almost always successfully
negotiated because we simply didn't have any power at the table
to do anything other than accept the deal we were given.
If I was going to affect a set of laws, I would affect the
broadcast carriage laws that impact retransmission consent.
Mr. Latta. Mr. Campbell?
Mr. Campbell. I would echo Mr. Dodge and Mr. Rozzelle said.
And I, too, have negotiated retransmission consent. Obviously,
over the years the leverage has been swayed in favor of one
side, and at some point this is accelerating upward, and the
model breaks with these types of increases.
Mr. Latta. Mr. Bergmayer?
Mr. Bergmayer. Well, it is hard to pick just one but for
these purposes basic tier buy-through, and our testimony has a
number of provisions that should be sunsetted, listed.
Mr. Latta. Thank you. Mr. Chairman, my time is expired and
I yield back.
Mr. Walden. The gentleman yields back.
I will now go to Mr. Scalise for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman.
When we talk about the different challenges that each of
you face, you each have different groups that you answer to,
corporations, boards, customers. Ultimately, you are all trying
to provide services and represent those people that create the
great content that we all enjoy. And so when we have this
conversation, the reason I appreciate the chairman's focus and
the ranking member's interest in this is that I think we all
want to make sure that the policy is smart and reflective of
the world that we live in today.
And I bring the phone not just to point out that it cannot
text the chairman or give him the LSU/Oregon score on this
phone, but this was the modern device at the time these laws
were written. And if you look at what you can do with this
device today and you compare it to what you can do with this
device, and when people realize that the laws that are on the
books today that all of you have to deal with were written for
this, not for this and haven't been changed since this device
was the modern device, it shows you how outdated the laws are
but it shows you how complicated it makes your jobs and your
daily lives.
And government needs to go and get with the times and
figure out that you are living in a different world. You have
to go in negotiations every single day dealing with the
realities of modern technology. You couldn't even text somebody
but you surely couldn't download video, audio.
The things you can do today have complicated the
marketplace because now the laws are written in a way where you
literally had one broadcaster sitting in a room with one cable
operator. You had a monopoly negotiating against a monopoly.
And maybe that worked back in that day but we are not in that
day anymore.
Every consumer benefits from the fact that they have got
multiple options. If they want to turn on the TV, they can get
that through a cable wire, they can get it through a fiber,
they can get it through a satellite, they can get it from so
many sources but they can also go on their mobile device and
just download it onto their iPhone or iPad or Galaxy or
whatever device you have got. And yet, the rules are so rigid
that it forces in some cases government picking winners and
losers. In some cases you have complications you have got to go
to the FCC to get a ruling. And the innovation that is lost is
really what hurts the consumer. And that is really why we are
here today.
I want to ask you, Mr. Campbell, because you all just
recently rolled out Prism. It is a fairly new product, you
know, that you are into this marketplace and video, and you
have had to go through some of those growing pains in
establishing these relationships and negotiations. And the
negotiations are different depending on what kind of cable
service or what kind of product you are trying to provide.
Because if you are going to a broadcaster, it is a different
negotiation than, for example, you know, you all are based in
Monroe, Louisiana. We are proud to have you as a Fortune 500
company in Louisiana, but you are in Monroe. And a lot of
people now know about Monroe because of Duck Dynasty, number
one show in the country. We are very proud of that. They are
from West Monroe they would tell you, not just Monroe.
But, you know, the reason 11 million people or so last week
wanted to watch that show was because it is really good
entertainment. But that is not a broadcast network. The number
one show in the country is not a broadcast network or it is not
CBS or ABC or NBC or Fox. It is A&E. So you are in negotiation
with them to get that program that everybody wants is a lot
different under the law than a negotiation with CBS or ABC or
one of those broadcast stations, is that correct?
Mr. Campbell. That is correct.
Mr. Scalise. And so all you're asking for is a free
marketplace where you want to pay people for their copyright.
You know, our copyright artists, Ms. Aistars' clients, they
provided content; they ought to get paid for it. But shouldn't
that negotiation happen for A&E the same way as CBS because you
are a consumer. You are just flipping through the channels. You
want to watch a show. You know, why should one negotiation be
ruled by the government in a different way than the other
channel when for the consumer, it is a seamless operation?
Mr. Campbell. Representative Scalise, I have spent a lot of
money at the Duck Dynasty shop for my children, by the way. But
you are exactly right. A&E was created and there is no sort of
scales that are tipped in their favor under the law that would
give them an advantage over us in a negotiation. They have
cleared their copyrights. Sometimes the broadcasters that we
deal with, they don't want to clear all of those, which is part
of the compulsory license issue.
But you are absolutely right. They are under no regulatory
regimes so we sit down with them on one channel, we negotiate
carriage, we come up with agreement, and we put them on.
Mr. Scalise. And clearly, we want everybody to be treated
fairly. We want you to have to go and whether it is CBS or A&E
or any other channel, you know, go have a negotiation. If you
come to an agreement, great; if not, you know, obviously, you
go somewhere else. You look for other means to provide the
service. But the broadcasters ought to be paid for their
content, the artist who created the content ought to be paid,
but it should be done in a free market. You shouldn't have must
carry here and then you have got a buy-through, you have got
free transmission consent, you have got compulsory copyright.
There are all these things stacked on top of each other.
Broadcasters have limitations under current law. They can't
even own multiple media outlets, yet if you are operating on
the internet, you don't have any of those limitations. And yet
you are competing against each other but one guy has got one
set of rules he is playing by and somebody else has a different
set of rules. And so all we are trying to do here is start this
conversation to say, look, it might have worked in 1992. Things
are dramatically different in a great way for us in terms of
innovation but don't have these laws hold us back on the
innovation for today. And that is why the conversation not only
needs to start but ultimately we need to get to the point where
we can actually get to text, get to a position where we can
update and modernize these laws to reflect what is happening in
the world we are in today.
And I appreciate all of you for what you do to provide
great services because customers love it, but we ought to make
sure it is being done in a free and open marketplace that
reflects today's technology.
Mr. Campbell. Thank you, Representative.
Mr. Scalise. Thank you, Mr. Chairman. I yield back the
balance of my time.
Mr. Walden. Thank you, Mr. Scalise, for your work.
We will turn out to Mr. Lujan for 5 minutes.
Mr. Lujan. Mr. Chairman, thank you very much and to you and
to the ranking member for the work you have been doing in this
space.
The conversation that we are having today, as complex as it
is, but a reality that hits everyone across this country as we
look not only for information for valuable content and
entertainment as well. So thanks to everyone for being here.
I want to recognize as well the important work that the
broadcasters do in making sure that during times of emergency
we are able to get that local news. There is actually flash
flood warnings taking place in my district as we speak. There
was a tornado that was spotted early this morning that warnings
went out to the community that we are able to depend on that.
But on the same note, as we talk about that, when these
conversations are taking place with the breakdown that took
place between CBS and Time Warner and content is shut off, that
valuable asset, if consumers don't have redundancy, my rabbit
ears are now, I guess, the digital form of those in the home,
and our form of redundancy at least for me is my smartphone,
which I think would be redundant. But if internet content was
even cut off and now that I couldn't see it on my television, I
couldn't go to my device and try to pull it up because I still
have internet connectivity whether it is through whatever my
phone is receiving or through the internet signal that I still
have in the home, that concerns me.
And I think that in the same vein that I talk about the
importance of the critical service that is provided, it
concerns me that this shutout can take place from a blanket
perspective.
And I don't know if, Mr. Munson, we can talk about that a
little bit to see what we can do to prevent that from happening
when, at the very least, this is occurring. And I say that
because the broadcasters know I still have a lot of concerns
about orphan counties. And, at least in New Mexico, we still
haven't solved this problem. And we need to because there are
still places in New Mexico that those that are subscribers or
that live in rural areas--and I invite anyone to drive out with
me to New Mexico. It takes 8-1/2 hours to cross my district
alone, rural in nature. And there are a lot of people living in
these rural towns that count on receiving local information,
but now, because of the way that some of these lines are drawn
they don't get local news; they get news from the neighboring
State but maybe not some of the warnings that they would like
to hear as well. So, you know, that is a whole other issue.
But in regards to where sometimes the conversations break
down and it is the consumer that was left out of that warning,
can you talk about that a little bit, Mr. Munson?
Mr. Munson. Yes, thank you, Congressman.
First of all, I want to reiterate something I said in my
opening statement, and that is that we never went dark. CBS
never went dark in those markets. Their transmitters were on.
They were broadcasting at full power during the entire time.
People can receive our signals. We have spent a lot of money on
a very robust system. As you know, in the southwest, we count
on translators in many cases to repeat that signal through
large areas of land to reach as many people as we can possibly
reach with the over-the-air signal.
Mr. Lujan. Well, Mr. Munson, I don't want to interrupt,
sir, but then it goes back to redundancy. And my question is if
I am going to make an investment in my home to put a digital
receiver so that I can receive the broadcast feed off of that,
then should I be open to what is being suggested by the
chairman and the ranking member to say that I have made the
investment to receive that digital signal, so I get my local
affiliates for free. So then why am I paying for them on my
DISH feed or my cable feed?
Mr. Munson. Primarily----
Mr. Lujan. And I think we need to be careful when we say
that it is constantly being said because then, as a consumer,
where am I? If I am going to invest in what I believe is
redundant again to my smartphone and through what I perceive to
be able to get information over the 'net but even that was
chopped off, then my redundancy is the investment with what I
need to do, especially in a rural area. And so, you know, a
feed in New York City is different than a feed in New Mexico.
Mr. Rozzelle. Congressman, if I might, one of the redundant
features that exists is your local cable television operator
because he has an emergency alert system. And that is triggered
by, as you know, various stages from the Federal Government all
the way down to the local entity. And that includes weather
alerts as well. I thought I would point it out.
Mr. Lujan. Well, I think that is fair but in a day that--
and, Mr. Chairman, I see my time has run out--we are
highlighting the importance of a broadcast feed never going
down and always being fed. I guess that is where I am caught a
little bit now as I am looking at this closer when trying to
understand what that means.
So if I am watching my local channel, CBS goes out, that is
the channel that I watch. I know that when I turn it on, it is
blank; it says talk to your cable subscriber or talk to
whatever it is so we can try to get this figured out, is that
emergency broadcast still going to run on that channel or am I
going to have to flip the channel in hopes--because probably I
am going to turn it off and then I am going to go to my
smartphone if I know that something is happening.
Mr. Munson. It does run on our television station, yes.
Mr. Lujan. So even with that signal, even with that little
note up there, I would still get the message?
Mr. Munson. In the particular case you have described, if
it were to happen to have an impasse between a cable company
and a broadcaster, nothing is passed through because there had
been an expiration of that particular contract.
I want to also mention again that we are talking about 1-1/
2 percent or a half of 1 percent of the times we enter into
these negotiations as broadcasters it ended up in an impasse.
It is unfortunate and it is particularly outlined, as we talked
about in the CBS/Time Warner, it was very public and 30 days
long. But that is a rare occurrence in these negotiations.
There are probably people negotiating as we are sitting here in
new retransmission deals that we don't know about.
Mr. Lujan. I appreciate it. Thank you, Chairman.
Mr. Walden. And I think your point is it is still over-the-
air broadcast so it is not a complete blackout. If you have an
antenna, you still get CBS? It is just not available on a cable
or satellite provider, depending on who is having the blackout.
Mr. Munson. That is correct, Chairman. Yes, sir.
Mr. Lujan. Thank you. Thank you, Mr. Munson. I appreciate
that.
Mr. Munson. Thank you.
Mr. Walden. We will now go to the gentleman from Colorado,
Mr. Gardner.
Mr. Gardner. Well, thank you, Mr. Chairman. And I had hoped
that Mr. Scalise would still be here because for the record he
still brings his 8-track player.
But thank you very much, all of you, for being here. I
particularly welcome Mr. Campbell and Mr. Dodge for your
representation today. Both of you are responsible for creating
thousands of jobs in my district and across the State of
Colorado, so I thank you so much to both of you for being here.
Now, with regards to the topic of today's hearing, there
are two primary concerns that I have. One is a consumer's
ability to get what they want at a reasonable price and the
free market mechanisms that allow that to happen. But it seems
like we are more and more facing impasses as we try to achieve
those 2 goals of the free market and giving the consumer what
it is that they want at a reasonable price.
Broadcasters come before the committee and our office and
say that everything is working the way it should, but others
say that it is not working the way that it should. And I will
tell you in Congress when we get accused of things working or
not working, we end up with negotiations, concessions, those
kinds of words that pop up, compromise. Each side has to give a
little, a bit for the sake of the people who are affected to
try to meet the two concerns I addressed of the consumer.
And so I don't purport to have an answer and I don't know
that anybody here on this committee has purported to have all
of the answers or to say that there is one proposal that will
fix this situation. But the fact is that there are still
blackouts and that consumers are paying the price both
figuratively and literally. But in my mind one blackout is one
too many, especially when it is one that affects so many
millions of people. And I think we can all agree on that. And
sadly, it isn't just one and it hasn't been just one. The
rising cost of programming and the number of retransmission
consent disputes and impasses leads me to believe that we do
have a problem.
So with that, I have a few questions for our witnesses. To
Mr. Dodge, could you please explain a little bit more about
your plan? Would you pay broadcasters in the adjacent market if
you were to import their signal? And what would this do to help
the problem that we all see?
Mr. Dodge. Yes, we would. The imported signal if you will
would be compensated under the current distant network signal
royalty scheme, which is negotiated with each reauthorization
of STELA, SHVERA, whatever flavor it is with the copyright
holders and represents a fair market rate. And the idea would
be that when a local signal is down we could import an adjacent
market signal, which, as I noted in my opening remarks, is
quite an imperfect substitute. It allows people to continue to
have access to the core network programming but there would be
no local content, so there would still be an incentive for both
parties to negotiate and reach a fair deal to retrans at the
local station.
Mr. Gardner. You spoke about it earlier in your opening
statement in terms of this being a permanent solution. This is
not a permanent solution because I mean if you want to watch
the Denver Broncos, you are not going to be thrilled if you
have to watch the Cleveland Browns. Of course----
Mr. Dodge. Many would say that.
Mr. Gardner [continuing]. In this case it has worked out
very well for us.
But will this process though help you get a solution though
for consumers, a settlement so to speak?
Mr. Dodge. We think it will because it will somewhat level
the playing field which today we think is quite out of skew.
And there is sort of two goalposts, which I think are
represented by Representative Scalise's bill and Ranking Member
Eshoo's bill, which in one you can do a complete deregulatory
approach or you can try and level the playing field a little
bit so there are fair negotiations.
Mr. Gardner. And to Mr. Munson, during the last hearing, I
asked each panel member if they believed the current system was
a free market system and why. And I had one broadcaster respond
by stating that it was in fact a free market. And that I will
quote from the hearing: ``In terms of retransmission consent,
we view that as a mechanism of actually entering into
negotiation, and I think one of the tenants of our businesses
we spent a lot of money in creating content and we want to be
able to, you know, get an appropriate return on that content.''
And so my question to you, with regard to the proposal that
is outlined in the testimony today to import distant signals
even if a cable company is willing to pay you for importing a
distant signal, you are still opposed to that idea? And you are
opposed even if it is over a short period of time? And why is
that?
Mr. Munson. My experience is, Congressman, that it would
prolong the dispute, not shorten it. By bringing another CBS
affiliate in in this particular case, first of all, it violates
the long-held contract that I have with the television network
for the exclusivity for the CBS product, in this case Phoenix.
You can't import ESPN from another market if you have a dispute
with ESPN. You can't say, well, I want to bring the ESPN signal
from Tucson into the ESPN market into Phoenix. Why would it be
any different to import the CBS signal, which violates our
contract?
It really goes to the core of localism. As you have already
mentioned, it destroys the localism. Bringing a distant signal
in with television commercials, with programs, news programs,
traffic, weather that doesn't reflect that particular community
destroys the whole idea behind localism, which was the
foundation of over-the-air broadcasting.
Mr. Gardner. So I mean do you think that what we have today
is a free market system, a system that works in the free
market?
Mr. Munson. I do. I think that having the deadline--I
mentioned this earlier--having a deadline, while gut-wrenching
for the parties at some times, it generally brings the parties
together. But by prolonging it, by bringing another station in,
it artificially kicks the can down the road with the deadline,
and therefore, the parties don't negotiate and get a deal done.
Mr. Gardner. Mr. Chairman, I yield back.
Mr. Walden. The gentleman yields back. Looks like we go now
to gentleman from Missouri, Mr. Long.
Mr. Long. Thank you, Mr. Chairman, and thank you all for
being here today for your testimony. It looks like maybe I am
the cleanup hitter today.
So, Mr. Dodge, let me start with a question for you. Do you
think that DISH and others involved in efforts to change these
retransmission consent laws, do you think that you and others
are working hard enough out in the marketplace as it exists
today to reach successful deals?
Mr. Dodge. We do.
Mr. Long. I am sorry?
Mr. Dodge. Yes, we do.
Mr. Long. You do? OK. Earlier, you said in your testimony
when it was your turn at the microphone there you said that
blackouts are occurring with more frequency and last longer. So
if that is the case, if they are happening with more frequency
and they are for a longer period of time, just ballpark, but
how many disputes has your company been involved in over, say,
the last 5 or 6 years?
Mr. Dodge. Actually, I don't have a number of the top of my
head.
Mr. Long. Can you get it for me?
Mr. Dodge. Of course.
Mr. Long. OK. Because I would kind of like to know what--
because if we are doing everything we can out there in the
marketplace to, you know, prevent these and then they are
happening more and more with more frequency and lasting longer,
I would kind of like to--if you can get me an answer to that, I
would appreciate it.
Mr. Dodge. Of course.
Mr. Long. OK. Thank you. And is it Aistars?
Ms. Aistars. Aistars, yes.
Mr. Long. Ms. Aistars, OK. The satellite compulsory
licenses were created, as we saw--I don't know if it was Joe
Barton's phone that Scalise held up there or what, but they
were created a quarter of a century ago and for very specific
reasons of course at that time, as you are well aware of.
So looking at the satellite compulsory licenses 25 years or
better, are those reasons still relevant today with what we
have heard today and all of the new technology and everything?
Ms. Aistars. Thank you for the question.
As I said when I introduced myself, I am a copyright lawyer
rather than a Communications Act lawyer, and so I think some of
the justifications for the creation of those licenses were more
steeped in communications law than copyright law, although they
reside in Title 17.
But I guess I would just say that the marketplace is
vibrant with a variety of new services, as you have pointed
out. You can do more today with the devices you have in your
pocket than ever before. There is more creative content
available to consumers through a variety of new services. And
so I am enthusiastic about video marketplaces as we see it
today, and I don't see that it is in need of any new
regulation.
Mr. Long. OK. OK.
And with that, Mr. Chairman, I yield back.
Mr. Walden. Does the gentleman yield?
Mr. Long. I already yielded back, yes. Do you want me to
yield to somebody?
Mr. Walden. Yes, he was asking.
Mr. Long. Oh, I am sorry.
Mr. Walden. Mr. Lujan.
Mr. Long. Now, you don't have a Vermont accent.
Mr. Lujan. No, sir. I have got this one over here but----
Mr. Long. That is not what it says on the TV monitor.
Mr. Walden. And is that really a Missouri accent? That is
what I want to know. No one knows.
Mr. Lujan. I thank the gentleman for yielding. I guess just
a few follow-ups with what was said.
Mr. Munson, I really appreciate the response to Mr. Gardner
associated with where these territories and markets were drawn
and they give you your competitive advantage for the space that
you operate in, but it also impacts a dilemma that I am trying
to solve in my State in my district with orphaned counties. The
consumers are not given the choices with what content they want
delivered to them because someone drew an arbitrary line based
on a population center, based on a market penetration of where
the epicenter is for advertising. They get whatever content is
going to be thrown at them.
In this day and age I think with DISH through my Slingbox I
can get the content recorded and then I can watch it digitally
anywhere that I have access to the internet that there is
enough bandwidth for the video stream capacity. So I get my
local content from New Mexico when I am here that way. But in a
day and age where I am able to subscribe to a suite of
information, there should be no reason that, based on some
lines that were drawn that leave my consumers out if they want
information.
But as I have described before in this committee, if they
are savvy enough as far as a DISH Network or DIRECTV subscriber
and they go get a Post Office Box in an area that gets local
programming, no matter where they are, I could do it here. I
could have a DISH Network or DIRECTV network here. I could get
billed to my New Mexico address and set the thing up here and I
could get all the local programming that I want from New
Mexico.
It seems that something is broken in a way that I today
based on a law that is preventing consumer choice should be
able to get whatever programming from Arizona, California,
Colorado, or New Mexico that I so desire as well.
And so I just wanted a little bit of time to explain that
that is a concern that I have with where these lines were drawn
with how it is hurting my consumers when they want local news
and they can't even get that.
Thank you, Chairman. And I yield back.
Mr. Walden. The gentleman yields back. And I think that
wraps up what I think has been a traffic hearing. We really
appreciate all the testimony, your answers to our questions.
And, as you know, we don't have to tell you this is a
complicated issue that we are trying to work our way through.
We also know STELA has a timeline and a clock on it. We
also know there are a lot of people who want to hang every
caboose and main car and everything else onto STELA if they
can. So we are going to be having further discussions about the
video marketplace as we go forward.
And with that, the committee stands adjourned.
[Whereupon, at 4:41 p.m., the subcommittee was adjourned.]
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