Cspan, where history unfolds daily. In 1979, cspan was created as a Public Service by americas Cable Television companies and is brought to you today by your cable or satellite provider. Host tom larsen, what do you do for a living . Guest i run Government Relations for media come communications corporation. Were the fifth biggest Cable Company in america. Used to be the eighth biggest, but we keep moving up without doing anything. Host well, what does that entail . What does your post entail . Guest so we have 1400 communities that we serve in 22 states. So my team actually manages the relationship we have with those communities. So we would go to the board meetings, we would talk the city councils, the mayors. We would take in a lot of cases we take calls from council members. If theres an issue, we deal with them. We also run the media relationships. So in a lot of those markets where weekly or daily newspapers, we would talk to the press if there are issues, announcements, anything like that. And i also personally run our d. C. Office which means i come down on the train a lott to d. C. Host so do you find in the cable business that its the state and local regulations or the federal regulations that you spend most of your time on . Guest i think in the last two to three years its been the federal regulations. States there was a movement about, i dont know, signature to eight year six to eight year ago to move to state franchises to allow competitors like at t and verizon to come into the business. And that had the effect of limiting some of the interactions we have with local communities and really streamlining the process for getting in those markets. So thats, in a lot of ways, has lessened the burden on our team. But federally, theres been a big push lately to regulate the internet, and so weve spent a lot of time here talking about that. Host so how would you describe the state of the cable business or media comes in particular mediacomss in particular. Guest i think were seeing growth on the broadband side of our business. Its been a fabulous product, and its going to continue to grow. On the video side, weve seen a steady deterioration in customers, and theres a lot of reasons for that. Pricing of the product is one of the reasons, the channels have become very expensive. Plus, theres a tremendous amount of over the top competition from Companies Like netflix, hulu, more recently sling, which is a dish company, directvs launch an over the top product, and i think just this week youtube tv launched. So we have an amazing amount of competition, if i think some of our customers go to those places. Some of them say its just too expensive, well find our entertainment elsewhere. Host also joins us is matt polka, whom do you represent, mr. Polka . Guest we have about 800 members all across the United States of america in all 50 states. Were in a number of territories, serving about 7. 5 million customers, providing phone, cable and Broadband Service. Weve been around for 24 years, we just had our 24th annual summit here in washington, d. C. Where 24 years ago independent Cable Operators came together and said we have to have a voice in washington. So since then, weve been fighting for independent companies who primarily work in smaller markets and rural areas. Were not the Biggest Companies out there, but were out there delivering the key services, the Key Communication services to small markets, rural areas, competitive areas throughout the country helping to solve Digital Divide. Host are a the interests and concerns of your companies the same as, say, a comcast or a charter . Guest in many ways, they are. The issue for us and our members and the American Cable Association focuses on the impact often times of regulation on smaller businesses. Primarily because in our markets we have fewer customers per mile, and consequently the same regulation might have a higher cost of compliance per subscriber. So that means a longer term on regaining our investment. It also means that it is more difficult to have the available resources that we need to provide the services that our customers want. So the impact of regulation could be very, very important to determine in a small market or rural area about whether or not a community has served [inaudible] host well, mr. Larsen mentioned that theyve seen a deterioration in the video business. Is cord cutting a thing thats going to continue . Is there any way to ameliorate that . Guest i think its really the video issue of our time. As consumers learn that they have choice, using and consuming over the top video whether its through a net flicks or a hulu or an netflix or a hulu or an amazon prime which i actually was watching coming down on the play today, it gives consumers more choice. Something that theyve wanted for a long time, more control from the bundle of cable linear programming. So, yes, that is an issue of our time. Our members, however, i think are very aggressive in how they are trying to provide consumers that they serve with more choice through on demand, through availability of over the top services, making sure that their broadband plan is fast enough to support a consumers video habits. So, yes, its a thing thats happening today, cord cutting, cord shaving. But as an industry, our members are well primed to be able to serve their customers with their Broadband Service that allows them to consume the video they want. Host so, tom larsen, are you partnering with some of these ot ts like roku or hulu or netflix . Guest we sell or we deploy tivo boxes, and theyve been a great partner, great technology. And within their sort of format, they will place, you know, hulu or a netflix or an amazon so that customers can seamlessly sort of transition between their mediacom subscription and these over the top subscriptions. And separate from that, we do a lot of pairing directly with Companies Like netflix where well build our Network Directory to them so that it lessens the burden on the public internet and improves the sort of quality of service that our customers receive. Host why not skinny bundle offered by a Cable Company . Guest its mostly because the programmers dont want to let us do it. They would rather, you know, continue to reap the cash from that model or that platform and grow outside of that platform with other newer over the top providers. So if we were able to offer a skinny platform, that would mean we would be able to drop channels from our expanded basic lineup. They dont want any channels dropped. They want all of our customers to pay for those channels. If we were able to go with skinny channels, our customers would have more choice, and thats something they dont want to let happen. Host matt polka, why not a la carte . Guest well, for the same reason really. Its the companies that control the content, that control the distribution rights. Its been difficult enough to try to create a skinny bundle to give consumers more choices because of provisions in carriage agreements that require carriage of a service to, you know, x amount of subscribers. And if you go below that certain amount of subscribers that are required, then youre penalized for it from a rate perspective. So its very difficult from the standpoint of an operator to create those choices for consumers. But back to your earlier question, i think consumers are getting the choice and the a la carte that they want through their ipads, through their lapptops, through their laptops, through their cell phones that we are able to help deliver with our broadband networks. So we are part of that process, and we want to continue to be part of that as we give our customers more and more of the broadband speeds and capacity they want, which comes back to your earlier question about regulation and why regulations need to be such that our members are incented to invest more into their broadband plans. Host from multichannel news reporting on your recent summit here in washington, the erosion of video subscribers was just one of the topics discussed as the American Cable Association faithful and members of the national Cable Television cooperative ascended on washington for their annual policy summit. Indeed, some Cable Operators such as cable one have abandoned the marketing of Video Services because of high costs and instead focus exclusively on broadband and phone. Guest it is an important issue that many of our companies are looking at today and, no doubt, toms company is as well. The video we consider ourselves cable guys, to be honest are you. But with the advent of broadband, we could provide phone service as well as p broadband highspeed internet. The cable business isnt what it used to be because of the increasing cost of not only cable programming, sports programming, broadcast programming through retransmission consent, and as a business, it is failing. It is very, very difficult for a cable operator in many cases to even break even on the cable side of the business which is why broadband is so important in giving consumers more of the choice that we cant give them on cable through the broadband pipe. So i agree with the article, i degree with the statement that this is a very i agree with the statement that this is a very difficult thing, and many of our companies are looking at and primarily focusing on maximizing broadband knowing that cable is something weve tried to deal with, weve tried to provide choice, but we have little ability to do that because of those who control the content. Host tom larsen, is video a losing proposition for mediacon. Guest its certainly our worst product, it makes the least amount of money. Its always been a big revenue driver for us. Its paid, in a lot of ways, for the network that is able today to deliver broadband, so were not ready to abandon it yet. Its a challenging business, and we wish and we hope that our Business Partners on the programming side someday realize that its been a great ride for all of us for a lot of years. Lets not end it now. Lets try to make this thing work. And a lot of that, i think, just has to do with pricing. We need to be sensible, because consumers dont have unlimited pocketbooks. Host so how do you get to a better pricing model then . Guest i think you get to a better pricing model by getting rid of some of the networks that just dont make sense. Theres a lot of and youre starting to see that today, i think pivot and aljazeera and some of these networks have gone away, and theres probably some more trimming of those networks that could happen. And, you know, and the other thing is i think we need to have really a serious look at what were spending on sports in this country. Be the amount of money that the broadcasters and espn and some of these Regional Sports networks are shelling out for the rights to broadcast games is just absurd. They just turn around, they have no sort of concept of cost pain, because they just pass it on to consumers. They dont understand the impact of their reckless spending. If they were a little bit more sensible in how they spent, i think it would be better for all people in the pay t universe. Of. Host so, matt polka, a comcast or a charter can essentially deliver a product cheaper, correct . Guest absolutely. Host is that a fair statement . Guest very fair. Host so what happens to the smaller operators . The 800 or so that you represent . Guest well, challenges have never been an issue for us, weve always had them. [laughter] weve always had to deal with them. Ive been in this industry since 1986, and running a Small Business has never been without challenges. But it does show the stick to itiveness of our members who are committed in their communities where they live and work. But it does make it difficult. As i mentioned, to deal with the price of content, the bundle of programming, to deal with the heavy cost of regulation particularly that weve had to to sort through over the last eight years where we have tried our best to provide consumers the services that they want, that theyve wanted has made it very, very difficult. Broadband is certainly something that our members feel very passionate about. They see it as their future. Its why, one of the reasons why we were so concerned over the last few years when we talked about title ii and Net Neutrality regulation. Not that we as isps, Internet Service providers, were going to block or discriminate or engage in paid prioritization. We didnt do that then and we dont do it now. But when you reclassify and impose heavy, onerous regulations on Small Businesses, it has a disproportionate impact. And thats what we want to discourage so that private networks can work with government and consumers to give consumers the protection and the services that they want and that weve with always tried to deliver to them. Host so how was the mood at this years aca summit as opposed to last year . Guest it was a bit more upbeat, i will say that. Host why . Guest there is no doubt. Well, theres a difference in philosophy at least now when we look at the new administration, the new fcc, the new leaders in congress. And not, peter, that i think that there is going to be all of these changes that somehow are going to benefit smaller businesses, independent Service Providers where now we have a blank check to do whatever we want. The regulatory, legislative process is hard, and its difficult, and weve learned that over 24 years. And we know that we have to work very, very hard as an association to win a better balance to the regulations that were imposed over the last eight years. So were very hopeful working with the fcc, working with congress, working with the administration that we can provide some better balance that primarily for a company like mediacom encourages their investment into their plant rather than into the cost of regulatory compliance. And we think we have the opportunity to try to achieve that over the next four years, but we know its not going to be easy. We will be in the fight, however. I can assure you of that. Host tom larsen, ajit pai, the fcc chair, spoke at your summit. What did you hear from him that you agreed with and what made you concerned . Guest well, i think, clearly, hes deregulatory. So, i mean, there was a lot of last minute regulation that occurred at the end of chairman wheelers, you know, regime. And i think, you know, what i think i heard was, you know, expect Less Government in your business. Now, in some ways i think he, you know, hes still not going to address some of the issues that are really important to us like retransmission consent is a hugely important issue to us and our company. Its the Fastest Growing cost to our business. I dont expect him to do anything about it short of some major, major event in the marketplace. Host well, how regulated are those . Or is that just an agreement between you and the broadcasters . Guest ing you know, its really just a negotiation between us and the broadcasters, although they pretty much have the leverage because they can simply black out their stations. As youve seen this year already, theres been 143 blackouts, the most ever in a room was in 2015, there was 192. Were a little over three months in, were going to smash that record by a long way year. So, you know, and i think short of some major marketplace event, i dont see chairman pai doing anything about that issue. I do see him, i think, being letting the market work more in the internet space. I think market from our position, the markets worked really well. Its really inspired a lot of innovation. I think, you know, 20 years ago would have said the capable companys a monopoly. Today in the video space. Today that argument cant be made. I mean, theres satellite competition, theres over the top competition. Seems like theres a new provider every day. And so thats been done in an open, free marketplace that was created by networks we built. So i think he recognizes that you should let the market work if it can work. Host so the fcc last year put titleii into motion. Guest right. Host what was, what did mediacom do in preparation for a potential title ii . Guest well, you know, its hard. I mean, i think we had to take a gamble last year on whether to invest in our network or not, and our chairman decided that despite all the regulation that was happening at the federal level, he was going to take a gamble, and he decided to invest a with dollars over three years a billion dollars over three years to become the first Cable Company in america to go all really all gigabit. So this year we prepared our next last year, this year were launching in 1400 communities. Weve done 500 already this year in the first three months, and well do another 900 by the end of the year. And were going to be the leader in that space. And so from our perspective, we were very concerned about title ii, but because were privately held, we had a gentleman that could take a gamble and say, you know what . Im going to bet on common sense coming back to this marketplace, and im going to bet on our customers and our network, so he made the investment. Host so does a charter, Time Warner Cable merger hurt mediacom . Guest not in the sense that we compete directly with them. I think what it does, where it hurts us is that the volume discounts that they get for programming get greater, and the prices we pay go up higher because were, we end up what happens in the video marketplace is the big guys get the best prices, and the programmers look to the littlest guys to make up the difference. So our price will disproportionately get higher. So the markets we serve, traditionally small, rural markets, will pay more than an urban market. So its kind of a different kind of Digital Divide. Its a pricing divide. Host matt polka, how do you combat that . Guest i think we just have to continue to serve our customers in the best way that we possibly can, which our Member Companies do given their commitment to their marketplaces and where they live and work and provide service. While at the same time, we have a very, very active and engaged voice here in washington to try to win better regulatory treatment of smaller businesses. Thats a really important point because the companies that are in the marketplace to solve these Digital Divide issues are not the large companies, its the small companies. So we have to be committed to our communities, we have to be committed to investment, and thats why its so great to hear what mediacom has been able to achieve. Those things would not happen without the ability to know that you have, hopefully, a bright future. And the ability to innovate which i think there will be greater opportunities for our Member Companies. Is so right now its just continue to do what were doing in our marketplace, fight for our businesses and realize that we are and we are here to be part of the solution in solving the Digital Divide. Host one of the conditions for the charterTime Warner Cable merrier was lifted by merger was lifted by the fcc, the wildout. Do you buildout. Do you agree with that. Guest absolutely. We were flabber disasterred by the fact that the fcc would impose as a condition to limit anticompetitive behavior of a merger to require the merger participants to overbuild other existing providers. Made no sense to us whatsoever. So we were very pleased when the fcc, under chairman pai, reversed that condition and took that condition away. I mean, our members have fought this battle time and time again not only from a standpoint of dealing with large merger combinations, but also in significant, billions of dollars of government funding of broadband in areas, taxpayer funds that have been used to overbuild mediacom and other members where broadband already exists today through the goodness of companies who said, look, i want to do this. They werent told to do it, they didnt ask for money to do it, they did it. And they shouldnt have to face governmentfunded overbuild. Fortunately, that condition of the charter merger was removed, and i think its the right decision. Host a recent Washington Post article by brian fung, 7 in 10 support option of cityled internet network. This is a pew study finding that said that seven out of ten people believe that cities should be able to offer their own internet network. Do you agree with that . Guest i dont, and ill tell you why. Ive seen it time and time again in our markets, and it doesnt work well. Theres a perfect example in minnesota, lake county, minnesota, where weve been overbuilt with a, i think it was a 70 million grant and loan combination from the 2008 stimulus package. And what was said to the, what was said to the citizens at that time was, hey, were going to take this money, were not going to spend any of your tax taxpayr money, and since that time i think theyve spent an additional 30 million of taxpayer money bringing the project to a total of 100 million, and really all theyve gotten out of that is probably 4 or 5,000 homes that werent served before. So 100 million to serve 4,000 unserved household, its just a terrible waste of money, and these taxpayers in this poor county are going to be stuck paying this debt for their lives, for their kids lives. Theres just no way to pay it back with the amount of people they have. Thats the problem with taxpayer money is that its easy to find by raising taxes. And unlike your cable bill where you know what youre paying every month, these hidden costs of Government Networks are hidden in your water bill, in youre electric bill, in your property tax bill, and you just dont know what the real cost is. Host who do you consider to be your competition . Guest oh, gosh, weve got a lot of competition. We have, obviously, the satellite companies, dish and directv. In iowa in particular there are a lot of governmentowned networks. We have some Startup Companies in cedar rapids, iowa. Obviously, the phone companies provide a lot of competition, centurylink, wind job stream, frontier windstream, frontier, at t, vise p. And now even in the internet space the speeds are increasing, so were seeing competition from the sailor guys too on the internet side. Host matt polka, have the googles and the facebooks and the amazons been treated the same way as isps . Guest no, no host should they be . Guest absolutely. Host why . Guest that was the primary issue when we talk about privacy regulation and the regulations that were imposed on Internet Service providers under chairman wheeler. This perception that somehow Internet Service providers were the one taking and abusing and monetizing consumer data. Were cable guys. From the very, very early start of our industry we have been told by law that we have to protect consumer information, and weve been doing it since the start of this industry. The googles of the world, the amazons, theyre the ones that actually take this data and use it and monetize it. Weve even had people from google come to our conferences and boldly say at google we make money two ways, we sell ads and we sell the unsold inventory of saads. And they ads. And they do that by using consumer data. So all of this misinformation that weve seen about privacy, the vote by congress under the Congressional Review Act to restrict and move back the privacy regulations, its, it is misinformation about we as Internet Service providers, what we do with that data. We protect it. Weve always protected it under the ftc regime of regulation. And going back to the earliest days of our business. So, in fact, if there is going to be regulation in any way related to privacy, in my view, it must cover the socalled edge providers, google, amazon, apple and others. Because theyre the companies that are using it. I was so surprised the other day, peter facebook, too. I literally at home bought a blotter for my desk at home, and within an hour of the time i clicked to buy on my Facebook Page there were other suggestions and other blotters that i could buy. My isp, which is comcast, didnt sell that information and give it to facebook right away. It wasnt the isp, it was the edge provider. And thats where if there is going to be privacy regulation, we need to focus on the companies that are using and monetizing that data first. Host you brought up go ahead, mr. Larsen. Guest i would just say that i tend to look at things very simply. I follow the money. And so if you look at who makes the most money out of the internet ecosystem, its clearly the edge providers. So if you take facebook apple, google, microsoft, last i checked, they have 325 billion of cash on their balance sheets. If you look at comcast, charter, verizon, at t, they have 350 billion in debt. My numbers may be slightly off, but the point is the companies that are taking the risk, borrowing the money to build the networks, are being criticized and being made out to be villains whereas the companies that are making all the cash off the internet are being lauded for their wonderful innovation. And im not saying these are Bad Companies in the sense they havent done amazingly innovative things, im just saying they make a ton of money off the internet. And for them to go, you know, scotfree with no regulation suggests to me that maybe thats not the right approach. I mean, maybe we should look at whos making all the money and why are they able to take so much south of the out of the system . Its because theyre selling your information. Host how do you think the black hat, white hat perception of these Different Companies came about . Guest well, i think in particular under the Obama Administration i think they, you know, used some very good algorithms and some very good consumer data to put, you know, president obama in office. And thats great. I mean, he used Technology Like nobodys ever used technology before him in any president ial race. And i think he, you know, they end deared themselves to that administration endeared themselves to that administration. Thats great. Thats d. C. , thats politics. Thats hard work, and but at the same time, you know, lets not forget that they have, theyre in business to make money. And so, you know, we need to be cognizant of the fact that a lot of these policy changes allowed them to make more money. Host now, you mentioned as an aside earlier your chairman at mediacom, rocco a ca meese sew, who is he . Why did we all laugh . Guest hes an italian immigrant that came to this country, you know, 12yearold that didnt speak english and earned himself entry into a prestigious boys catholic school, and from there he earned his way to columbia on a soccer scholarship, and hes never stopped working. Hes a real underdog in life, you know . Hes taken his role as an underdog, and he relishes it, and he proved, i think, in the 1990s and 2000s that you could take systems that no one else wanted and turn them into, you know, upgraded, very good systems that people would be proud of and that really, you know, can make consumers on par with consumers in small towns in iowa on par with chicago customers and new york city customers. And more recently, he just bought the new york cos moss, another franchise that was left for dead. Its a soccer team that pele played for. It was near bankruptcy in december, and he bought it, and hes out to prove that he can fix american soccer. Thats his next passion. Host and back to policy. Matt polka, can you mentioned the ftc as opposed to the fcc. Do you see maybe a move over to the ftc to be more of the regulator . Guest thats really, when were talking about privacy, thats who regulates privacy today. And the ftc, for many years, has done a wonderful job. Theyve had hundreds of enforcement action against web providers, against isps when there was cause for concern on a case by case basis. So that regime has worked. I do not at all think the fccs going to shiring its duty when it comes to isps, working with private networks, being forthright about the fact that there is an ecosystem of sorts between government that has a very specific purpose in insuring that there are proper regulations to protect the Public Interest but also recognizing and i think this is fundamentally different from the last eight years recognizing that all of the good things that we want to give to consumers and we want to insure that they have will be provided by private networks. And we have to recognize that private networks are an important part of this circle to give the consumers the services that they want. So i think that there will be a much greater or recognition of the Important Role that private networks, and in particular, smaller private networks have to be able to solve some of the greatest problems our country faces. Host matt polka is president and ceo of the American Cable Association, tom larsen is Senior Vice President of government and Public Relations for the Mediacom Communications corporation. You can watch live online at cspan. Org or listen live using the free cspan radio app for apple and android devices. In case you missed it on cspan, Veterans Affairs secretary David Shulkin on the state of the va. Twenty veterans but they are dying by suicide. That should be unacceptable to all of us. This is a National PublicHealth Crisis and it requires solutions that not only be able work on but all government and other ane partnerships in the private sector, nonprofit organizations. Fortin University Law professor Zephyr Teachout on corruption in u. S. Government. 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And Hillary Clinton talks about the 2016 president ial election and her upcoming book. You may think you know what happened, and you may be right to a certain extent based on what you perceive and how you process it. But im going to tell you how i thought and what i felt and what i thought. Because you cannot make up what happened. Cspan programs are available at cspan. Org, on our homepage and by searching the video library. Now a Panel Discussion with several federal trade commission officials