A number of smaller pay TV operators have contemplated getting out of the pay TV business entirely and just selling broadband, saying they lack the scale to keep pace with the absurdly-skyrocketing rates of television content. The American Cable Association last week wrote to the FCC, asking the agency to use its authority under the Communications Act "to combat surging programming costs." More specifically, the ACA wants the FCC to reform retransmission consent rules (preventing blackouts during negotiations), and consider numerous other protections.
"If current trends continue, already high video programming fees will continue to escalate, causing the margins from traditional pay-TV service for smaller cable operators to shrink and then dry up within five years. The FCC must use its power to restore some semblance of sanity to the out-of-control video content market or broadband investment will suffer," ACA President and CEO Matthew M. Polka said in a statement.
The FCC is already considering reclassifying Internet video providers as Multichannel Video Programming Distributor (MVPDs), effectively giving them the same protections that existing cable operators already enjoy. By doing so the FCC hopes to increase competition in the pay TV sector, and eliminate some of the protectionist logjams currently occurring in regards to programming licensing.
Smaller cable operators meanwhile argue that if rules aren't changed to make things easier on them, they'll ultimately have less revenue to contribute toward broadband expansion. Of course they're asking for help from a regulator they're
simultaneously suing over net neutrality rules.