Cable and satellite customers feeling weighed down by the contents and costs of their bundled packages have an unlikely advocate on their side: a cable industry trade group.
Green Tree-based American Cable Association, a 20-year-old organization representing more than 1,000 small- and medium-sized independent cable companies, including Butler-based Armstrong Cable, is on a mission to inform consumers that many of the rate hikes and shifts in service they resent aren't necessarily going into smaller providers’ pockets.
In fact, if you ask organization president Matthew Polka, a combination of laws surrounding retransmission fees for programming and mandatory package deals set by programmers for popular channels are cutting into smaller cable companies‘ bottom lines and forcing them, to their detriment, to operate like their larger competitors.
“We've been trying to identify these issues for customers as well as lawmakers and regulators to help them understand the genesis of fees that they end up paying for,” Mr. Polka said.
During a time when consumers are abandoning pricey cable packages in favor of streaming services such as Netflix, small cable companies are losing profits due to both the customers they lost and those they serve.
For instance, Mr. Polka said, broadcast stations have federal authorization to grant or deny permission to cable operators seeking to send their signal to customers and can charge fees for access to their signal. He said those retransmission fees range from $6 to $8 per customer per month, with smaller companies sometimes paying up to 20 times more than larger ones.
Retransmission consent fees are renegotiated every three years. However, small operators shouldn’t expect any relief in the near future, said David Shipley, business manager for Colorado Springs-based cable company CableCo, which does business as TVision.
“As a small cable operator, programming is already our largest expense by far and we simply cannot absorb any more increases in our carriage fees,” reads his letter posted to the organization‘s website.
The American Cable Association has petitioned the Federal Communications Commission on behalf of both small and large operators to allow unbundling. Under current law, television programmers or media corporations can force cable or satellite operators to purchase several channels in order to carry a single popular channel, such as ESPN.
Steven Inzinna, president of Jackson, Miss.-based Trust Communications, said the practice is forcing his company into purchasing a costly tier with channels that customers neither want nor can afford.
“Most of our Communication‘s customers in rural communities are satisfied receiving only 65 channels as basic, especially those in low income areas — not everyone wants to pay for 125 channels,” he wrote in a letter posted on the American Cable Association website.
In light of a pending merger between cable monolith Comcast and Time Warner Cable, Mr. Polka said increased consolidation is limiting consumer options. Without the aid of lawmakers and the outcry of citizens, he fears television access in the future could be limited to cash-heavy companies supplying only consumers who can keep up with constant increases.
“We stand as independent cable operators to be the canary in the coal mine of the industry,” said Mr. Polka.
Deborah M. Todd: firstname.lastname@example.org or 412-263-1652. Twitter: @deborahtodd.