U.S. TV subscribers should be refunded for channel blackouts: Rockefeller

American cable and satellite TV subscribers should receive refunds for channels they lose access to during blackouts related to retransmission negotiations, the chair of the U.S. Senate’s commerce and science committee said Tuesday. “Overheated rhetoric alleging greed and bad faith is of little comfort to someone paying for services they are not getting,” Democratic Senator Jay Rockefeller said during a meeting of the Senate Commerce, Science and Transportation Committee to discuss the state of the U.S. broadcast distribution market. “When consumers lose channels in these corporate disputes, they should get a refund,” he said. “I think it’s only fair.” Rockefeller said efforts to reign in unfair billing practices in the American health insurance industry resulted in $4 billion US in rebates to consumers, and suggested offering similar rebates to consumers affected by channel blackouts. Under provisions in the 1992 Cable Act in the United States, American over-the-air broadcasters have the right to negotiate with broadcast distributors for the retransmission of their signals. Called the retransmission consent regime, the regulatory policy gives broadcasters the power to pull their signals if carriage negotiations fail. At the Senate committee meeting Tuesday, held to consider the Cable Act and its impact on the American broadcasting system, Rockefeller said the act has failed to protect consumers from rising cable TV prices outpacing inflation and from sales practices that require consumers to purchase packages of channels, including some they don’t want. “Rather than being able to pick small packages or choose the channels they want, consumers are still forced to purchase larger and larger packages of channels, no matter how few they actually watch,” he said. “This says to me that the market isn't working. Real competition should be bringing rates down.” Rockefeller said consumers should be protected from paying for services they don’t want. Debate about the retransmission consent regime is picking up in the United States as Republican Senator Jim DeMint (South Carolina) and Republican Representative Steve Scalise (Louisiana) have introduced the Next Generation Television Marketplace Act, which would repeal parts of the regime. Gordon Smith, president and CEO of the National Association of Broadcasters (NAB), agreed with the proposal for consumer refunds. Smith challenged cablecos’ calls to repeal broadcasters’ right to pull their signals from broadcast distributors over retransmission fees, and told the committee that such changes would have “possibly devastating impacts” on local broadcasters. He said blackouts related to carriage disputes are not a significant problem in the industry, noting that 0.3 per cent of the 5,800 cable companies in the U.S. have been a party to a service disruption. He said three major broadcast distributors in the U.S.—Time Warner Cable Inc., DirecTV and DISH Network Corp.—are “principally the party to the vast majority of disruptions.” Smith said the NAB supports the proposal for viewers to “receive refunds when stations are unavailable” and that consumers should have the freedom to “easily switch among competing without incurring financial penalties.” He called on the government to require distributors to “give viewers ample notice of a possible disruption in service.” Melinda Witmer, executive vice-president and chief video and content officer at Time Warner Cable, said the retransmission consent regime has become a larger problem for American consumers, resulting in lost services and higher prices. Witmer said carriage negotiations “are now characterized by escalating blackout threats as broadcasters make clear that they are willing to pull their signals to increase their bargaining networks.” She said there were 69 dispute-related blackouts this year, representing a 35 per cent rise from the total for 2011. Retransmission consent rights give large broadcasters leverage to push distributors to purchase bundles of affiliated programming where demand for some of those channels does not exist, Witmer said. “This has resulted in bloated packages and higher costs to consumers,” she said. In Canada, broadcast distributors Cogeco Cable Inc., Rogers Communications Inc., Telus Communications Co. and Shaw Communications Inc. have sought appeal to the Supreme Court to overturn a divided Federal Court of Appeal decision last year that said the CRTC has the jurisdiction under the Broadcasting Act to implement a value-for-signal regime similar to the U.S. retransmission consent regime. The Supreme Court of Canada, which heard arguments in the case in April, has not yet released a decision. news@thewirereport.ca

U.S. TV subscribers should be refunded for channel blackouts: Rockefeller

Broadcast | July 25, 2012

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U.S. TV subscribers should be refunded for channel blackouts: Rockefeller

Broadcast | July 25, 2012

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