Will someone please 'fix' the market for small cable customers?

WHEN people see their cable bills going up and up, they deserve an explanation.

Recent headlines have featured mighty battles between some big cable operators and key broadcast programming suppliers, but coverage of these fights rarely tells the whole story about cable rates. I want to provide some insight into these disputes from the perspective of a small Kirkland-based cable provider that is seldom reflected in the news coverage.

Many years ago, cable won a place in the American home by offering consumers choice and value. Those halcyon days are never coming back unless we see the repeal of major laws and regulations and the adoption of new policies designed to curb the abusive market practices of major media corporations, especially the owners of multiple broadcast outlets.

In 1992, Congress passed a law that allowed broadcasters to demand cash from cable operators and to withhold their signals from cable consumers until they had secured their desired level of compensation. With the cyclical advertising market now in a deep slump, broadcasters want to recover lost revenue by demanding higher and higher retransmission-consent fees from cable operators, regardless of the impact on consumers mired in the worst economic downturn in decades.

News Corp. chairman and CEO Rupert Murdoch recently declared that broadcasters are entitled to 10 percent of cable's operating income. Murdoch's chief operating officer, Chase Carey, added that the higher fees sought from cable operators will "fix" a broken broadcast business model. Given that News Corp. just reported $8.7 billion in quarterly revenue and $1.2 billion in operating income, it's not clear to me what Carey needs to fix.

Nevertheless, the Murdoch-Carey cash grab will likely succeed because broadcasters possess regulatory preferences that unfairly assign subordinate roles to small cable companies. For instance, network exclusivity rules enforced by the Federal Communications Commission effectively prevent my company from making carriage deals with ABC, NBC, CBS and FOX stations located in neighboring markets if I believe the home market stations demand too much money. A right to choose would protect consumers. I'm sorry if it would frustrate Carey's effort to fix broadcasting.

FCC rules also require cable operators and broadcasters to negotiate in good faith, but the FCC has yet to prevent a broadcaster accused of bad-faith bargaining from going ahead and pulling its signal from cable customers. Broadcasters use the public airwaves for free, placing a tax burden on Americans that would not exist if broadcasters had to pay for spectrum. If consumers underwrite the broadcast TV medium with free airwaves, they should never lose access to free TV on cable.

FCC rules also guarantee that TV signals are seen in every cable home — consumers, in other words, are denied the choice to better control their cable bills by purchasing broadcast stations on an optional tier or potentially on an a la carte basis. The FCC needs to retreat from this policy because the agency is inflating cable bills by creating artificial demand for TV station content through the enforcement of antiquated buy-through mandates.

Viewed together, these broadcast-friendly regulations mean that my company has no choice but to accept price hikes demanded by local TV stations and pass them along to consumers, who can end their relationship with me at any time and switch to a competitor if I don't have the broadcast programming they want.

Consumers have a right to know why rates go up. They shouldn't expect to see any relief until the government gets serious about policing aggressive media conglomerates that leverage favorable regulatory conditions to trap people into paying far more than they should for broadcast programming.

Is there someone in Washington, D.C., willing to "fix" the market on behalf of my customers?