Host and this week on the communicators a discussion of the future of television, the internet and video. Joining us is monty tayloe. He is the founder, president and ceo of a Company Called Mediacom Communications corporation. Mr. Commisso welcome to the communicators. What is mediacom . Guest mediacom is what they used to call Cable Television companies. In fact, we started our company back in 1995 and little by little our mission at that time was to go out and which has been maintained basically to deliver to the smaller markets in the u. S. The same level of services you could find in San Francisco and new york city or washington d. C. And up to 7. 3 billion in investments we have achieved that and im very proud of that. We are in 22 states. We have 1500 communities in those 22 states. We have 4600 employees that we generate about 1. 7 billion in annual revenues and im a lucky man. To have the people that i have. Host are you a Cable Company . Guest we like to say we are a Cable Company but we are multiservices. We start as a Media Company back in the 1995 period buying all of these assets. It was a one Way Communications for the most part in back in the late 90s i got into the broadband business. In 2005 they got into the telephone business and then in the last seven years we spent a lot of money and time and getting into the Enterprise Commercial side of the business. Host mr. Commisso we here in washington a lot going on when it comes to telecommute patients. The fccs vote on Net Neutrality, how does that affect your business . Guest will look as i keep on asking everyone in washington what have i done wrong . And they dont have an answer for me. In fact, we have done everything good and nothing bad. As i just mentioned to you we have spent a lot of money to make sure that the small markets markets consumers and all the franchise areas that i operate get the same level of service. I am proud to say that in fact in each of the markets, and we dont discriminate like some other Companies Going into one area of the city like google and maybe not the others. We essentially offer the same services and we started out with a 256 meg service. Today we offer upwards of 300 megs. The download speed but our extended markets are 50 to 10150 megs. Host to go back to the question how will that affect your business . How will these new Net Neutrality guess who it will create uncertainty. We need to make sure all the lawyers in washington if they have been going on vacation two or three weeks a year they wont be going on vacation for the next year because they will be making so much money on this thing there isnt enough money to go around. It will impinge on our ability and its not going to be seen in the next month or two. Our ability to raise money at a reasonable cost it will increase, have no doubt that this will increase rates to consumers. Why is that . It will be costing us all kinds of regulatory fees, up additional rental fees, taxes at the local level. I think utilities in the states where we operate ive been found one government that does not want to raise more money and thats going to give an opportunity to raise more money. And frankly, the thing the craziest part of this thing peter is that heres a company like mediacom but just in the last four years and by the way i took the Company Private four years ago so now i own 100 of the company. He is in the Public Markets and i spent 1. 1 billion in cap. We have been able to double and triple the speeds in the Network Capacity that we have available for our customers pretty regularly in the last 15 years. Im just concerned that if i cant make a return once we see see the orders and it may take weeks or months to see the order, im not going to bail to keep up with the dramatic needs to invest money in our networks so we can deliver the stuff thats coming down the road. Host joining our conversation this week on the communicators is monty tayloe of communications daily. Guest mr. Commisso mr. Oreilly when he was talking about the title ii regulation used the word for parents to express his doubts that the fcc is going to keep some of those taxes that you were just mentioning away. Why doesnt oreilly or you believe chairman wheeler when he says those new taxes and no fees are going to plug your companys . Guest well because for instance i think he spoke about no tariffs, no regulation but that is on day one. He also has in order for anyone to file a lawsuit, for anyone to bring a procedure to the fcc and you know what happens. The rates are too high or whatever, i have to hire more. So the fact that there is no regulation a teacher feature today but not necessarily true tomorrow. Once this regulatory this monstrous regulatory scheme is put into place which by the way goes back to 1934 when there was a true monopoly operating the phone system all over the u. S. We dont know what the next three commissioners assuming they are democrats or whatever they may be and i dont have a certain date to know exactly two or three years down the road once i make the investment that i need to make up able to get a return on that. Guest what should the fcc have done instead . Guest we have been a very very strong proponent of what has been in place and what has been in place over the last 15 years, 20 years falls under bush and under clinton and in the first six years of the Obama Administration is a Net Neutrality order that we have all up i did too. No prioritization no fast lanes, no slow lanes and its done its job because frankly when i started my company in 1995 google was not around and neither was facebook and neither was twitter. None of these companies frankly were around and they succeeded. In fact the Largest Companies in the internet space just to give you a number right now as we speak they have 280 billion in cash on the Balance Sheet. The largest four countries and the infrastructure comcast time warner have 260 billion so how is it possible that this thing has been so bad they manage to accumulate 28 billion of cash on their Balance Sheets and the guys are ripping off them. They are up to 160 million. Something has not been said to the consumer and to the public the way it shouldve been said which is facts and truthfulness frankly in a major issue like this which is reregulating the entire internet under a scheme that was put in place back in 1934 when we only had one phone company in this country. Guest some economists and others have said its not necessarily a bad thing. They can add benefits to the consumer. You believe there could be a good site to pay prioritization . Guest first of all we lost that argument and we have agreed not to have it but if i was in a different world i would say yes, people should pay for what they use. People should pay for the money that they get from the network that they utilize. So let me give you an example. Netflix has been a huge proponent of reregulation of our business. This little Company Called mediacom in the last four years spent 800 per customer and capital expenditure. What do you think they spend . They spend a little less than 6. There is 800 here in 6000 netflix so how has netflix been able to get 50 million customers . By basically bypassing and staring out distribution cost which is true in any business. Even there we have agreed. That was a agreement that was put in place for the last 15 years. What we dont like and what we are going to fight is this reregulation of our business under a regime that already failed if you look back to 1992 cable act and what developed from there. Host mr. Commisso you said you are going to fight. Does that mean in court . Do you see a lawsuit . Guest i think we are doing the right thing for the American Consumer and my employees by the way whom i love very very dearly dearly. Im the one that has got to watch after them. First of all we have congress and we have full support of the legislation that has been put in place by senator thune in the Commerce Committee and i think we will see what happens there but i think in the next month or two maybe something will happen. The same time we are not going to allow three bureaucrats from the fcc to change the entire ecosystem of the business and three may be a change in administration. If there is a lawsuit taking place and it goes on for years, and by the way the fcc doesnt know. I dont remember if you i dont know if your member the Janet Jackson situation with the super bowl. They have been looking at it for the last eight years and they still have not resolved it. It may take a long time to get a final resolution through the court system that we may have to go that route. The best thing for everyone is for the elected representatives of our people which is congress to revisit this which they havent done since 1996. And let everyone talk about it and at the end of the day let congress decide how this thing should be done. Host rocco b. Commisso is a member of the board of directors. Mr. Commisso you were here in town for National Cable association has some meetings but as their general agreement among all the Companies Large and small about how to approach the Net Neutrality issue . Guest within the ncta is comprised of companies from the distribution side and the viacom and espns up this world. At the very least on the distribution side, that distributors are in full agreement. The copy side, i cant speak for them but they are not saying you cant sue. I have every right to sue too. Last time i checked im an american citizen and somebody gave me the right to sue the government or anyone is trying to hurt my people and my investment. And i think whether its us, whether its ncta, whether cell phone industry, whether its the cellular industry whether its cant tell, whether its the manufactures ciscos, the intels and ibms are folded in support of our site and the Public Interest. The Public Interest is not just free press and public knowledge. The public includes my customers customers. I dont think my customers frankly know what the hell is really going on. Over time they will find out and they will find out when somebody wants to make their bills go up. Just go your company and i think the aca have both pointed out that neutrality rules overpass today dont prevent Contact Companies like viacom from blocking the way it does isps. As in the fact that they are keeping isps from blocking give you more ammo for your argument against . Guest you would think so but unfortunately and this is the way washington works you know because we provided bill for the consumer, when espn or viacom gets paid they dont get paid by the consumer. They get paid by rocco. The consumer pays me and i give it to viacom. Thats a very very critical distinction as to what we are all about. Google facebook what consumer complaints that they have. They make their money by selling advertising. I make my money unfortunately only by charging the consumer. You heard me speak the last 20 years, i want to charge the consumer lesson not more but to make sure the suppliers charge me less which has not been a the case in the last 15 years. So i think one of the problems and we have seen it already in the 1990s to the cable act where the government came in and said 20 rates for video is too high. 75 nobody complains about it. Why is that . All of that has been due to what we pay espn and what we pay espn and what we paid to his name not via comment fcc and so on and so on and the consumer has to foot the bill. The same thing is happening here. This is rarely a question of the consumer. That may give you one number again. The four Largest Companies in the Silicon Valley have 280 billion on their Balance Sheet and cash whereas the infrastructure industry, the Companies Like myself but i am not included in that the top Largest Companies have 260 billion. It just doesnt make sense. They want people that make money are the good guy and the people investing and borrowing are the bad guys in the business. Host from an an isp point of view video provider point of view and a consumer point of view should consumers be able to opt out of bundles and be able to to go oligarch . Guest if they program does that yes but unfortunately the contractual agreements that i have i am not allowed to permit my customers and peter i have been talking about this for 15 years, when you bundle with espn and viacom come i dont think its right. Ive been speaking about this for years. Once again let me go back to this major act passed in 1992 where the government came in and said more competition lead to lower prices. I just just mentioned you 75 the last time i checked his more than 25. Our prices have tripled largely because their programming costs went from 40 to 45 of the programming costs per month goes from 4 to 44, 11 times. We dont make more money but the money that we charge consumers is going someplace else. So more competition frankly in that particular Business Model lead to higher prices for the consumer. Now the government is trying to redefine this 25 meg definition. They are trying to prove we are a monopoly because few people offer more than 25. Im finding im in a situation that i invested the money had the fastest speeds and because i have the fastest speeds im a monopoly. Maybe i should not have invested the money and i would be below 25 along with everybody else and then there would be seven competitors according to their definition as opposed to one. Thats an issue. Its also an issue frankly with the other part that the fcc is trying to do. President obama went to cedar falls which happens to be my market in the great state of iowa. He went to monopoly to talk about that im a monopoly. The cedar falls is a utility put in place before i got into the state of iowa. They have a monopoly with electric and gas and they use that monopoly status basically to compete with other markets. So he is the greatest entity in the state of iowa because they are a utility complete competing with rocco. Rocco has 50 employees in rocco has got 1600 employees and none of my employees who voted for the present were mentioned. How unfair is that . To have to pick and choose which side frankly hes too and i can tell you that my people were absolutely upset. The work we have done and we have covered 300 different communities in the state of iowa and iowa is my biggest state. Nothing was mentioned about the work that they are doing. Just go you mentioned the bundle is a problem. Wheeler has said that he is redefining in bdp to include ot services as a way to get rid of that. Do you think thats a good strategy for doing that . Guest i dont know how thats going to work out. I could spend two hours with my people know the answers better than me but they there are all kinds of logistics. Regulatory and legal issues with what they are trying to do. The question is do i qualified . In other words if netflix can do that can i also do that . I dont know. Guest do think it would lead to increased competition for you guys . Guest i probably could but listen i have 650,000 video customers in the last years. Host you have lost . Guest i have lost. Im not proud to say that but when somebody calls me a monopolist maybe they should look at the facts. Monopolist dont lose customers. I have because people will want to pay the money they are paying at the end of the day. Simple as that. Now we are trying to replicate the failures of what happened in 1992 with what the fcc has done today. By the way today is thursday february 26. With the title to ii cable act. I have no doubt that this is no good for the americans consumers or lease the consumers eyes are are. We will only increase costs. If the cost me more money and i cannot pass that along to netflix or google or anybody else and whos going to pay for that investment . That may give you a mother statistic. We are seeing a tripling of data consumption and our company in the last three years. The average consumer in our Company Utilizes coming uses about 90 gigs of data per month. We think we are all over the top as you amazon, apple, hulu and a few others. And videostreaming is the big thing. Besides netflix that 90 may go to 300. That 300 in the next two or three years that 300 takes place we have to go out and spend hundreds of millions of dollars frankly to revamp our network and extended network. We can get a return on that whats going to happen to all these new dimension potential competitive forms of video . Are they going to be able to be launched if we cant keep up with the infrastructure side . Host mr. Commisso even though you have got 5000 plus employees. Guest 4600. Guest 4600 employees and 1500 communities etc. You are considered a smaller operator. You have a position when it comes to the comcast time time warner merger or or the atu at t directv merger . Guest hopefully these are market deals and i have to lead with the consequences of them getting bigger in me staying ym but i but i can accept that because thats the way the market works but i cannot accept accept, after he spent the money money. I spent 7. 3 billion since 1980. You dont want me to repeat that again. I spent it on one set of rules and i dont want the rules to change. It frankly hurts the investment dollar. That is a government intrusion into my business. Its absolutely uncalled for given what is the balance over the last 15 years and given the fact that this is the engine of our future generation. This internet is good for everyone. So its okay to take care of the Big Companies in Silicon Valley. This has nothing to do with garage innovators. The garage innovators are used to do the talking but the beneficiary of what the fcc is doing is to benefit those companies that are already very big. We have no issues with a garage in a bitter. Im a garage innovator. I started in the basement of my house with nothing. So i wanted the same sort of situation as the garage innovators are. We are concerned that frankly something that should be nonpartisan, something that should be democrats, republicans republicans, lets go together for the good of the country that this has been made highly political and highly partisan. Thats why they leave the office office. And not worry about frankly the people in iowa and my customers in iowa who helped get the president elected. Host monty tayloe last question. Guest we were just talking about the comcast merger and some people talk about that merger all the time Bad Customer Service from those two companies and cable as a whole comcast is that its going to do something about that and i think mediacom has had problems in the area in the past. Guest let me tell you something monty, if you dont send a bill to the customer you have no complaints. Once again people that make the money out of our business are on the conference site or Silicon Valley. Not one of us so when you send a bill to the consumer they are not going to call google and complaint to them. Google is the good guy and so is espn but they do complain to me why their prices are going up. Thats 80 something we did not cause but im going to blame the government for that too because the government wanted to make sure that this thing was done well they would have regulated both of us. They would have regulated cable business and infrastructure guys and the distributors and they would have regulated the company company. They are making the same mistake again. What theyre doing right now they want to regulate mediacom and not google. Its a oneway street. And its us that makes the house calls. We have over 1 million comments a small company. We have 1. 3 million customers. How many do you think google, apple, facebook microsoft combined do . Zero. Thats the reason the consumer blames me. Raising their prices while other people are making money. Host finally mr. Commisso do you feel you have a voice at the fcc and do you think your new york senators and representatives here you . Guest we are in 22 states and we hope they listen to us. They certainly listen to is one i kept my headquarters there. Hopefully they will listen to us but we have pretty strong support i must add with a lot of the political leaders in congress to come from my states. Whether its iowa whether its florida or georgia, we are in 22 states. Hopefully they get going and try to help us and the American Consumer on this major major change to the way we have to do business. Host rocco b. Commisso founder and president of mediacom vacations corporations and monty tayloe associate editor of communications daily. Thank you guys. Guest thank you. Guest thank you
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