At the House Subcommittee on Communications and Technology’s Wednesday hearing, industry representatives from cable, satellite and online video providers like Netflix met to discuss the future of TV.
Many of the witnesses focused on the merits of the 1992 Cable Act, which included a provision that broadcasters can call for a “must carry” rule with a cable or satellite system. As a result, broadcasters without popular content — who might otherwise need to pay cable and satellite operators to be carried — can simply call for a “must carry” and rely on advertising to generate revenue.
Charlie Ergen, chairman of Dish Network, called this rule “a government sanctioned monopoly on network programming… while pay-TV providers face stiff competition from one another. The result is almost always bad for consumers and the free market,” he said.
David Barrett, CEO of Hearst Television, however, argued that the provision promotes “localism and diversity in available programming.”
Debating the rule has become especially significant as Internet video becomes an integral part of the marketplace.
If the Federal Communications Commission decides that Internet-based providers like Netflix or Sky Angel fall within the Multichannel Video Programming Distributor provisions of the Communications Act, they would also be subject to obligations like the “must-carry requirement,” and emergency information requirements.
The broadcasting industry would likely benefit from such a definition. Although television broadcasting is a 37 billion dollar industry, it has been steadily shrinking as new technologies compete for consumer entertainment dollars.
Continuing the must-carry provision with cable companies or extending those requirements to Internet-based providers would likely help smaller broadcasters. David Hyman, representing Netfix, said that attempts at further regulation could be “anti-competitive.”
“When you couple limited broadband competition with a strong desire to protect a legacy video distribution business, you have both the means and motivation to engage in anti-competitive behavior,” he said.
At the end of the hearing, both sides appeared to be in agreement that the 1992 Cable Act should be updated.