Photo credit: Marla Maritzer |
| New York City Comptroller William C. Thompson, Jr. and New York City Councilmember Eric Gioia unveil “Keeping Cable Fair” legislation to strengthen protections for cable consumers at a news conference on October 28, 2008. Pictured (l to r) are: Chuck Bell, Programs Director, Consumers Union; New York City Councilmember Eric Gioia; and, Thompson. |
New York City Comptroller William C. Thompson, Jr. and Councilmember Eric Gioia today unveiled “Keeping Cable Fair” legislation to further strengthen protections for cable consumers, while also improving the tools of City regulators to increase cable rate transparency and ensure programming fairness and diversity.
“New Yorkers deserve more transparency, more accountability and more choices from their cable providers,” Thompson said at a news conference. “This legislation builds on the foundation of my Cable Consumer Bill of Rights, and reforms antiquated regulations so we can implement the strongest and most comprehensive set of cable consumer protections in the country.”
“Hard-working New Yorkers expect and deserve to know that during tough economic times we are taking every step possible to protect consumers,” Gioia added. “This legislation will go a long way towards ensuring that cable customers have more choices by giving them equal access to independent networks that aren’t owned by the cable giants. Passing this legislation will make New York the model for cable consumer protection. I applaud Comptroller Thompson’s hard work to keep cable fair.”
Chuck Bell, Programs Director for Consumers Union, who attended the news conference, said: “Consumers are very concerned about the high prices they pay for cable, and the quality of customer service. These new reforms will give consumers much better information about what their cable bill is actually paying for, while protecting consumer access to independent networks, and strengthening oversight of cable service in New York City. We’re committed to working with Councilman Gioia and Comptroller Thompson to enact these reforms and make cable play fair for a change.”
In March, Thompson introduced the Cable Consumer Bill of Rights, a multi-pronged blueprint created in conjunction with the New York Public Interest Research Group and Consumers Union aimed at protecting consumers by demanding significant reforms in cable companies’ franchise agreements with the City.
Time Warner and Cablevision’s 10-year agreements expire soon, and Verizon just was granted a 12-year franchise to provide cable television services citywide.
As part of the Verizon deal, Thompson was successful in ensuring cable rate transparency, including the requirement that Verizon must meet twice annually with the Commissioner of the Department of Information Technology and Telecommunications (DoITT) to review the company’s performance. Thompson also secured franchise language that commits Verizon to not discriminate against independent networks that are not affiliated with cable or broadcast companies.
“We will insist that any franchise renewal for Cablevision or Time Warner Cable include the same oversight and reforms,” Thompson said. “I applaud Councilman Gioia for this legislation, which will ensure that the DOITT Commissioner has the power to protect consumers in these new agreements.”
Thompson and Gioia said the need for legislation to protect consumers has increased in recent weeks. Earlier this month, Time Warner asked the Federal Communication Commission (FCC) to give it unchecked power to charge whatever its wants for cable services in Manhattan because of the City’s recent agreement with Verizon FiOS TV – a move that could dramatically boost cable costs for more than 600,000 households in Manhattan. Thompson and Gioia said the City must move to oppose cable price deregulation for Time Warner immediately, and put in place strong consumer protections.
Additionally, the FCC earlier this month ruled that enough evidence existed that Time Warner and other large cable companies had discriminated against independent channels to warrant referrals to an FCC administrative law judge. And, two weeks ago, a Buffalo Bills game was taken off the air in more than 330,000 households in the Buffalo area by Time Warner because of a dispute with a local CBS affiliate owned by LIN TV. These latest examples echo the battle the Yankees and Mets had with Cablevision and Time Warner that kept games off the air for more than a year in 2002 and 2005.
Finally, Time Warner, citing increased costs for carrying certain channels, has begun seeking hikes in cable rates as high as 17 percent in some parts of the country. However, Time Warner has failed to disclose that it owns a number of the channels it carries and has never revealed the revenue associated with that arrangement.
The new legislative proposal builds on the tenets included in Thompson’s Cable Consumer Bill of Rights and from lessons learned during the Verizon franchise negotiations. The legislation’s major provisions are:
Cable Rate Transparency
- Franchisees would meet with the DoITT Commissioner twice a year to report on price increases, increased programming costs, and related information.
- Detailed reporting to DoITT would disclose the percentage of monthly subscriber bills that is allocated to Capital Expenditures, System Maintenance, the Cost of Content, Administrative Expenses and Profit.
- This information would be made available to consumers in summary form so they can make intelligent and informed choices among competing video providers.
Cable Content Costs Transparency
- Detailed reporting to DoITT would also include information about increases/reductions in the cost of content (i.e., what cable companies pay to cable networks in carriage fees).
- Reporting would include information on the cost of carriage for each network in all service tiers.
- Reporting would include details of what company owns each channel and summarize the cost of content for cable company-owned channels, broadcasting company-owned channels and independent networks that are unaffiliated with either cable companies or broadcasters.
- Summaries of this information by channel group would also be made available to consumers, in order to help them manage their cable bills by making intelligent and informed choices.
Promoting Fair Access
- Empower DoITT with the ability to appoint an outside arbitrator to settle programming disputes where the incumbent cable companies are discriminating against an independent network that would compete with a network owned by that cable operator.
- The independent network would need to establish, based on available information, that it is reasonable to expect that the network would be granted carriage if it were owned by the cable operator in question.
- DoITT would only get involved if the dispute continues for six months without resolution from private negotiations. DoITT would be empowered to institute a “shot clock” that would put both the cable operator and independent network on notice that DoITT intended to refer the dispute to an arbitrator after a set period of time, providing another avenue for private resolution.
- DoITT would not participate in the arbitration decision, which would be predicated on both parties making “best and final offers” and the arbitrator choosing between them.
Gioia plans to introduce the measure in the coming weeks. “It is simply our responsibility -- as a City Council – to fight for these consumer protections,” he said. “Cable rates have nearly doubled in the last decade, far outpacing inflation. Now is the time to install new reforms that will shine a bright light on price increases and what is really driving them.”
Added Thompson: “We won valuable reforms from Verizon, but there is more work to be done. We will vigorously pursue consumer protections both through this council legislation and direct negotiations with the cable incumbents as part of the franchise renewal process.”
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