Broadband Cable Association of Pennsylvania

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May 28, 2013

Michael K. Powell - son of former Secretary of State Colin Powell and the cable industry's front man in Washington - arrived early for a recent Senate hearing and worked the room with the ease and confidence of a consummate Washington insider. He laughed. He greeted an acquaintance with a hearty clasp of his shoulder.

A former Republican chairman of the Federal Communications Commission, Powell has smoothly transitioned into the private sector and now heads the National Cable and Telecommunications Association, representing the cable-TV companies he once regulated. It's one of the most politically powerful industry organizations in Washington - spending more in 2012 in lobbying, $18.9 million, than either the pharmaceutical or electric industry associations, according to the Center for Responsive Politics - and famously disciplined in its unity. "The cable industry," said Andrew Jay Schwartzman, a longtime Washington telecom lawyer, "can move on a dime. There are few places where the interests of Comcast and Time Warner or Charter are different from one another."

Perhaps historically. But that's not so anymore as the economic interests of cable-TV companies seem to be diverging, with monthly TV bills escalating faster than inflation and Congress debating what to do about it. Comcast Corp. is in the midst of that fray, and the stakes are very high. Evidence of that is the tens of millions of dollars in lobbying costs that Comcast and the industry are spending on behalf of the desired outcome - maintaining the status quo.

Cable-TV companies with programming assets, such as Comcast, seem intent on preserving the current system of offering bundles of cable- and broadcast-TV channels to consumers. Midsize or smaller cable-TV companies without programming subsidiaries, meanwhile, would like more flexibility in offering channels to consumers and not the big bundles of channels that consumers perceive as being so costly. Powell, say Washington and industry observers, seems caught between the two sides, and his predicament was captured publicly at the May 14 hearing on the state of the nation's video industry. He couldn't recommend to senators even one minor change to the current telecommunications laws when asked, even as he acknowledged those laws were "frayed, increasingly incomplete, and out-of-sync with the realities of the marketplace."

There are differences of opinion among his members as to what those changes should be, he told the communications subcommittee. He couldn't have been more accurate. Minutes after the hearing, Powell's comments on Sen. John McCain's proposed Television Consumer Freedom Act were contradicted by the nation's fourth-largest publicly traded cable-TV company, Charter Communications Inc. Powell had told senators that he considered McCain's proposed legislation to force cable-TV companies to sell cable channels individually, or a la carte, "respectable and noble." The trade association, though, has "profound doubts that a la carte would deliver a lower-priced product to American consumers," Powell said.

Charter chief executive Tom Rutledge shot that down. "It is clear that consumers are being forced to purchase content that they don't want or need," he said in a statement released at his Connecticut headquarters. "The tying together of networks by programming giants, combined with a lack of consistency in pricing for distributors and a complete lack of transparency surrounding that pricing, creates a no-win situation for consumers, who are forced to purchase large bundles of program content at prices that continue to escalate despite the myriad alternatives enabled by current technology," Rutledge added. It is time to give "consumers more choice in this difficult economic climate," and McCain's "proposed legislation is a logical step in that direction," the CEO said.

Charter, partly owned by maverick cable pioneer John Malone, has operations in 25 states. Rutledge declined to comment beyond the statement last week. Charter and several other cable companies, among them Time Warner Cable and Cablevision Systems Corp., have separately staked out another position in Washington independent of the National Cable and Telecommunications Association. These cable companies - but not Comcast - belong to the American Television Alliance, which is lobbying to reform the "retransmission fees." These are fees that many contend will drive consumer TV bills as they require pay-TV companies to compensate the broadcast-TV networks ABC, CBS, NBC, and Fox for their channels. The relatively new hidden fees will amount to billions of dollars, critics say. The beneficiaries of the fees are companies that control broadcast-TV networks, which include Comcast but not the other cable companies. Comcast owns NBC through NBCUniversal. Comcast had no comment Friday on why it was not part of the alliance.

In addition to the lobbying through the trade association, Comcast funds a corporate lobbying apparatus headed by executive vice president David Cohen. The company spent $14.7 million in lobbying costs in 2012, up from $590,000 in 2001, according to the Center for Responsive Politics. Comcast was a much smaller company in 2001. The National Cable and Telecommunications Association had no comment on its level of lobbying expenditures, or the issues it advocates. Powell, who is paid about $2.2 million a year to head the association, also declined to comment on member relations. "What happens with trade associations is that they sometimes have to sit out issues when there are divisions in the membership," said John Bergmayer, senior staff attorney for the nonprofit Public Knowledge, who also testified at the Senate communications subcommittee hearing May 14. "But that doesn't mean they won't be a potent force when the membership agrees." Philadelphia Inquirer

A state judge removed five plaintiffs from the legal challenge of Pennsylvania's voter identification law Friday but allowed the overall lawsuit to go on. Commonwealth Court Judge Robert Simpson agreed with Corbett administration lawyers the five aggrieved voters -- including lead plaintiff Vivian Applewhite of Philadelphia -- should no longer be allowed to challenge the law since they have obtained acceptable IDs since filing their challenge of the law a year ago. He spared two other challengers

The five have "valid IDs for voting; thus, an actual controversy no longer exists as to these Petitioners," he wrote in an opinion filed Friday. "Further, while I agree with Petitioners that the issues raised here are important, the remaining Petitioners will have an opportunity to fully litigate these issues." Gov. Tom Corbett signed a GOP bill in March 2012 requiring voters to present photo identification at the polls. The seven voters filed suit with the help of the American Civil Liberties Union the same month, arguing it would lead them to be disenfranchised. The courts waived the ID requirement for the November 2012 election and the May 21 primary in advance of further argument this summer. Pittsburgh Post-Gazette

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