McSlarrow's Top Four Challenges

Cable World, April 4, 2005

By Jerry Kent, CEO, Cebridge Connections

Beyond making sure the NCTA stays focused on its current list of regulatory and legislative priorities (including, at the top of that list, parity with and protections against the latest efforts by Verizon and SBC), there are four items I hope Kyle McSlarrow will include on his priority list.

Programmers vs. Operators: In the FCC's vote on multicast, broadcasters were reminded of the value of a unified voice and the pitfalls of a fragmented voice. While cable won that debate, we shouldn't take too much comfort in the victory. We'll never realize the full potential of our industry or be consistently effective in Washington until the divide in our own house, that separates the interests of programmers and operators, is addressed. In the past, these issues have not been front and center, partly because programmers and operators are both NCTA members. I think NCTA's top executive should play a role in this area. McSlarrow might start by bringing key representatives of the factions together to openly discuss issues that threaten the health of the core business that supports all of us (issues like the potential harms of the upcoming retransmission consent battles). Cable operators' constantly eroding video margins are not good, long term, for either side.

Retrans and Cash-for-Carriage: Retrans is possibly the biggest (and certainly the most immediate) potential contributor to an even greater divide between NCTA's operator and programmer members. If nothing is done to mitigate the retrans debate, there will be a train wreck later this year, and cable operators could very well be the casualty (or, at least, the lightning rod for public outrage). I can do a lot with my cable plant. But one thing I can't do is add more fringe networks to the expanded basic package in return for retransmission consent. There's simply no more room, not if I'm going to remain competitive by offering double- and triple-play service bundles. It's hard to argue that cable operators and their customers should be forced to pay cash for broadcast signals that are available free over the air, delivered by profitable, private companies that are using free spectrum granted to them by the federal government. These issues come to a head in the context of retrans consent and the way it is often abused. That has to be addressed in the first half of this year. Otherwise, our interests will be divided even further and hence our industry's effectiveness, in both the marketplace and Washington, will be severely compromised. I'm not naive enough to think we can eliminate retransmission consent. But we need to level the playing field--possibly by allowing operators to import distant signals when retrans negotiations break down, or finding some other competitive offset.

Commercial Issues & Opportunities: Other than the National Show, it seems the NCTA has been focused almost exclusively on what happens inside Washington. But if the NCTA is going to live up to its true calling as a "trade" association, it should be more actively and consistently focused on helping its members address commercial as well as regulatory matters. Among others things, I think the NCTA could do a better job of gathering and collating industry/consumer data, which its members could use to more effectively develop, target and market their offerings. In other words, NCTA should strive to become the central clearinghouse for competitive information that will help improve our businesses. Yes, the NCTA has made some contributions in this and similar areas, but more can and should be done to honor its role as a trade association, involved with government as well as marketplace matters.

Smaller, Independent Operators: While at the helm of Charter, I didn't fully appreciate the unique challenges faced by smaller, independent operators. Now, of course, I experience those challenges, firsthand, every day. NCTA has done a great job supporting smaller operators on issues like the misappropriation of federal money through the USDA's broadband loan program. But other issues remain unanswered. The Senate has a decidedly rural bias, and the rest of Washington is starting to follow suit: paying more attention to both the digital divide and values divide that separates rural communities from urban centers. The small operators are addressing the needs of those rural communities.

Hence, the small operators fill a critical role in NCTA's larger efforts to continue building our industry's credibility on the Hill. At Cebridge, we decided to join the ACA because it is firmly focused on the smaller, independent operators' unique needs. While I still believe we could all benefit from a truly unified voice, several things must happen first: NCTA must address the issues separating programmers and operators. NCTA must elevate and protect the voice of smaller operators at the organization's policy- and strategy-setting table. And finally, NCTA and ACA must jointly determine how they might further consolidate their efforts, above and beyond their current level of cooperation.