Change Is Coming for CableLight Reading - Networking the Telecom Industry
NOVEMBER 14, 2008
Statistical savant Nate Silver cut his teeth crunching baseball numbers but hit a home run by applying his techniques to the U.S. presidential election, correctly predicting the outcome for 49 out of 50 states. Maybe cable MSOs should hire this guy to model possible regulatory outcomes under the incoming administration.
President-elect Barack Obama campaigned with a promise of change, and undoubtedly, it will be coming to the Federal Communications Commission (FCC) under the new administration. Cable operators have moaned about their misery under the reign of current FCC chairman Kevin Martin on issues ranging from digital must-carry, commercial leased access, à la carte programming, network management, ownership caps, and separable set-top security.
While MSOs have been counting the days until the current Commish cleans out his desk, hopes that his successor will prove more cable-friendly are likely misplaced. Indeed, as the Obama policy engine revs into high gear next year, cable operators may actually end up missing Martin.
The No. 1 item on the Obama campaign’s technology policy list is to “protect the openness of the Internet,” noting that the now President-elect “strongly supports the principle of network neutrality.” Four trends point to this sentiment moving beyond political platitude and into actual rulemaking.
First, a key argument from MSOs and telcos against Net neutrality regulations has been that free market competition better protects consumers than government policymakers. In the wake of the global financial crisis and subsequent $700 billion Wall Street bailout, such market-centric sentiments suddenly seem both naïve and passé to any American reading his or her monthly 401K statement.
Heck, even mega free-marketeer and former Federal Reserve Chairman Alan Greenspan recanted on the issue when testifying before Congress last month, saying: “I made a mistake in presuming that the self-interest of organizations, specifically banks, were such that they were best able in protecting their own shareholders and the equity in their firms."
In such a climate, it is not difficult to cast Comcast Corp. and AT&T Inc. as akin to Citibank and AIG, arguing you can trust the former with your bits about as much as the latter with your bucks.
Second, Google is deeply embedded in the Obamasphere. The Wall Street Journal reported that through the period ending August 31, Google employees had contributed nearly 25 times more cash to the Obama campaign than to the coffers of John McCain. Google CEO Eric Schmidt served as informal adviser to the Obama campaign and, after the election, was named one of the President-elect’s economic advisors.
Additionally, Sonal Shah, head of global development initiatives for Google.org, is now serving on the Obama transition team advisory board. A read of Google’s public policy blog offers a reminder of the search giant’s continuing quest for Net neutrality and competitive broadband “white spaces” spectrum.
Third, Team Obama made history by powering its campaign with Internet technologies and applications. In the name of political self-preservation -- let alone Truth, Justice, and the American way -- ensuring unfettered network access for content and applications is a high priority for the Obamans.
Fourth, even if one argues that the FCC lacks the statutory authority to implement aggressive Net neutrality regulations, that can be quickly remedied legislatively by an administration whose party also controls both houses of Congress.
The question is not whether Net neutrality policies will be implemented by the incoming administration but, rather, how broadly they will be defined -- and, to the point, whether the FCC will go so far as to consider common-carrier-type regulations for broadband Internet access providers, including the unwinding of vertically integrated applications and services.
While the thought of this will make cable cringe, Internet consumers and content and application providers will likely cheer, thanks in part to Comcast’s foot-in-mouth track record with network policy management.
Given the current environment, it would behoove cable operators to wake up from the fantasy that Net neutrality rules can be argued off the table. MSOs would be better served by an active engagement approach, collaborating and compromising with key stakeholders to ensure that Net neutrality rules meet administration policy objectives without undermining the economic model that enables broadband providers to continue investing in infrastructure and innovation.
So, we'll keep an eye out for changes in cable industry tactics. Kyle McSlarrow, the president and CEO of the National Cable & Telecommunications Association (NCTA), U.S. cable's chief pressure group, is a well connected Republican, having served previously as Deputy Secretary of the U.S. Department of Energy in the Bush administration, as well as Deputy Chief of Staff and Chief Counsel for Senate Majority Leaders Bob Dole and Trent Lott.
McSlarrow was hired in 2005 for his Republican reach. He'll need to keep "reaching across the aisle" in the name of diplomacy with the Democrats.
In the original writing of this column, it was suggested that cablers could consider replacing the current NCTA chief with a Democratic heavy hitter. Friends at the NCTA informed the author that he must have inhaled too many exhaust fumes on the way to work.
The NCTA says that McSlarrow "has a contract that runs through 2010 and the NCTA Board of Directors is very happy with his performance and has no intention of replacing him," righteously noting that "NCTA's history isn't one that flips leaders when the political leadership changes in D.C."
— Michael Harris, Chief Analyst, Cable Digital News
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