May 20, 2009 - NTCA Outlines Bargaining Inequities that Hinder Competition in Video Market

Tying, bundling and forced-tiering among issues FCC should address


Arlington, Va., May 20, 2009 - The ability to offer a quality video product will spur broadband deployment and is essential to the long-term viability of rural communications providers, but bargaining inequities threaten their ability to deliver that product and should be addressed by the FCC to enhance competition, diversity and affordability in the video market, the National Telecommunications Cooperative Association (NTCA) said in response to an FCC notice of inquiry on the status of competition in the video market.

Access to technology and desirable content on reasonable terms and conditions are required for successful video deployment, but programmers and broadcasters use a variety of strategies to make it difficult for rural carriers to obtain content and offer it to subscribers at an affordable price, according to NTCA's comments.  Those strategies include bundling, tying and forced tiering by program providers, contract provisions restricting the use of shared head-ends and non-disclosure agreements.  Additionally, retransmission consent rules strongly favor the broadcasters to the detriment of consumers.

In the comments, NTCA points out that video and broadband deployment are intrinsically linked, with the transition of video delivery to IP format meaning video demand will spur broadband deployment, and broadband availability will increase video demand. 

NTCA cites tying of must have programming with undesirable content as the most prevalent problem in faced by small video providers today.  The comments also outline other issues affecting rural providers, such as the recent trend of content providers tying Web content to video content, and the practice of requiring programming to be placed on a specific tier or that a certain percentage of subscribers receive the service.  

"The combination of bundling and forced tiering make it impossible for small [providers] to offer a truly basic.package of affordable service," the comments said.  "It also prevents small [providers] from competitively distinguishing themselves." 

In the comments, NTCA says that while video competition may be thriving, small providers seeking entry to the market or to remain viable in the market are struggling.  The comments conclude with several recommendations to the FCC which will address some of the problems faced by small providers and ensure the future of video service to rural consumers.

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The National Telecommunications Cooperative Association is the premier association representing more than 585 locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America.  NTCA Contact Caitlin Colligan at 703-351-2086provides its members with legislative, regulatory and industry representation; meetings; publications and educational programs; and an array of employee benefit programs.  Visit us at www.ntca.org.