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The next cable data war

by Matthew Lasar  Nov 28 2007 - 9:04pm     

One thing is for certain: the cable industry is a leading cause of statistics.

Take yesterday's Federal Communications Commission decision assessing the extent of cable's national reach. At first the FCC tentatively concluded that cable video providers have collectively passed the hoped-for or dreaded "70/70" threshold: when cable systems with 36 or more live-and-in-use channels can be accessed by 70 percent of U.S. households and 70 percent of those households subscribe to them.

Once this goal post has been passed, the 1984 Cable Act permits the agency to regulate cable in order to promote greater programming diversity.

Yesterday's announcement noted that the FCC had long ago resolved that cable breached the first half of the 70/70 formula. But now the Commission stated that, for the first time, "we find that based on data from Warren Communications News, the second prong benchmark [the access prong] has been met at 71.4 percent."

But maybe not, the Notice added, given that "other data sources do not demonstrate that the second prong has been met."

Commissioner Jonathan Adelstein prompted that last caveat. He says that the first conclusion seemed a bit hasty.

"The Commission’s attempt to rely solely on data from Warren Communications, while disregarding a multitude of other sources, is troubling," Adelstein declared in his comments on the Notice. "A thorough and transparent analysis of the available data – both from the FCC and independent sources – on cable penetration rates was sorely missing from the initial draft of this item."

Adelstein and his fellow Democrat Michael Copps have been concerned about what they see as a rush-to-judgment problem at the FCC, especially in the area of media ownership rules, where FCC Chair Kevin Martin has been moving at a NASCAR-like pace.

It's a principled stand, but also risky, given that "independent data sources" will be happy to add their perspective on this matter. Prominent among them is U.S. Cable & Satellite Broadcasting, whose Vice President Craig E. Moffett is a leading critic of proposed net neutrality laws and former consultant for Bell Atlantic, long since merged with GTE to form Version.

U.S. Cable filed its own cable stats with the FCC on November 21st. They say what the cable industry has been saying and will say until global warming freezes over: that part two of the 70/70 test, the "penetration" test, has not been reached. And it's not even close, they insist.

Moffett estimates that there are 63.5 million cable subscribers in the United States. Cable operators can reach 105 million homes.

"This implies a cable adoption rate among the issuers of public securities of just 52%," Moffett concludes. "We do not believe that it is mathematically possible, even after adjusting for vacancy rates and subscribership among other privately held cable operators, to arrive at cable adoption rates materially in excess of 60%."

That may be what Moffett thinks, but the FCC appears to be in a skeptical mood. They've ordered all cable operators to submit the following info for last year (2006) "within 60 days under penalty for perjury" (just in case anyone thinks the agency is funnin' around):

  • the total number of homes reachable by the cable operator
  • the total reachable with 36 or more active channels
  • the cable operators total number of subscribers
  • the total number of subscribers who get 36 or more activated channels

In a sign that this is more than just an exercise in data gathering, the FCC yesterday also issued an Order tightening up the rules requiring cable companies to lease their channels to unaffiliated video programmers. The move, which is welcome news for sports channels, streamlines the FCC complaint process, making it easier for independents to get their problems resolved.

So how much incoming cable data can the FCC anticipate? We're talking eight public companies, two recently privatized companies still audited by the Security and Exchange Commission, and sixteen non-publicly traded outfits.

In short, expect a lot of numbers.

It's unclear from the FCC's ruling whether the agency will make those cable statistics available to the general public in the appropriate docket, but they should.


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