First, a little history.  When Congress adopted program carriage rules in 1992, it cited then-present concerns about high levels of vertical integration between cable programming and cable distribution.  Regulation was necessary, so the story goes, to ensure that content creators could reach consumers and so that MVPDs could not favor program networks in which they had an ownership interest over “similarly situated” program networks owned by someone else.  If they did, the government could order the MVPD to change its programming line-up so that the affiliated and unaffiliated networks were treated “equally.”

For starters, the factual predicate used to support the case for program carriage rules has virtually disappeared.  In 1992, consumers that wanted multichannel video service typically had one choice available to them – the local cable operator.  DBS service hadn’t even launched and the telephone companies were statutorily barred from offering video services to consumers.  Cable systems themselves had limited capacity – the largest systems only had about 60 channels – and about 53% of cable programming networks were affiliated with cable operators.

Today’s marketplace has changed completely.  DBS operators control almost 35% of the MVPD marketplace.  The statutory bar on telco participation was lifted in 1996 and now two of the top ten MVPDs are telephone companies.  Due to advances in technology, all of these platforms, including cable, now offer consumers hundreds of channels to choose from.  And vertical integration of cable networks has plummeted from 53% to only 14% — even after Comcast’s merger with NBCU.  Finally, of course, online video is booming, with companies like Google, Apple, and Microsoft jumping into the fray.  Netflix alone has more video subscribers than the largest cable operator.

In other words, whatever concerns may have led Congress to adopt the program carriage provision in 1992 no longer exist.  Amazingly enough, however, the FCC recently released an Order expanding the program carriage rules and some are pressing it to expand the rules even further.  We have filed an appeal of the FCC’s recent Order and look forward to our day in court.

These marketplace changes lay bare some of the fundamental problems with the program carriage regime itself.  First, the government’s abrogation of freely negotiated contracts between sophisticated parties is a danger to the foundation of free markets.  The security and stability of the marketplace depend upon the predictability that contracts, once entered into, will be enforced.

That’s especially true where free speech is involved.  We should all be alarmed when the government starts favoring certain programming over others and dictating channel line-ups.

But it’s not just government carriage mandates that raise serious free speech concerns; it’s the creeping government involvement along the way.  One of the first things the FCC does in assessing a program carriage complaint is to determine whether the programming networks are sufficiently “similar” to make a case actionable.  Is a channel that carries documentaries similar to a news channel?  Is it similar to a science or history channel?  What if the documentary channel also has some news and interviews – what percentage of its programming has to qualify as news to be considered “similar”?  And do we really want the government making those distinctions?

These questions aren’t academic.  Programming that is deemed “similar” by the government falls into a favored category under the program carriage rules.  Fall outside that favored category and you’ll get no help from the FCC.  And the irony here should not be lost.  In the name of “diversity,” the program carriage rules provide a perverse incentive for new networks to look and feel as much like existing networks in order to gain FCC favor.

The time has come to stop the madness and to replace mythology with intellectual rigor.  In today’s video marketplace, innovation, investment, and, yes, editorial discretion, are more important than ever in ensuring that consumers get the content and technological services they most value.  The world has changed and the regulatory world has to change with it.

Congress and the FCC should take stock of the fundamental changes since 1992 and remove the regulatory underbrush that too often leads to the government picking winners and losers in the marketplace of speech, content and ideas.  This is especially important now, when the shape and form of the video marketplace is in such ferment and transition.  As the Internet emerges as an important source of video content, all media – new and old – need the freedom to experiment and compete.

Nobody knows where this is new world going.  Even the government.  It’s time to reset, step back, and let the marketplace work.

Broadcasting & Cable‘s John Eggerton reported some of the key points made in his remarks.

“Congress and the FCC are on the verge, perhaps for the first time, of declaring that the highest and best use of spectrum is not broadcasting, but broadband,” [Powell] said in a speech to the Media Institute in Washington. While a speech about communications and jobs is common these days, Powell’s was linked to Steve Jobs and his mantra of simplicity. Like the less-is-more approach to Apple products’ elegant functionality or rail thin TV sets, regulators should also look to pare back, he suggested.

Powell’s speech touched on broadcasting, the Internet, spectrum availability, common carriage. He also addressed concerns about broadband speeds.

Powell suggested that the rap that current broadband speeds are not fast enough, no matter how fast they are, is a bad one. “Internet evangelicals constantly profess the end of the world because there is not enough capacity for some future magical set of applications that they have imagined and drive us to feel national shame because we don’t measure up to some otherwise unremarkable Baltic Country,” he said, as laughter erupted in the room. “If you really want to go to Latvia for broadband, go down to Dulles airport and head on out.”

You can read the entirety of his remarks on NCTA’s website. You’ll also find references to the world-renowned designer John Maeda, Barry Schwartz’s book Paradox of Choice, William of Ockham, and Talladega Nights‘ NASCAR driver Ricky Bobby.

John Eggerton offered a preview of the show in Broadcasting & Cable yesterday.

But we are starting to see a very disturbing meme spread by some folks who think that the government should disrupt this success and inject rate regulation and price control over broadband networks. One such fierce advocate is Susan Crawford, a smart and respected former Obama Administration official who now is a law professor and commentator on broadband policy issues. Crawford took to the opinion page of last weekend’s New York Times to lay out her rationale, but it’s one that we find full of faulty analysis, leading to a disastrous prescription.

In a blog post titled, “Susan Crawford’s Broadband Blinkers“, Richard Bennett of the Information Technology and Innovation Foundation provides a thoughtful and important rebuttal that shouldn’t be missed. Here’s a sample:

Crawford’s particular style of analysis is heavy on vague generalizations and light on substance. She talks about “high-speed connections” without ever specifying a rate, and refers to a number of common applications – such as filling out job applications on-line – as if they required massively reengineered networks when they clearly don’t.

Both columns are worth reading to understand where this debate is going, but let’s make sure that we have a firm understanding of the facts before we rush to conclusions that could devastate one of America’s few thriving industries.

Following the event, Reps. Rogers and Ruppersberger introduced new bipartisan legislation – the Cyber Intelligence Sharing and Protection Act of 2011 – to help protect our nation’s critical cyber infrastructure. To demonstrate how critical this legislation is to protecting our country, the House Intelligence Committee has already marked up and passed this legislation and it now goes to the House floor. We urge Congress to act swiftly on this important measure.

Cyber threat is deeply frightening. In our world, there is a misguided but well-armed community that is diligently working to undermine the economic viability of the American public through corporate espionage. There are those who wish the American people harm through cyber-attack, threatening the very national security of our shores. And there are those engaged in criminal enterprise whose sole purpose is to steal and defraud good hardworking people.

This is a threat that will be with us forever, requiring bold and innovative solutions. Most importantly, it is a problem that requires an armada of constituencies to come together and work effectively. It is not an exaggeration to say when it comes to cybersecurity, that what you don’t know can hurt you.

One of the most valuable aspects of this new legislation is that it deals with the most critical problem when industries and government face a challenge like this: inadequate information flow. You can’t fix what you don’t know. You can’t work in cooperation and coordination with others when you’re not effectively able to share information.

I’ve had some experience with this challenge from having chaired the Federal Communications Commission and served as the National Security Commissioner for the United States. I faced the tests of the Y2K transition and helping to lead the country through the restoration of communications networks in the 9/11 crisis. From those experiences, I can say one of the most valuable aspects meant that we could put industry and government together in partnership to share information in a trusted and secure space, and begin to share best practices and adequately attack the problem. That is what the core of this bipartisan legislation does.

To provide for the common defense requires a trusted partnership, and to build that partnership I applaud this legislation’s focus on a non-prescriptive, non-overly regulatory approach and one that really invites people into the process both in self interest and shared comment interest. This is a critical first step in improving the security of our country, and the protection of our citizens.

In a statement, NCTA President & CEO Michael Powell applauded the bill, saying that it would “ensure better information sharing between all stakeholders involved in protecting our nation’s critical cyber infrastructure.”

We appreciate that this legislation avoids a prescriptive regulatory regime that does not fit the constantly evolving cyber threat environment and it appropriately allows individual companies to determine how they can best participate.

You can watch a video of the event.

Here is a sampling of the news coverage.

• New cybersecurity bill would foster sharing of online data between government, private sector [WashingtonPost.com's Checkpoint Washington blog]
• Cyber security bill promotes sharing of threat data [CNN's Security Clearance blog]
• Bipartisan Cybersecurity Bill Aims to Spur Industry-Government Sharing [National Journal]
• Companies Urged to Share Cyber Threats With U.S. in House Bill [Bloomberg Businessweek]
• Bill would allow US intelligence to share cyber-threat info [Network World]
• Cable, Telco Backed Cybersecurity Bill Introduced; Allows the government to share certain cyber threat intelligence with private entities, like ISPs [Broadcasting & Cable]

The study was conducted by the Pew Research Center’s Internet & American Life Project in partnership with the Family Online Safety Institute (FOSI) and with the support of Cable in the Classroom.

The cable industry’s education foundation, Cable in the Classroom, has a long history of providing educators with tools and resources that help them do their job better. CIC has been an advocate within the education community and elsewhere for “digital citizenship,” which is a holistic approach to helping children learn how to be both safe and smart participants in a digital world.  This means helping kids understand their rights and responsibilities, recognize benefits and risks, and realize the personal and ethical implications of their online actions.

This new research, with its insights into how kids learn online behavior, how they navigate and behave in the online world and who they turn to for advice and guidance, can help determine the most useful and relevant approaches to take, as the online safety community considers and designs tools, resources, and policies to help keep kids safe online.

It’s no surprise that social media use is widespread among teens: Fully 95% of all teens ages 12-17 are now online and 77% are users of social media sites. For the most part, these kids have positive experiences online and in social networks.

The study found that some 69% of the teenagers who use social networking sites say their peers are mostly kind to one another on such sites. While, 88% of these teens say they have witnessed people being mean and cruel to another person on the sites, 47% say they saw such behavior “only once in a while” and only 12% say they witnessed cruel behavior “frequently.”

Adult social network users are less likely to say they witness or experience this type of behavior, but they still report that it is prevalent: 69% of the adults who use social networking sites say they have seen people be mean and cruel to others on those sites.

Kids are mostly acting responsibly while online. While 19% have been bullied, around 80% have taken some action to support the target or get the bully to stop. Most kids (55%) have refrained from posting something because it might reflect unfavorably on them in the future.  Four of five kids are using some privacy controls on their profiles.

As they try to navigate difficult social environments, virtually all teens say they receive advice about online safety from a wide variety of people in their lives. Parents are the top source: 86% of teens say they received advice from their parents about how to use the internet safely and responsibly and 70% received advice from teachers and schools. Teens reported that parents were also the biggest influence on shaping what they think is appropriate or inappropriate behavior when going online or using a cell phone. At the same time, 18% of teens say that “no one” influences them about their attitudes towards online behavior.

This is an important point. Even though your kids might not act like they’re listening, they will take it to heart if you can provide them with proper tips. There are some great opportunities for parents and teachers to acquire the knowledge and skills necessary to offer useful and effective advice when called on.

Broadband can be a powerful tool. But all tools need some instruction to be used wisely. We’ll continue to promote the use of cable content and technology to expand and enhance learning for children and youth nationwide, but we’ll also continue to promote safety tips and education on how best to do so.

But what about the one-third of American households that hasn’t yet adopted broadband at home?  Research from the Federal Communications Commission (FCC), the Pew Internet Research Center, and other groups shows there’s no single reason why people don’t sign up.  It might be a lack of digital literacy, little or no understanding of the relevance of broadband service, no computer at home, or affordability.

That’s why a new public-private partnership announced recently by cable’s leading broadband providers and the FCC seems so important.  The “Connect to Compete” (C2C) program unites a number of non-profit and private partners in a coordinated, community-based program that is dedicated to a common purpose – promoting adoption among certain families with school-age children that have not yet hooked up to broadband.

Cable broadband providers reaching 86 percent of U.S. households with broadband service have committed to participate in C2C or some other complementary program. They’ll offer a discounted promotional rate of no more than $9.95 a month (plus tax) for high-speed Internet access to qualifying families with kids in grades Kindergarten through 12 who receive free lunch under the National School Lunch Program.  Participating companies will waive installation fees in the case of standard or self-installation.  They’ll throw in a cable modem free of charge during the length of the program, or offer to sell one for a deeply discounted fee.  And those who sign up for the program will enjoy, at a minimum, download speeds of up to 1 Mbps, while some may receive faster speeds.

The program will launch in 2012, in the back-to-school period for the 2012-13 school year.  There will be a sign-up window of three years.  And any family that qualifies and signs up can stay in the program for up to two years.

C2C is the latest step in cable’s long journey of commitment to education.  That commitment to the value of broadband in education actually began more than 20 years ago when we started to wire and connect tens of thousands of schools and libraries, first for cable TV, and then to the information superhighway we now call the Internet.  Our efforts continue today, led by the industry’s non-profit education foundation, Cable in the Classroom, to promote and distribute educational content and help teachers and students use broadband technology and services safely and responsibly.

The program is also part of our legacy to promote broadband adoption.  We’re fiercely proud of being the first industry to bring broadband to American homes. Today, our companies provide broadband service to more than 45 million American homes.  We’re convinced that C2C will enable even more homes to adopt broadband – providing tremendous educational benefit to more American families.

The EAS is actually a national system that also provides communications capabilities to the President to address the American public during a national emergency. It involves the resources of broadcasters, cable television operators, satellite radio providers, and direct broadcast satellite (DBS) providers.

On November 9, at 2:00 p.m. (EST), the FCC and FEMA have scheduled the first-ever test of the Presidential Emergency Action Notification (EAN) of the EAS. The test will last about 30 seconds.  During the test, cable customers will see a special EAS channel regardless of the cable channel they are watching (You can see an example of an alert here.).

As the EAS test runs, the audio feed will advise viewers that it is only a test. The onscreen text will simply state:  “This is an Emergency Action Notification,” and in some cases, “for the United States” or “for the District of Columbia,” depending on the equipment.

The EAN message itself is set by the federal government; cable systems are required to pass through the government’s message to their viewers.

The cable industry is taking action to assist the government in educating consumers about the test.  Our member companies are airing public service announcements from the FCC to raise viewer awareness (Copies of these PSAs are posted on NCTA’s website).  Cable systems are also using invoice messages to alert consumers to the upcoming test.  And cable operators and programmers are linking to websites with more government information about the test, such as this one from the FCC.

Our message is simple:  This is just a test of the system, and no action is required.

NCTA continues to inform our member companies about test developments and has briefed other groups, such as the Cable Center Customer Care Committee and state and regional cable associations. Cable programmers also have pledged support in educating consumers.

An end-to-end nationwide test of the system is critical to assess the reliability and effectiveness of the EAS as a public alert mechanism. Cable will be expending every effort to help ensure the test is a success.

UPDATE: You might also want to read this post at the Time Warner Cable Untangled blog.

The Chairman, the commissioners and the FCC staff all deserve a great deal of credit for bringing this item to completion.  Universal service and intercarrier compensation are some of the most difficult, complex issues faced by the Commission and adopting an item of this magnitude is a significant accomplishment.  That we have concerns about some of the decisions made by the Commission in this order in no way diminishes our respect for its efforts and accomplishments.

On the positive side, we believe the item establishes a reasonable and workable process for transitioning to a more rational intercarrier compensation regime.  The Commission acknowledged over a decade ago that the current intercarrier compensation rules were irrational and created an environment ripe for regulatory arbitrage and disputes.  We are optimistic that the rules adopted today will help put an end to the arbitrage and the disputes.  We are particularly pleased that the item commits to placing carriers of VoIP traffic on equal footing with legacy telephone companies with respect to intercarrier compensation.

We are less enthusiastic about the universal service components of the order, which are far less ambitious than was recommended in the National Broadband Plan and the Notice of Proposed Rulemaking.  At a high level, the Commission’s “new” approach to high-cost support through the Connect America Fund is to give the incumbent phone companies preferred or exclusive access to virtually all the money.  Cable operators will be able to receive broadband support only in areas where an incumbent price cap phone company chooses not to exercise its right of first refusal (or “state level commitment” as it is now called).  This overwhelming preference for incumbent phone companies violates the universal service requirement that support be provided on a competitively neutral basis, and is a step backward from the current regime, which gave competitors an opportunity to receive support in any area where they were willing to meet the Commission’s requirements.

The degree to which the Commission has granted special treatment to large price cap phone companies is particularly disheartening.  AT&T and Verizon are the two largest telecommunications companies in America and the so-called “mid-size” price cap companies (CenturyLink, Frontier, Windstream) pay out the highest dividends among S&P 500 companies.   Given the financial strength and size of these companies, it is unreasonable and unnecessary for the Commission to give them: (1) preferential access to $1.8 billion annually in high-cost support in 100 percent of their territory through a right of first refusal; (2) recovery of as much as 90-100 percent of their access charge losses from an Access Replacement Mechanism that will increase consumers’ phone bills; and (3) exclusive access to $300 million in new high-cost support, in addition to 100 percent of their legacy support (which is phased out for competitors) before the new Connect America Fund begins.  We look forward to reading the order to see if there is a reasonable explanation for this blatant favoritism.

Although the lack of competitive neutrality is a major concern, there are a number of bright spots in the USF reforms adopted.  The Commission proposes to eliminate support in some (but not all) areas where cable operators offer broadband without a subsidy, a policy that NCTA has advocated for many years.  The Commission also adopted a budget for the high-cost program for the first time, another long-standing NCTA policy recommendation.

Consequently, while the item is far from perfect, NCTA greatly appreciates the efforts the Commission has made to begin the process of modernizing the USF regime.