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Tuesday, January 13, 2015

Cable Fees Set to Rise

Posted By on Tue, Jan 13, 2015 at 9:51 PM

click to enlarge FILE PHOTO
  • File photo
Cable customers throughout the state will see their monthly bill jump next month — but it's a group of local cable companies that are crying foul.

Burlington Telecom and six other small cable companies have written to Vermont’s congressional delegation and other state leaders, asking them to do something about a system that leaves “Vermont consumers at the mercy of what is, simply, major network greed.”

The situation they're upset about applies to cable providers across the country. Federal legislation passed in the 1990s and reauthorized last summer requires them to pay fees to broadcast stations for the right to air their networks. As those fees — which broadcast and cable companies negotiate every three years — have skyrocketed, so has the conflict between the two groups. 

One of the most notable clashes came in 2013, when a standoff between CBS and Time Warner Cable led to CBS channel “blackouts.” 

But Vermont's small local cable companies argue that they have it especially bad.

BT customers will see a $5 to $12 hike in their monthly bill, starting in February. Without that cost hike, the telecom outfit will lose money, according to BT manager Amber Thibeault. 

Since cable providers must negotiate individually and are bound by a nondisclosure agreement, they lack the bargaining clout of bigger competitors, which means they often end up paying higher rates. Further diminishing their influence: They can only negotiate with broadcast stations within their "designated market area."

Burlington Telecom wrote to its customers in late December warning of the upcoming price hike and telling them that “broadcasters take advantage of our need to carry these local stations to our subscribers and their effective monopoly in the television market by demanding as much as they can.” 

Companies like BT deal with regional affiliates of major networks like CBS and Fox, and they say it’s gotten increasingly difficult to negotiate as those networks continue to consolidate, increasing their market power. In an era in which people are increasingly “cutting the cord” — watching TV online — cable companies are already worried about losing customers. If cable companies don’t cough up the money, customers can’t watch local TV programs.

“Basically it’s the broadcasters being greedy and trying to pass through costs to small operators," Thibeault said." But, she pointed out, "The rules allow them to do what they are doing."

Burlington Telecom, along with Vermont Telephone Company, Duncan Cable TV, Southern Vermont Cable Company, Waitsfield & Champlain Valley Telecom, Stowe Cablevision and Trans-Video Cable, are asking Vermont’s congressional delegation to revisit those rules. They are hoping to win the ability to negotiate with channels outside their immediate market and are asking for matching market rates to level the playing field between large and small cable providers. 

Both the U.S. Senate and House commerce committees plan to take up the issue. In a statement provided to Seven Days, Rep. Peter Welch (D-Vt.) didn't identify specific solutions, but said, "I regularly hear from Vermonters frustrated with the rising cost of cable and satellite television. They question why they need to pay for hundreds of television channels that they don’t watch. And they wonder how it is that their entertainment can be held hostage in disputes between providers and content distributers. My top priority as Congress begins the process of rewriting these laws will be more consumer choices and lower bills."


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About The Author

Alicia Freese

Alicia Freese

Bio:
Alicia Freese is a Seven Days staff writer.

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