CED caught up with American Cable Association president Matt Polka at the recent Cable Show, who in a free-wheeling conversation talked about what to expect at the Independent Show including; how broadband and over-the-top might be the future for smaller operators, and whether Congress and the FCC are ever going to provide smaller ops with some relief from the pressures they’re experiencing. Here’s what he had to say:
CED: Tell us about what attendees can expect at the Independent Show.
Matt Polka: I think the program is going to be really exciting. One of the things the NCTC did at its Winter Education Conference was to focus a bit more on technical issues related to the future, things like over-the-top (OTT), and bringing in speakers from some of the so-called disruptive technologies.
And then at our ACA/NCTC Independent Show, which both organizations jointly produce, we’re going to take that to the next level, from a technical perspective, an operational perspective, a marketing perspective, financial, as well as policy.
You’re going to see panels that will have representatives from CableLabs and financial analysts. I’m going to have three or four D.C.-based trade association heads talking about the future from a policy perspective, in terms of how to protect our members’ interests.
The question is how can we get our members to focus on their broadband future. Our members do very well at day-to-day operations. That’s their business, and they do it very well. But this business is so dynamic, we as their business and policy representatives are trying to encourage them to be more proactive about their futures.
The worst-case policy is that the future occurs and our members are behind the curve because they were more focused on the present than thinking ahead.
CED: Some operators devise some of their own technologies, their own approaches, handing technology off to the NCTC, or forming cooperatives, or offering to do managed services for geographically nearby peers. It sounds like there are avenues for companies who don’t have enormous engineering staffs.
Polka: Well, that’s one of the benefits of the group. You mentioned companies in the group, who develop solutions, which they then allow others to use. Bob Gessner at MCTV – Massillon Cable – they helped develop the “TV Everywhere” authentication platform that he then turned over to the NCTC to license to members. That kind of thing is one of the things that’s so great about our members – that you have that spirit of cooperation among one another.
The truth is, that becomes even more important as we think about broadband. There are so many issues involved with providing voice, video, and Internet services, and that’s why we want to get members to focus on it. Do what you do every day well, but don’t by any means ignore the future – embrace it.
And look at some of these new technologies not as foes, but perhaps friends, and not necessarily as threats. Hopefully we’ll be able to accomplish that, and help members plan their foundations for the future.
CED: Massillon may have been a rare instance of altruism, not for lack of desire, but for lack of opportunity. Is there any way the members might find a way to formalize ways to cooperate?
Polka: There’s a lot of that that occurs through our meetings, whether it’s at the ACA Summit, or the NCTC Winter Education conference, our members consistently tell us the value-added services that we provide in addition to our main missions, those value adds are two-fold.
One is information, where we as association representatives provide information about their business, or policy issues, or compliance. We ship this to them, and it saves them a tremendous amount of money to have this information in hand without having to consult a lot of lawyers.
The second is the personal relationships, the networking. We seek to facilitate that through panels that we program, but then also the opportunity the members have in the context of our meetings, to break bread with each other, to go to evening events, to use the downtime for visits.
One of the things we do at the Independent Show, and the NCTC does this too, we facilitate meetings with our members. We bring them to our booth, and we’re asking questions, and they’re asking questions too.
I think our members are very open to challenges as well as solutions, and how they solve problems.
CED: Gathering and sharing information. There was a disruptor panel at The Cable Show. Might things that are considered a disruptor by a big company be an opportunity for a small company, and vice versa?
Polka: When you look at companies like Aereo, that’s trying to provide – hard to believe – broadcast signals free over the air – what a concept. Can you get sarcasm in the written word there? Or Netflix, Hulu, Amazon, and then you have facilitators like Roku and others.
To be candid, some of our members are a bit fearful because it’s sort of the unknown. I think a number of our members are appreciating the fact that some of these over the top services actually can be tremendous benefits to them and their business. Because it helps to enable consumers to get what they’ve always wanted, which is some measure more of control.
I’ve talked to members who have said, we haven’t launched a video-on-demand platform yet, and we don’t intend to. What we intend to do instead is launch a truly robust broadband experience, perhaps 50 megabits or up, and then let our customers choose whoever they choose, whether it’s Netflix or Amazon or someone else, and get that video-on-demand experience over the top.
That’s versus VOD, which can require huge capital expenditures in set-top boxes, headend upgrades, et cetera. And as our members look more and more into the value of their broadband networks, certainly the business opportunity they have and the profitability, they’re looking to more broadband-centric services – these over-the-top services are not so much a threat as a nice supplement that consumers want.
As I look at these so-called disruptive services, I don’t think they’re so much disruptive to us as they are to the established broadcast media industry, the broadcast networks, the affiliates, as well as to the cable programmers, which are trying to perpetuate the same old subscription model that consumers have begun to reject by greater adoption of over-the-top services.
I think this is really an opportunity for us – and this is a good point – if we can be forthright about embracing that challenge, even though it can be scary, there’s a lot of opportunity for our members, in terms of giving consumers more of what they want as well as maximizing their broadband plan and their broadband business.
I don’t personally see it as a threat; I see it as a supplement that can help us expand our broadband business.
I was talking to a member who showed us a graph, possibly originally from Kagan –video subscribers will continue to decrease, and in about a year’s time, Internet subscribers will surpass video subscribers.
CED: In terms of growth or in terms of total numbers?
Polka: Total numbers. So when you think about that, you think about where the business is heading. Video’s slowly been declining. Its consumers reject the high cost of the bundle, and they seek more of the online video choice that broadband gives.
So as managers look at that scenario, and realize that what our customers want from us is more broadband, and we have to manage that knowing that our customers are generally doubling their capacity every two years – it’s a huge investment in our business.
That’s why as we look at the show itself, looking to the future, maximizing broadband, embracing the opportunity that disruptive technologies could actually be a great benefit for us.
CED: One of the big deals for the cable industry has been CCAP, but it seems like a solution tailored for larger companies. For smaller companies, it might not even be relevant. Smaller companies have been talking about this opportunity you’re talking about – getting IP into the home, perhaps with some sort of hybrid box, a hybrid DTA.
Polka: That’s one of the reasons we continue to work with the FCC about waivers of their set-top box rules. For our members to do all of these things, ideally they need to reclaim more bandwidth and to get more toward that all-digital IP environment. That’s going to be really important.
From the policy perspective, we keep encouraging continued openness as the FCC has shown recently related to set-top box rules. Greater leniency related to smaller companies. The Commission has been very open and flexible, and as a result we’re seeing our members beginning to embrace the movement toward that all-digital platform, where they’ll really be able to do more.
CED: Charter got that waiver. Do you have a sense if the FCC and Congress are getting any more open to expanding the options for getting such waivers?
Polka: First, the FCC – from our members’ perspective, the Commission has been open to our members’ concerns, starting with the CALM Act and a number of other things, the Commission has been sensitive to longer terms for compliance, and flexibility of waivers, providing some relief for companies of smaller size. We’ve been pleased to see the Commission has been open to our members’ unique concerns.
The Hill is a little different. Looking at some of the larger issues. The predicament they’re dealing with now is the reauthorization of the Satellite Television Extension Of Localism Act – STELA. It used to be the old Satellite Viewer Act. The issue there for us is can we get Congress as part of that reauthorization to be willing to look at some Cable Act issues that really need to be updated?
They were passed in ’92 and are still on the books, and in the 21 years since, Congress hasn’t even begun to look at them. And that’s a bit of an uphill battle. The satellite thing is all about the ability to carry out-of-market local signals. We’ve tried to expand that, but Congress being Congress – ha! They’re not exactly good at taking on new issues. But I’m encouraged that more members in the Senate and the House are saying that it really is time to look at the ’92 Act and see what needs to be updated.
For us, it’s a process, hoping to get the Cable Act issues looked at sooner rather than later.
CED: Working on the Hill today has to be as hellish as it’s been in 25 years?
Polka: Our issues tend to be tangential to the big issues Washington tends to deal with. Where we intersect with the Commerce Committee, you don’t find as great the partisanship as maybe you do with some of the more divisive political issues. Could be because people on the Committee are also consumers, and they understand the issues from the consumer perspective.
So you see a lot more bipartisan comment as well as viewpoint as issues move forward, but without question, this is a fascinating time to be here in D.C.
CED: Anything else to touch upon?
One thing in particular that we’ve asked the FCC to do something about, which they have not, is to address co-coordinated retransmission consent negotiations.
CED: Multiple local broadcasters…
Polka: …stations coming together basically to collude, yes.
The other issue we’re continuing to fight, and it’s big, it’s $10 billion dollars over five years – is reform of the Universal Service Fund into what the FCC calls the Connect America Fund.
They have phases, what they call CAF 1 and CAF 2. The first phase is several hundred million dollars, and that was sort of a primer to the pump. And this second phase is the big one, $2 billion a year to help fund broadband, and it’s not truly as technology-neutral as advertised. This money for the most part is going to go to the larger price cap companies that have a right of first refusal.
Our fear is that these companies use taxpayer money to fund overbuild. We’re not afraid of competition, but we don’t think the government should be subsidizing competition.
There’s good news and bad news. The bad news is that the program is going to go forward, but the FCC is working to keep these price-cap carriers out of where cable operators are providing broadband today, provided those broadband providers are part of the national broadband map, and also have filed a Form 477 with the FCC, so that they’re on record.
But even with those basic requirements, the FCC has been pretty lenient with the challenge process. So if there’s an application that’s put on public notice and our members see they’re coming in to their area, they have the opportunity through the process to be able to reasonably challenge that application to keep those funds out.
So I’d say the FCC is really trying to ensure that they’re not funding taxpayer overbuilds. I think they reacting to the mess of the $7 billion that came out of the Stimulus Act of 2009 and so much of the failed rural broadband program that was administered through the Rural Utilities Service.
They’re doing a reasonable job, and it seems so far, so good.