Did I really see that?

On November 29th, 2005, Washington DC experienced a sighting more fantastic than naturalists finding a flock of ivory billed woodpeckers doing figure eights over the Macy’s Thanksgiving Parade. Kevin Martin, Chairman of the FCC, stated that a previous FCC report “relied on problematic assumptions and presented incorrect and incomplete analysis.” And he said it about a report on the CABLE industry! The people for whom the FCC lies so often that the Government Accounting Office has twice warned Congress “don’t trust the FCC about cable.”

Oh my stars. Just when I think Kevin Martin can’t impress me anymore he goes and tells the world the FCC issued a bad report last time. I just know I’m in for disappointment once he gets around to ownership, but I’ll take the crumbs I can get.

Why am I so giddy over this, especially when I haven’t taken a stand on the actual substance of Martin’s discussion (a la carte cable programming) and I’m not thrilled with the notion of “family friendly” cable progrmaming tiers? See below . . .

Every now and then, Congress wants to know what is going on in the media/telecom world, so it can keep and eye on things and make sure all runs smoothly. So from time to time it orders the Federal Communications Commission (FCC) to do reports on various topics.

One would hope that these reports would involve lots of serious research by an expert agency that takes its role as guardian of the public trust seriously and understands that, whatever policy decisions it makes, they must rest on real world data.

Then, of course, one reads the reports and becomes very seriously disappointed. Why? Because the FCC treats these reports as an exercise in confirming the wisdom of its existing policies (or the predetermined policies to which it wishes to move) and demonstrating to the world how it is doing a wonderful job.

In fairness, the FCC can sometimes do a good job. But on any politically sensitive issue, the FCC doesn’t issue reports, it issues propoganda puff pieces. Usually, as in the much criticized annual assesment of deployment of Advanced Telecommunications Services (the “Section 706” or Broadband Report), this occurs through the mildly dishonest practice of setting standards low enough to meet the goals. Many have observed that the FCC defines “broadband” as 200 kbps, and determines “availability” based on whether someone somewhere in the zipcode can get “broadband.” As a consequence of setting benchmarks low enough, it concludes that deployment is going swimmingly.

But then there is the cable industry, and the two mandatory reports the FCC must do: the annual cable pricing survey and the “Annual Assesment of Comeptition in the Delivery of Video Services.” Here, the FCC’s conduct goes beyond what Scott Adams of Dilbert would call “ordinary weasleness.” It descends into outright dishonesty. Every year, the FCC finds cable prices are competitive, price increases are not the result of market power, there is loads of competition in the cable industry, and cable programming is independent and unaffiliated. This it does based on the filings of the cable industry, which it does not check or verify in any way, and by dismissing the contrary filings of everyone else in the universe — from industry rivals like DirecTV and RCN to would be programmers to consumer organizations.

That’s not just me talking. That’s the Government Accountability Office (GAO). The GAO is the reasearch arm of Congress and, as a general rule, tries to get real answers to questions asked because making good public policy depends on real data.

Starting in 2002, when people noticed that cable rates kept going up twice or three times faster than inflation, members of Congress started asking GAO to investigate what the %$#@! was going on. After all, the FCC kept saying things were competitive and more systems every year were being completely deregulated from price controls because the FCC found they faced “effective competition.”

So the GAO started digging and got results that were nothing like what the FCC got. For example, they found that satellite TV did not appear to have any impact on rates. They also found incumbent cable systems did not generally act as if they faced real competition. So they asked the FCC how they kept finding competition. And the FCC told them. “We ask the cable companies and we believe them.” “Do you make any effort to independently verify the data provided by the cable companies?” Asked the GAO. “No.” Said the FCC. “Do you require the companies to certify the accuracy of their data, or do anything if they fail to return survey forms or fill them out wrong?” “No,” said the FCC. “Do you think that, maybe, the cable companies might have an incentive to shade the truth just a little bit?” Asked the GAO. “Well, we asked them that, and they told us they wouldn’t.” Said the FCC.

So in May 2003, the GAO issued a new report with the catchy title “Data Gathering Weaknesses in FCC’s Survey of Information On Factors Underlying Cable Rate Changes.” The report outlined the problems with FCC data collection described above, and promised a set of recommendation when it did its full cable report at the end of 2003.

One would think the FCC would get its act together after a public spanking in front of the Senate like that. But this was in the days of Michael “I know what I’m doing and I’m smarter than you” Powell and his hatchet man in charge of the Media Bureau, Ken “What Do I Give a F@#! About the Truth Anyway” Ferree. Ken Ferree’s disdain for facts that contradicted his personal policy decisions or directives he received from Powell, his express contempt of his critics, and his utter lack of anything remotely resembling a moral scrupple made Ken Ferree utterly impervious to criticism of any kind.

In October 2003, the GAO issued a comprehensive report on cable competition in which it blasted the FCC for its poor data gathering and reporting. Stripping away the polite language, the GAO called the FCC’s cable price report and video competition report garbage. Worse than garbage, these reports fouled the waters in trying to get at the real problems in the cable industry. The GAO concluded with this damning assesment of the FCC’s cable reports:

“[The] FCC’s findings provide the Congress with information relevant to important policy decisions including regulation of cable rates and/or services and media consolidation and convergence of video, voice and data services. The lack of reliable information in the FCC’s cable rate report may compromise the ability of Congress to make these important policy decisions and of the FCC to monitor and provide oversight of the cable industry.” (emphasis added)

(The GAO repeated these concerns again in its 2004 Report, noting that although the FCC had promised to think about making changes, it still hadn’t done so and might not do so).

In other words, the FCC basically tells the cable industry “Lie to me baby, you know what I want to hear.” And the cable industry replies “Honey, you know I ain’t got no market power and I treat my customers right. Now keep me deregulated, bi-yatch!” And the FCC giggles and they run off for another fun year of screwing customers, programmers, and local governments. Meanwhile, Congress and anybody who might do something about it has only a pack of industry lies packaged as an official agency report, and thus granted an imprimatur of legitimacy. (Can you guess this really bugs me?)

I have never figured out why the FCC puts out for the cable industry like this. My only guess is that it is some form of penance for the FCC trying to stifle the emergence of cable at the bidding of the broadcasters in the early 1970s. Since then, its like some magic cable fairy has turned the FCC into cable’s little lap dog. It is bizzare beyond words. It’s not just that when cable says “speak,” the FCC says “woof.” It’s like when cable comes into the room, the FCC runs over and starts barking excitedly, wagging its tail and wee-weeing all over competitors and cable subscribers, in its joyful excitement to see cable again.

This “cable vision” applies to both Republicans and Democrats. Reed Hundt, the first FCC Chair under Clinton, did a terrible job implementing the 1992 Cable Act, voluntarily stayed operation of the ownership cap Congress imposed, and generally supporting the cable industry position on interpreting the 1992 Act. Bill Kennard, the second FCC Chair under Clinton, absolutely believed until he left office that he had to give the cable companies what they wanted by raising the ownership caps and not imposing open access on them in order to get cable broadband and competitive cable telephony deployed.

This attitude gets worse as you drill down, where it absolutely permeates the staff level. Staff never do anything about enforcing the actual laws on the books. To take just a few recent examples, the Mid-Atlantic Sports Netwok filed a comlaint against Comcast for violation of the rules when Comcast refused to carry the Nationals Games. That complaint was styled an “emergency complaint” and was filed at the beginning of the baseball season. It is still pending. Another independent programmer, frustrated that the latest comprehensive evidence against Comcast was just yawned at by staff, asked me in frustration “What is it going to take? Is there anything that could make staff find a violation of the law?” To which I sadly had to say “as best as I can figure out, no.”

So when in 2004, the FCC issued this 100+ page report on whether a la carte pricing would lower cable rates, it did not surprise anyone that the FCC came up with “no, the universe we exist in is the best of all possible worlds, and even thinking about regulating cable makes things worse for consumers and probably angers the terrible cable volcano gods!” For those just tuning in, “a la carte” is French for “cable subscribers should be able to pick their own channels rather than have the selection made by the cable companies, who — no surprise — favor the networks they own or the ones owned by other big media companies like Disney and Viacom.” The cable industry hates the idea of a la carte. Therefore so did Ken Ferree. Therefore the Report condemned a la cart.

All this explains my surprise and giddy delight that Kevin Martin seriously cracked the whip over the cable industry. No, I don’t expect him to suddenly embrace open access, effective ownership limits, or any of the other stuff we’ve asked for and supported with several hundred dead trees worth of evidence. I understand that Martin is primarily interested in getting “family friendly” tiered programming. But, as a Red Sox fan, this is kind of like watching some National League team whup the Yankees in the World Series. That Martin is willing to rattle the cable industry’s chain, publicly at a Senate hearing on a major issue, is worth the price of admission.

More amazing was the acknowledgement that the past FCC report “relied on problematic assumptions and presented incorrect and incomplete analysis.” That was a first. Even when FCC Chairs have wanted to reverse course, there seems to be some tacit rule against saying what everyone knows, that the previous report was a results-oriented piece of garbage. Usually there is some face saving talk about “new evidence” or “changed circumstances” that supposedly prompts the agency to shift policy. But Martin told it like it was. I would have bet on Bill Gates releasing Windows under the GPL before an FCC Chair publicly said a previous agency report got it wrong.

So never mind the substance of a la carte (I’ll save that for another day). For now, I just want to savor the brief, miraculous moment when an FCC Chair spoke truth about a cable industry report in the Senate.

Stay tuned . . . .