U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–847 2012

VIDEO COMPETITION IN A DIGITAL AGE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS, 

TECHNOLOGY, AND THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

OCTOBER 22, 2009 

Serial No. 111–76 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

pwalker on DSK7TPTVN1PROD with HEARING

COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California 

Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

(II) 

pwalker on DSK7TPTVN1PROD with HEARING

(III) 

SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

RICK BOUCHER, Virginia 

Chairman 

EDWARD J. MARKEY, Massachusetts 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JAY INSLEE, Washington 

ANTHONY D. WEINER, New York 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

GEORGE RADANOVICH, California 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

pwalker on DSK7TPTVN1PROD with HEARING

pwalker on DSK7TPTVN1PROD with HEARING

(V) 

C O N T E N T S 

Page 

Hon. Rick Boucher, a Representative in Congress from the Commonwealth 

of Virginia, opening statement ............................................................................ 1 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 3 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 5 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 5 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 6 

Hon. Bart Stupak, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 8 

Hon. Christopher S. Murphy, a Representative in Congress from the State 

of Connecticut, opening statement ..................................................................... 9 

Hon. Nathan Deal, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 9 

Hon. Zachary T. Space, a Representative in Congress from the State of 

Ohio, opening statement ...................................................................................... 10 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, prepared statement .................................................. 111 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

prepared statement .............................................................................................. 113 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, prepared statement .................................................................................. 115 

WITNESSES

Thomas Rutledge, Chief Operating Officer, Cablevision Systems Corporation .. 12 

Prepared statement .......................................................................................... 14 

Answers to submitted questions ...................................................................... 166 

Benjamin Pyne, President, Global Distribution, Disney Media Networks ......... 25 

Prepared statement .......................................................................................... 27 

Patrick Knorr, Chief Operating Officer, Sunflower Broadband ........................... 36 

Prepared statement .......................................................................................... 38 

Answers to submitted questions ...................................................................... 172 

Ronald D. Moore, Writer, Executive Producer ...................................................... 45 

Prepared statement .......................................................................................... 48 

Terrence K. Denson, Vice President, Corporate Marketing, Verizon .................. 54 

Prepared statement .......................................................................................... 56 

Adam Thierer, President, The Progress & Freedom Foundation ........................ 68 

Prepared statement .......................................................................................... 70 

SUBMITTED MATERIAL

Letter of October 21, 2009, from Wealth TV to Subcommittee, submitted 

by Mr. Boucher ..................................................................................................... 119 

Letter of October 22, 2009, from Comcast to Subcommittee, submitted by 

Mr. Boucher .......................................................................................................... 123 

pwalker on DSK7TPTVN1PROD with HEARING

pwalker on DSK7TPTVN1PROD with HEARING

(1) 

VIDEO COMPETITION IN A DIGITAL AGE 

THURSDAY, OCTOBER 22, 2009 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:06 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Rick Boucher 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Boucher, Markey, Stupak, 

Doyle, Inslee, Weiner, Castor, Murphy, Space, McNerney, Welch, 

Dingell, Waxman (ex officio), Stearns, Upton, Deal, Bono Mack, 

Terry, Blackburn, and Barton (ex officio). 

Staff present: Roger Sherman, Chief Counsel, Communications, 

Technology, and the Internet; Tim Powderly, Counsel; Amy Levine, 

Counsel; Shawn Chang, Counsel; Sarah Fisher, Special Assistant; 

Greg Guice, FCC Detailee; Amy Bender, Minority FCC Detailee; 

Will Carty, Minority Professional Staff; and Garrett Golding, Minority Legislative Analyst. 

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. BOUCHER. The Subcommittee will come to order and good 

morning to everyone. 

Today we will examine the state of competition for video programming. In 1992, Congress recognized that the cable industry 

which then dominated the market for the delivery of multi-channel 

video programming could use its control over that programming in 

order to stifle competition. In order to enable competition in multichannel video delivery, Congress enacted program access requirements in 1992 to prevent cable operators with ownership interest 

in video programming from refusing to sell their programs to the 

emerging satellite providers. That requirement is broadly acknowledged as being essential to the birth of the DVS industry and to 

the competition to cable that direct broadcast satellite has brought. 

Congress also in 1992, enacted program carriage requirements 

that prevent cable operators from discriminating against unaffiliated programming in favor of their affiliated networks. The rules 

have been broadly successful. Without them, neither satellite television nor multi-channel video delivered by telephone companies 

such as Verizon’s FiO service or AT&T’s U-verse service could have 

entered the market. The rules have also been instrumental to the 

pwalker on DSK7TPTVN1PROD with HEARING

2 

success of independent cable networks like the Food Network and 

Bravo. 

But at the time the program access provision was approved by 

Congress in 1992, it applied only to programs that were delivered 

by satellite to multi-channel video distributors. Today, what is commonly known as the terrestrial loophole has arisen as vertically integrated cable operators use fiber optics more and more frequently 

in order to deliver some of their programming to cable headends. 

Fiber-based terrestrial networks have become economical alternatives to satellite delivery particularly for regional sports and for 

new programming controlled by regionally clustered cable operators. Cable operators which deliver programming terrestrially can 

block competing multi-channel providers access to their highly popular program offerings. These arrangements are understandably 

troubling for some sports fans who may have to choose between 

subscribing to the video programming provider of their choice or accessing the games of their favorite regional sports teams. 

In 2007, the Federal Communications Commission found that 

subscribership to direct broadcast satellite was 40 percent below 

what otherwise would be expected in Philadelphia where a cable 

operator’s regional sports network has a lock on the Phillies, the 

Flyers and 76ers’ games. In San Diego, the commission determined 

that lack of access to the regional sports network provided by the 

programming by the Padres’ games resulted in a 33 percent reduction in the households subscribing to direct broadcast satellite in 

the San Diego area. 

The problem of the unavailability of terrestrially-delivered programming on DVS systems is even worse for some rural residents 

for whom switching to cable service may not even be an option because a cable operator may not serve the area in which the rural 

resident lives. If direct broadcast satellite companies and phone 

companies are precluded from carrying regional sports programming, that effectively bars many rural fans from viewing their favorite teams. 

We are interested in hearing from today’s witnesses about the 

terrestrial loophole as it currently exists and the consequences of 

it. What benefits does continued use of the terrestrial loophole offer 

to the providers of multi-channel video and to consumers and what 

are its harms, and we have knowledgeable witnesses who will 

speak to us on that subject from a range of different perspectives 

this morning. 

We are also interested in other matters. The FCC has recently 

considered a number of program carriage complaints by independent programmers that a multi-channel video programming distributor favored its own programming over the unaffiliated programming with respect to the terms and conditions of carriage. 

Does the FCC’s program carriage complaint process work as Congress intended or should we consider modifications? 

Finally, an increasing amount of video content is now available 

by means of the Internet. Some programming web use generated 

such as YouTube is user generated and available without regard to 

the identity of the originating entity and its vertically-integrated 

nature. Other Internet-based services like Hulu and the Web sites 

of the major television networks offer full episodes of programming 

pwalker on DSK7TPTVN1PROD with HEARING

3 

that aired on television as recently as the previous day. The more 

such programming migrates to the Internet, the less consumers 

may need to subscribe to a multi-channel video programming distributor at all. At the same time some Web sites that offer video 

content such as ESPN 360 are only available to subscribers of particular multi-channel video programming distributors. What are 

the implications of these emerging business models for consumers 

and for competition in video distribution? 

I expect that our knowledgeable witnesses today will offer a 

thoughtful analysis of these and other matters regarding video distribution in this digital era and we thank them for their presence 

here and look forward very much to their testimony. 

That concludes my remarks and I am pleased to recognize the 

gentleman from Florida, the ranking Republican member of the 

subcommittee, Mr. Stearns. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning and thank you, Mr. Chairman. 

Thank you for holding this very interesting hearing. The issues 

surrounding video competition obviously are very important. I look 

forward to hearing from our witnesses and thank them for taking 

their time to be here. 

Competition in the video marketplace has been robust. Twenty 

years ago cable commanded almost 100 percent of the multi-channel television market. Today because of fierce competition, cable’s 

market share has dropped to about 63 percent of multi-channel 

video households. As we know, consumers can choose from a variety of multi-channel video providers including direct broadcast satellite. In fact, as of June 2009, DirecTV with 18.3 million subscribers was larger than all the cable companies in the United 

States except Comcast. EchoStar with almost 14 million subscribers was the third largest multi-channel video provider in the 

United States. Competition from the phone companies such as 

Verizon and AT&T and Web sites offering everything from home 

videos to full-length movies have brought even more choice to the 

consumers. As a result of this competition, 37.8 million consumers, 

over one of every three video subscribers can now obtain multichannel video programming from some company other than local 

cable operator. It is a truly amazing thing how far have we come 

in such a short amount of time. 

Even the FCC has acknowledged the competition in the video 

market. The FCC’s 2009 annual report on video competition reinforced the trend line of previous reports confirming growth and entrenchment of competition in the video marketplace, the decline of 

vertical integration between cable operators and program networks, 

and the emergence of a new video competition from programming 

that is distributed on the Internet. 

Innovations and new products are still being created all the time. 

The next frontier is Internet-based video which now competes with 

cable, satellite and telephone providers giving consumers even 

more choice. Applications such as Hulu, which the Chairman mentioned, which provides longer network television programs continue 

to experience explosive growth. With 373 million video streams per 

pwalker on DSK7TPTVN1PROD with HEARING

4 

month, overall online video usage has grown almost 25 percent to 

an average of 9.5 billion streams a month. 

Yet despite all this competition, we still operate under regulatory 

regimes stemming from the radio broadcast provisions of the 1934 

Communications Act and the multi-channel video programming 

distributor provisions of the 1992 Cable and 1996 Telecommunications Act. And as much as we are finding in the broadband context, regulatory policies can hinder rather than help investment in 

the rollout of video services to consumers when competing platforms are present in the market. The growth in digital video programming is requiring significant investment in the Internet and 

beyond. Cable and satellite providers and now telephone companies 

are making large investments in equipment and capacity to accommodate next generation video content. Broadcaster and other programmers are incurring large cost to create and transmit digital 

programming. In a competitive environment, network neutrality 

mandates and regulations in general deter investments, at least 

put a chill on them. Any discrimination in openness mandates limit 

companies’ ability to differentiate themselves from the competitors 

and provide their customers with the unique products and high 

level of service they demand. 

As the video industry competes in a digital world where the winning business models are not clear yet, it becomes even more important to rely on market forces and not on regulation. In such a 

competitive environment and absent any evidence that consumers 

are being harmed, it makes little sense to create a new regulatory 

environment that would only freeze investment and stunt innovation. 

When Congress adopted the program access rules in the 1992 

Cable Act, Congress wanted to ensure that the infant satellite television industry and other independent pay television providers simply had access to content. Thus, section 628 prohibits a cable operator from unfairly hindering the ability of other pay television providers to gain access to programming in which the cable operator 

has an ownership interest. Congress did however include an exception for terrestrial-delivered programming as opposed to programming delivered to providers using a satellite network. Congress 

wanted to give providers an incentive to invest in local programming. That incentive would be diminished if providers were forced 

to share the content they develop with their competitors, especially 

since they would need to spread their cost over less than a national 

audience. Moreover, when providers launch unique offerings to differentiate themselves from their competitors, consumers benefit 

from a greater selection and a quality of programming. 

As I have said, the video market is very competitive and at this 

point, consumers have many choices. 

So I look forward to this hearing, Mr. Chairman, and I appreciate again the witnesses coming here to testify. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The Chairman of the Energy and Commerce Committee, the gentleman from California, Mr. Waxman, is recognized for 5 minutes. 

pwalker on DSK7TPTVN1PROD with HEARING

5 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. I want to 

thank you for holding this hearing and I want to thank all of our 

witnesses for appearing today. 

We are in the midst of one of the most profound technological 

revolutions since the invention of the wireless. It heralds great 

abundance in the generation and delivery of content which is all 

to the good. We need to ensure, however, that we have an architecture of policy and technology that ensures diversity, competition, 

choice and access. As always the interests to be served first are 

those of viewers and users, the interest of competition and not any 

specific competitor. This hearing will help frame these issues. 

I especially want to recognize and welcome Ronald Moore, who 

is testifying on behalf of the Writers’ Guild of America West. Mr. 

Moore is an Emmy Award-winning writer and producer of some of 

the most popular science fiction programs in history and I welcome 

your participation today, and I look forward to hearing your insights on the consolidation on program ownership. It is very important that those who create video programming are not left out of 

this debate. 

The market for distribution of video programming is changing. 

Many consumers have the option to subscribe to at least two paid 

television services delivered by a cable, satellite or fiber optic line. 

In addition, the transition to digital over-the-air broadcast has 

given tradition broadcasters the opportunity to deploy more channels with new and innovative programming. Meanwhile, more and 

more consumers are relying on their broadband connections to access web-based video services, and these new web-based distribution models offer great hope for many in the creative community. 

As I have indicated, all of these changes are creating both opportunities and challenges. For example, program carriage and program access issues remain particularly when a distributor owns 

programming that is comparable to or competes with independently-owned programming. In this case, it may be difficult for competitors to field the types of products and services that consumers 

want. As with other areas of telecommunications policy, the advantages of historic incumbency can be difficult for new entrants to 

overcome absence government intervention, and I am pleased that 

even the Nation’s largest telecommunications companies recognize 

this fact. 

I look forward to reviewing all of our witnesses’ testimony. I 

thank you, Mr. Chairman, for holding this hearing and I yield back 

the balance of my time. 

Mr. BOUCHER. Thank you very much, Chairman Waxman. 

The gentleman from Michigan, Mr. Upton, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. 

And with all due respect I don’t think that this is necessarily the 

appropriate hearing that we ought to be having today. We should 

pwalker on DSK7TPTVN1PROD with HEARING

6 

be putting closer scrutiny on the proposals pending before the FCC 

and why these proposed regulations carve out certain companies 

and how regulation may stifle much needed private investment. 

We are entering a new digital age and a new age of entertainment and more than ever the consumer is king. Consumers don’t 

want their entertainment options dictated to them. They want 

greater control over not only what they watch but also where and 

when they watch it, and these new consumer expectations will continue to fuel investment, innovation and competition. But let us not 

forget, without investment in the physical network, there won’t be 

much room for innovation or competition. 

It is my view that public policy must focus on enabling network 

operators to secure and utilize the investment capital to meet that 

demand, and to build out the vast network necessary to allow for 

the deployment of new services while still ensuring that services 

remain affordable for all consumers. And I have stated in the past, 

proposed network neutrality rules seek to alleviate a problem that 

doesn’t exist and threatens to deter the investment necessary to enable consumers to enjoy additional exciting new features that the 

Internet could offer. 

Unnecessary new regs, such as those proposed by the FCC Chair 

will stifle future broadband investment and have broad economic 

implications. How does the FCC think that the U.S. will achieve 

ubiquitous broadband deployment after the agency imposes onerous 

regulations that will drive investment out of the broadband sector? 

The U.S. desperately needs broadband investment to help lift the 

Nation out of economic malaise and the FCC must not undermine 

that investment. 

Both the Post and the Wall Street Journal editorial pages agree 

that the Chairman’s proposal would harm broadband investment. 

The Post concluded that the FCC’s proposal would ‘‘stifle further 

investments by ISPs with attempts to micromanage what has been 

a vibrant and well-functioning marketplace.’’ And the Journal concluded that threatening to limit what telco companies could charge 

and to whom net neutrality rules would discourage broadband investments. 

Yesterday’s Reuter’s report, and I quote, here says, ‘‘Verizon 

Communications, Inc., Chief Ivan Seidenberg said that the debate 

around the proposal is extremely troubling and could halt progress 

in U.S. broadband investment. From ’01 to ’08, communication systems invested tens of billions of dollars.’’ The bottom line is this, 

in the conclusion, that without a regulatory touch, video has flourished in content and volume for all consumers. The same can happen with Internet access. 

Mr. BOUCHER. The gentleman’s time has expired. 

The gentleman from Michigan, Mr. Dingell, Chairman Emeritus, 

of the full committee is recognized for 5 minutes. 

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. DINGELL. Mr. Chairman, thank you. I commend you for your 

initiative in overseeing the state of competition in video programming. 

pwalker on DSK7TPTVN1PROD with HEARING

7 

I would note with no mean degree of dissatisfaction that the committee’s understanding of this important issue would have been 

much better informed and much more solidly based had the Federal Communications Commission under the chairmanship of 

former Chairman Kevin Martin not advocated its duty to complete 

annual studies on video programming competition. I want to commend Chairman Genachowski for acting to correct this disregard to 

responsibility and in particular extend my thanks and appreciation 

to Commissioner Copps who is acting chairman of the Commission 

first set out to deal with this matter. 

Since passage of the Cable Act in 1992, the market for video programming has changed significantly. While 20 years ago a majority 

of the subscribers received video content from cable providers, they 

now enjoy a greater choice as evidenced by the robust participation 

of fiber optic and satellite providers in the marketplace. As the 

committee once again takes up this matter, it is my hope that our 

witnesses will provide us with a sense of how competition in the 

video programming market has evolved and what issues remain to 

be addressed including their candid suggestions for how to do so. 

In closing, it remains my desire to ensure that all people regardless of income are able to view free, over-the-air television with 

local programming. This belief will inform my participation in the 

debate we once again begin today. 

Mr. Chairman, I thank you for your courtesy and for your foresight, and I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Chairman Dingell. 

The gentlelady from Tennessee, Ms. Blackburn, is recognized for 

2 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

I will submit my full statement. I know we are anxious to get 

to the hearing and I do have questions for some of you, believe it 

or not. 

As you all can imagine video competition is something important 

to me and my constituents in Tennessee. We have a lot of content 

producers there and they are certainly watching what is happening. So welcome to all of you who are our witnesses today. 

Mr. Chairman, I will tell you that it is always of concern to me 

when I see government insert itself into a private sector issue 

where there is no compelling reason to do so, and I think that is 

what we find ourselves facing right now. We know that increased 

regulation is going to give you less of what you want, and what 

people want to see is good, solid, aggressive competition in this 

marketplace. They want to see it spur innovation. They want to see 

it spur investment. They want to see it spur job creation and I 

think Congress mandating how these companies are going to market their products and services will end up being counterproductive. 

Now, there are some things I do hope we talk a little bit more 

about. Mr. Moore, I am going to want to talk with you a little bit 

about the ’92 Cable Act. I know that you reference in your testimony what has happened to production over the past 10 years, and 

sometimes that strong hand of Congress or government inserting 

itself can be counterproductive so I look forward to visiting with 

you. Mr. Knorr, I am going to want to talk with you about what 

pwalker on DSK7TPTVN1PROD with HEARING

8 

we see happening to small businesses and those that are entrepreneurial and innovative as we look at the expansion of broadband 

and the opportunity to expand access to the content that our creative community does put out there for everyone. I know that, Mr. 

Pine, you are going to have a little bit to say about having consumers access that. So welcome to you all. We look forward to the 

hearing. 

I yield back. 

Mr. BOUCHER. Thank you, Ms. Blackburn. 

The gentleman from Michigan, Mr. Stupak, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. STUPAK. Thank you, Chairman Boucher, for holding today’s 

hearing on the status of Video Competition in a Digital Age. 

Last year we held a similar hearing on competition in the sports 

and programming market. At that time, I voiced my concerns that 

the NFL Network was removed from the basic tier by Comcast and 

moved to a more expensive sports tier. Hoping to resolve the issue 

after it appeared to have hit a stalemate and all options were explored, I wrote to the FCC and requested that an arbitrator be appointed to serve as an independent third-party. However, the FCC 

did not have to weigh in to end the dispute and the parties negotiated a neutrally beneficial private agreement. I want to express 

my appreciation to Comcast for working with the NFL Network to 

ensure that sports fans were not denied access to content they demand. In the end, the dispute serves as an example of how these 

issues can be resolved for the benefit of consumers without direct 

government intervention. 

Today we will hear from our witnesses on challenges they have 

encountered in providing content to their consumers as well as 

their suggestive solutions to the problem. We should tread carefully 

when discussing legislative fixes when private solutions have not 

been exhausted. That is not to say that we should not act to ensure 

fair competition in the video marketplace. It is only to say that we 

should act as a last resort. Ultimately, we have the responsibility 

to ensure that consumers have access to the content they pay for 

and that the market power is not abused to their detriment. 

Thank you, Mr. Chairman, for holding today’s hearing and I look 

forward to discussing with our witnesses how we can ensure that 

we have fair competition in the video marketplace. 

Mr. BOUCHER. Thank you very much, Mr. Stupak. 

The gentleman from Nebraska, Mr. Terry, is recognized for 2 

minutes. 

Mr. TERRY. Thank you, Mr. Chairman. 

My opening statement would be simply repetitive of Mr. Upton’s 

opening statement so I will say that I will associate myself with 

his remarks and thank you all for being here and yield back. 

Mr. BOUCHER. Thank you very much. 

The gentleman from Pennsylvania, Mr. Doyle, is recognized for 

2 minutes. 

Mr. DOYLE. Thank you, Mr. Chairman. 

pwalker on DSK7TPTVN1PROD with HEARING

9 

I just want to welcome the witnesses and I will waive opening 

statement for time on questions. 

Mr. BOUCHER. Thank you very much, Mr. Doyle. 

The gentleman from Connecticut, Mr. Murphy, is recognized for 

2 minutes. 

OPENING STATEMENT OF HON. CHRISTOPHER S. MURPHY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CONNECTICUT 

Mr. MURPHY. Thank you, Mr. Chairman, for today’s hearing. 

Having looked at the testimony to be presented today, I know 

that our hearing is going to be especially relevant to parts of my 

district in southwestern Connecticut. And much of our witness testimony deals with the issue of competition in the New York metropolitan market between competitors that are also present there and 

are undergoing the same competition in my district and the district 

of my colleague, Mr. Himes, so I am interested to hear specifically 

about some of the issues relevant to that market. I also look forward to hearing from our witnesses today to get a better understanding of how current market dynamics and what if anything 

this Congress needs to do to ensure that our constituents have opportunities to receive the programming they desire at a fair price, 

while ensuring that we don’t stifle the development of innovative 

and new programming. 

I am especially interested to the extent that this hearing treads 

into the emerging new technologies which allow our constituents to 

receive programming online. Part of this hearing may focus on 

some of the emerging technologies like Hulu and Zillion TV which 

I think have some very interesting and potentially transformative 

impacts on our constituents. But this Congress needs to be mindful 

while we want to set a foundation that allows for that innovation, 

to be very careful about not allowing for the type of Internet piracy 

of and copyright violation that has hampered many of our efforts 

to try to promote the expansion of new and unique programming 

into the online space. 

So, Mr. Chairman, I thank you for the hearing and I look forward to the testimony of our witnesses. 

Mr. BOUCHER. Thank you very much, Mr. Murphy. 

The gentleman from Georgia, Mr. Deal, is recognized for 2 minutes. 

OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. DEAL. Thank you, Mr. Chairman. 

I think we all understand that we are in an evolutionary change 

in media and that evolutionary change has of course informed us 

better and we are better connected but the growth has come in the 

emergence of trying to protect the rights of copyright owners, compensating those who own the signals and on which the copyrighted 

program will travel in meeting the demand of consumers who want 

unfettered access to programming. Certainly, the marketplace is 

more competitive than ever. I think the question we have to answer is how can we make this marketplace completely free so that 

pwalker on DSK7TPTVN1PROD with HEARING

10 

everyone from the programming owner to the programming provider to the programming consumer will be benefited. 

Last week this committee dealt with the Satellite Home Viewers 

Reauthorization Act. At that time, the committee adopted an 

amendment that was passed requiring the Dish Network to carry 

the Public Broadcasting Service in high definition sooner than the 

parties involved were able to reach an agreement. Under the intention of providing public airwaves to all consumers, the government 

forced a satellite carrier to carry a station without permitting Dish 

to choose whether or not they wanted to carry it. This illustrates 

the problem with retransmission consent is broadcasters are able 

to use their government-given marketplace leverage to force carriers of their programming on the distributor in unbalanced negotiations. The practice of retransmission consent is nothing but a 

government-regulated monopoly as Congress has given authority to 

broadcasters to negotiate on their terms. 

It is my hope that this witness panel will be able to discuss a 

solution to the problems of retransmission consent in an honest 

and fair manner. In the end, it is the consumer that drives competition. Competition fosters innovation and innovation is what we 

try for for the future. Today I hope we will be able to work towards 

solutions that help promote a free and fair market, one in which 

broadcasters, distributors and consumers are afforded flexibility, 

transparency and more importantly, choice. 

I yield back my time. 

Mr. BOUCHER. The gentleman from Ohio, Mr. Space, is recognized for 2 minutes. 

OPENING STATEMENT OF HON. ZACHARY T. SPACE, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. SPACE. Thank you, Mr. Chairman. 

Today we examine video competition in the digital age, a topic 

with relevance to all Americans who watch TV and that is a lot of 

Americans. The status of competition in the video market affects 

all of those viewers whether they are actively aware of it or not. 

Mr. Chairman, in my district, my caseworkers and by the way, 

I have a very rural district pretty much like your own. We receive 

a steady stream of phone calls from my constituents complaining 

that they cannot get the video services they desire. The cable company doesn’t come out far enough to reach their homes which are 

some distance back from the main thoroughfares. Two of the five 

DMAs covering Ohio’s 18 Congressional districts have only one of 

the two major satellite providers offering service, not to mention 

that one of the markets lacks local-into-local programming. And I 

have spoken repeatedly about the lack of broadband access in the 

Appalachian terrain of southeastern Ohio. A sad state of affairs 

that continues to limit content availability on countless fronts. So 

I think my constituents might disagree with some of the testimony 

that is going to be offered today that competition is alive and well. 

While that certainly may be the case in more urban and suburban 

areas of our country, my constituents generally have just one 

choice for paid television services from a multi-channel video programming distributor and one choice isn’t really any choice at all. 

I worry that once again that rural America is being left behind. 

pwalker on DSK7TPTVN1PROD with HEARING

11 

I thank you, Mr. Chairman, for calling this hearing and certainly 

for your tireless devotion to meeting the needs of rural America. 

And I look forward to the testimony of our witnesses and thank 

them for their appearance. 

Mr. BOUCHER. Thank you very much, Mr. Space. 

The gentleman from California, Mr. McNerney, is recognized for 

2 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

The only thing I really want to say is that I understand clearly 

how important legislation and regulation is going to be in terms of 

enhancing the competitiveness of video broadcasting. The wrong 

ideas are going to make the market a lot less competitive and select winners rather than let the market select the winners. So I am 

looking forward to what your testimony is and to learn as much as 

we can before we actually start marking up ideas onto paper. 

So thank you very much, Mr. Chairman, and I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Space. 

The gentlelady from Florida, Ms. Castor, is recognized for 2 minutes. 

Ms. CASTOR. Thank you, Chairman Boucher, very much for calling this hearing. 

It is an exciting new world and I am very interested in your 

opinions, your expert advice on where we should be going forward. 

Thank you all for being here today. 

And I yield back. 

Mr. BOUCHER. Thank you, Ms. Castor. 

The gentleman from Vermont, Mr. Welch, just joined us and is 

going to waive his statement and both Ms. Castor and Mr. Welch 

as well as Mr. McNerney will have 2 minutes added to their question time for witnesses as will Mr. Doyle. Are other members seeking recognition? That concludes opening statements and we welcome now our panel of witnesses and express thanks to each of you 

for taking part in our hearing this morning. I will say a brief word 

of introduction about each of our witnesses. 

Mr. Thomas Rutledge is the Chief Operating Officer of Cablevision Systems Corporation, one of the Nation’s major cable companies. Mr. Benjamin Pyne is President of Global Distributions for 

Disney Media Networks. Mr. Patrick Knorr is the Chief Operating 

Officer of Sunflower Broadband. Mr. Ronald Moore is a writer and 

executive producer testifying on behalf of the Writers’ Guild of 

America West previously introduced by Chairman Waxman. Mr. 

Terrence Denson is Vice President of Corporate Marketing for 

Verizon and Mr. Adam Thierer is President of The Progress & 

Freedom Foundation. We welcome each of you and without objection your prepared witness statement will be made a part of our 

record. We would welcome your oral summaries of your testimony 

and ask that you try to keep those oral summaries to approximately 5 minutes, that way we will have ample time for questions 

and we will proceed from the left and proceed to the right. That 

is not a philosophical comment but it does coincide with philosophical positioning at least for the last witness to some extent. 

Mr. Rutledge, we will be pleased to begin with you and if you 

could pull that microphone a bit closer and make sure that it is on 

and we can hear you better. 

pwalker on DSK7TPTVN1PROD with HEARING

12 

STATEMENTS OF THOMAS RUTLEDGE, CHIEF OPERATING OFFICER, CABLEVISION SYSTEMS CORPORATION; BENJAMIN 

PYNE, PRESIDENT, GLOBAL DISTRIBUTION, DISNEY MEDIA 

NETWORKS; PATRICK KNORR, CHIEF OPERATING OFFICER, 

SUNFLOWER BROADBAND; RONALD D. MOORE, WRITER, EXECUTIVE PRODUCER; TERRENCE K. DENSON, VICE PRESIDENT, CORPORATE MARKETING, VERIZON; AND ADAM 

THIERER, PRESIDENT, THE PROGRESS & FREEDOM FOUNDATION 

STATEMENT OF THOMAS RUTLEDGE 

Mr. RUTLEDGE. Good morning. 

Mr. BOUCHER. That’s better. 

Mr. RUTLEDGE. Chairman Boucher, Ranking Member Stearns 

and members of the subcommittee. 

My name is Tom Rutledge and I am the Chief Operating Officer 

of Cablevision Systems Corporation. I also serve as Chairman of 

the Board of Directors of the National Cable Television Association. 

Mr. Chairman, the state of video competition is very healthy, especially in Cablevision’s area, the most competitive market in the 

country. We face competitors many times our size by any metric 

and consumers have been the primary beneficiaries of this competition. After the 1996 Act, Cablevision invested more than $5 billion 

to build the most advanced communications network in the country. Cablevision offers all, not some but every household in our 

service area an array of new digital video voice and high-speed 

Internet services at significant savings to what our customers use 

to pay our competitors. 

As the Congress recognizes competition breeds innovation and investment. In competitive markets like New York, the rules designed to jumpstart competition where there was less multi-channel video competition 17 years ago, the program access rules are 

no longer appropriate. Attempts to use the regulatory framework 

for competitive advantage such as by expanding the satellite delivered program access rules should be dismissed out of hand. Companies should continue to have incentives to compete in the marketplace not in the regulatory arena. 

For years, Cablevision has faced vigorous competition from Dish 

and DirecTV, currently the second and third largest video distributors, and Verizon and AT&T, the Nation’s largest telecommunications companies, and currently the eighth and tenth largest video 

distributors. These phone companies are significantly larger than 

Cablevision, more than 10 times our size. Cablevision has always 

competed by investing and innovating to create products that 

meaningful differentiate our service. Cablevision was the first cable 

company to launch digital video service throughout its footprint including high-definition offerings free of charge with our customers’ 

packages. We launched the Nation’s fastest Internet service Optimum Online Ultra and are now building the country’s largest WiFi 

network to provide our customers free access to the Internet service 

and public spaces in our marketplace. 

Similar groundbreaking investments have been made with regard to content to ensure that Cablevision continues to provide 

unique value for customers, examples include News 12. In 1986, 

pwalker on DSK7TPTVN1PROD with HEARING

13 

Cablevision launched News 12, the Nation’s first 24-hour hyperlocal news channel and now offers seven individual local news 

channels and five traffic and weather channels. 

Madison Square Garden high definition, in 1998, Cablevision became the Nation’s first regular provider of sports coverage in high 

definition. Cablevision’s investment was a gamble. It required a 

sizeable investment at a time when very few people had high definition televisions. Recently, Cablevision launched Madison Square 

Garden Varsity, a new multi-platform suite of television and interactive services dedicated to local high school sports, academics and 

activities of interest to our local communities. 

Our investments in local and regional programming have been 

both risky and substantial. The program access rule adopted in 

1992 to ensure that new competitors like DirecTV and Dish could 

launch with key programming is now at odds with this kind of innovation. In fact, Congress recognizes potential negative impact 

and allowed for a periodic review and sunset of the program access 

rules. The implications of keeping these rules in effect is clear, if 

you take the risk to develop creative and often costly new programming and you fail, you alone bear that cost but if you succeed, you 

must share the fruits of your risk and innovation with your competitors. 

To jumpstart competition on the multi-channel video distribution 

market in 1992, Congress required that all satellite-delivered cable 

programming be given to new satellite competitors. However, Congress also wisely established new opportunity for an innovation in 

programming where a cable operator could create new programming, deliver it terrestrially and not be forced to share it with its 

competitors. To reverse this policy, it would undermine competition 

by discouraging that investment for new content and services. If a 

company is facing vigorous competition, why would that company 

invest in untested and expensive services if it had to share those 

services with its competitors? In the interest of investment, innovation and competition, we strongly urge that efforts to expand the 

program access regulations be rejected. 

Thank you very much. 

[The prepared statement of Mr. Rutledge follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

14 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 18 74847A.001
15 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 19 74847A.002
16 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 20 74847A.003
17 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 21 74847A.004
18 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 22 74847A.005
19 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 23 74847A.006
20 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 24 74847A.007
21 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 25 74847A.008
22 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 26 74847A.009
23 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 27 74847A.010
24 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 28 74847A.011
25 

Mr. BOUCHER. Thank you, Mr. Rutledge. 

Mr. Pyne. 

STATEMENT OF BENJAMIN PYNE 

Mr. PYNE. Thank you, Chairman Boucher, Ranking Member 

Stearns and members of the subcommittee. 

My name is Ben Pyne and I am President, Global Distribution, 

Disney Media Networks. I truly appreciate the invitation to talk 

with you today about video competition. 

There has never been a more competitive video marketplace, 

never. Thanks to Congress and the FCC, consumers today have 

more choices and more video content available to them then at any 

time in history. Most consumers now have the choice of three, four 

or more competitive options to receive multi-channel video. While 

cable once was feared to be a monopoly, today 36 million customers 

subscribe to non-cable MPVDs. On the programming side, competition for eyeballs has never been more fierce. Over the last 30 years, 

the number of programming services literally has exploded. According to the FCC, there are now approximately 565 national satellitedelivered cable programming networks and cable and satellite’s 

most popular services now reach nearly 100 million households. 

At the same time, vertical integration among programmers has 

decreased. Of course, the exponential expansion of content on the 

Internet whether video streams or social networking has created 

even more competition. 

Today’s subscribers to multi-channel video get great value for their money. For about $50 per month, subscribers get thousands 

of hours of entertainment, news, sports, documentaries, lifestyle, 

children’s and family-friendly programming. In fact, with all the 

great content on multi-channel television, consumers spend much 

more per hour on movies, home video, mobile phones, print media 

and video games than for cable television. 

Disney realizes that as a result of all the competition that Congress has helped unleash, some cable operators are facing competitive pressure from satellite, telco and other new video entrants. In 

an effort to provide some relief to the smallest cable operator that 

is most impacted by this increase in competition, Disney and ABC 

have granted many small cable operators free retransmission consent for the current 3-year cycle for the 10 ABC stations owned by 

Disney. Specifically, Disney granted free retransmission consent to 

90 small cable operators out of a total of 113 operators with whom 

we deal in our markets. With respect to our non-broadcast channels, Disney and ESPN have deals with the NCTC, the small cable 

operator cooperative for all of our cable channels. This provides 

NCTC members with buying power equal to the Nation’s fifth 

multi-channel video provider. Given these and similar efforts, the 

subcommittee should not get involved in the private negotiations 

between programmers and distributors. 

Technology has empowered the consumer more than ever before 

and at our company we create and use technology to deliver content to reach our fans and viewers. In doing so Disney has been 

a pioneer through video downloads and I-tunes, video streaming on 

ABC.com, video on Hulu, video over broadband on ESPN360.com, 

video on demand, video on mobile devices and a production of high 

pwalker on DSK7TPTVN1PROD with HEARING

26 

definition video content across broadcast, cable, satellite and of 

course, DVD. These are just some examples of ways we have developed to serve consumers in this new age of media technology and 

we always will continue to find new ways to get our content to our 

consumers. 

Turning to broadband, Disney and ESPN distribute content on 

the Internet through various models. ESPN360.com is our sports 

event broadband product and it features an online video player and 

access to a broad array of game telecasts and long form sports content. ESPN360.com is available to any and all ISPs for a fee. It is 

currently available to over 50 million households representing approximately two-thirds of broadband subscribers in the United 

States. It provides fans with access to more than 3,500 live, fullgame telecasts every year, many of which would not otherwise be 

available on any other domestic outlet. Nobody in the marketplace 

is currently delivering this volume of multi-sport coverage online. 

I want to be clear on one point though. Contrary to what you 

may hear ESPN360.com has nothing to do with net neutrality. The 

entire debate over net neutrality involves network management 

issues and the relationship of an ISP to its subscribers. In contrast, 

the business model of ESPN360 has nothing to do with the actions 

taken by any ISP such as network management or retail pricing. 

Now and in the future getting the balance right between convenience and pricing is a challenge facing all of us who create and distribute digital content. Adding to that challenge is the problem of 

piracy. We believe the best place to start to fight piracy is to bring 

content to market on a well-timed and well-priced basis. Disney is 

working to do just that, however piracy is a growing threat to our 

ability to deliver great content. We are looking to increase 

broadband deployment and adoption and we at Disney believe that 

it will be high quality sports and entertainment video that will 

help drive that adoption, but unless that content is protected as it 

flows over broadband it will be pirated and ultimately our ability 

to produce that very content will be undermined. We believe that 

ISPs should be encouraged to use the most effective and commercially reasonable technologies and processes to help curb the tidal 

wave of stolen content present on our networks today. 

In closing, thanks to Congress’ pro-competitive policies, video 

competition is thriving. In our view, no additional government regulation of this dynamic and competitive marketplace is necessary 

or appropriate. 

Thank you very much. 

[The prepared statement of Mr. Pyne follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

27 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 32 74847A.012
28 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 33 74847A.013
29 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 34 74847A.014
30 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 35 74847A.015
31 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 36 74847A.016
32 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 37 74847A.017
33 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 38 74847A.018
34 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 39 74847A.019
35 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 40 74847A.020
36 

Mr. BOUCHER. Mr. Knorr. 

STATEMENT OF PATRICK KNORR 

Mr. KNORR. Thank you, Mr. Chairman and members of the committee. 

The American Cable Association represents nearly 1,000 independent cable operators that primarily invest in small and rural 

communities where the big guys find it unattractive to provide 

service. Our members don’t own or control national or major regional programming. Access to video content is tightly controlled by 

large media companies that have built their business models on top 

of decades-old regulation. As a result, our costs for this content 

have grown exponentially over the past few years and this is why 

your cable bill goes up every year. 

As an entrepreneur from Kansas, there is one message I hope 

you take away from my testimony. Do not believe those that say 

the sky will fall if you seek to improve the market for consumers 

by changing the status quo. I would like to remind you that Congress changed the cable laws in 1992 because it thought the marketplace could be better for consumers. In 1996 you updated communications law because you thought consumers could get better, 

more innovative service. And you did it with the Satellite Home 

Viewer Act and most recently with the DTV transition. Embracing 

change needs to be your philosophy once again. 

For instance, Congress needs to confront Federal rules that grant 

broadcasters exclusivity and insulate them from competition. A recent study shows that retransmission consent fees will increase 

from $500 million in 2008 to $1.2 billion by 2011, and a disproportionate amount of this revenue will come from consumers served by 

small and rural cable operators. To be clear, what happens today 

is not a negotiation. For most ACA members, a retransmission consent negotiation is a take it or leave it deal between an operator 

and a government-sanctioned monopoly. Networks use affiliation 

agreements to extend and ensure this monopoly status across every 

corner of a DMA. This artificially raises the price and keeps consumers from receiving relevant programming like sports and 

weather from neighboring markets. 

Video providers should have the option to offer consumers the 

most relevant and affordable broadcast content available. This is 

best accomplished by giving video providers the option of bringing 

in broadcast signals from adjacent markets. Today robust competition exists. In some rural markets, satellite has become the dominant provider. In the area of retransmission consent, DBS providers have the option to place broadcasters on a separate tier as 

an optional purchase. This gives DBS both a negotiating and pricing advantage over small cable operators who could not offer this 

option to their price conscious consumers. Therefore, small cable 

operators must have parity with satellite to remain competitive. 

They must have the same option to tier broadcasters. Moreover, 

smaller operators and their consumers face significantly higher 

programming rates, not only for retransmission consent broadcast 

channels but also cable and sports programming just because they 

are small businesses with minimal market power to negotiate fair 

terms from dominant media providers. 

pwalker on DSK7TPTVN1PROD with HEARING

37 

There is an additional extremely important issue for you to consider regarding how programming is being delivered via the Internet. ESPN is pioneering a closed Internet business model with its 

ESPN360 offering where broadband service providers are required 

to pay a per-subscriber fee for every consumer they serve. If a provider does not pay this fee ESPN blocks access to ESPN360 and 

does not provide any options to consumers to access that content 

at any price. 

There are multiple problems with this situation. First, a person 

that is out of work and needs the Internet only to apply for a job 

must now subsidize those who want to access ESPN360 on a regular basis. Second, it would establish a precedent that content companies can restrict consumer choices in the exact way that net neutrality was designed to prevent ISPs from doing. Wall Street loves 

this kind of business model and is encouraging others to follow 

ESPN’s lead so this will not be a unique situation. Because ESPN 

embraces this model, you can expect Hulu, YouTube and others to 

follow suit. How much will they charge? If this model proliferates 

with millions of Internet content sites, consumers will ultimately 

pay exponentially higher rates for broadband service at a time 

when Congress is working to make broadband more affordable. 

ACA believes that consumers should be given a choice and a 

chance to access any legal content on the Internet regardless of 

their ISP. Therefore, we would request that if you are to proceed 

in addressing net neutrality legislation that you do not solely focus 

just on network service providers but address content providers 

that intend to limit consumer choice. 

So what can be done to create a better video market? There are 

many suggestions detailed in my testimony but I will focus on four 

here. First, prohibit any party including a network from providing 

a broadcast station outside of the local market area from granting 

retransmission consent to a smaller cable company outside of the 

broadcasters protected zone. Second, provide parity with DBS that 

would permit small cable operators from offering local broadcast 

programming on its own tier as an optional purchase. Third, direct 

the FCC to review all programming contracts to empirically determine the level of programming price discrimination and take necessary corrective action. Finally, providers of content services and 

applications should not be allowed to block consumers’ access to 

their products regardless of their ISP. 

Thank you for this opportunity to testify today and I look forward to your questions. 

[The prepared statement of Mr. Knorr follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

38 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 44 74847A.021
39 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 45 74847A.022
40 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 46 74847A.023
41 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 47 74847A.024
42 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 48 74847A.025
43 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 49 74847A.026
44 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 50 74847A.027
45 

Mr. BOUCHER. Thank you very much, Mr. Knorr. 

Mr. Moore. 

STATEMENT OF RONALD D. MOORE 

Mr. MOORE. Thank you, Chairman Boucher, Chairman Waxman, 

Ranking Member Stearns and the other esteemed members of the 

committee. 

It is an honor to testify before you today. My name is Ron Moore 

and I am the executive producer and creator of Battlestar 

Galactica. I was also a writer/producer on the TV series Star Trek: 

The Next Generation, Deep Space Nine, Roswell and Carnivale, 

and I am currently working on my next project, Caprica, a TV series for the Syfy Network. 

I have been a working writer in the entertainment business for 

over two decades and in that time the television marketplace has 

fundamentally changed and in my opinion, not for the better. There 

are actually fewer places to sell ideas both in terms of the numbers 

of studios available to buy programming and the numbers of independent networks available to deliver it. While this might seem 

counterintuitive in an environment where the number of cable and 

satellite channels routinely runs into the hundreds, a closer look 

reveals that the media consolidation has resulted in a vast majority 

of television shows being produced by a handful of conglomerates 

and a vast majority of cable channels are also owned by only a 

small number of companies. 

This environment is a direct result of the repeal of financial interests and syndication rules in the mid-1990s. The challenge now 

is to make sure that the same thing doesn’t happen again, that the 

future of programming on the Internet does not fall victim to the 

same mistakes that led to the current domination of media conglomerates and traditional television. 

Let us take a moment to look at some of the raw numbers. In 

1989, there were 18 production companies who were significant 

suppliers to the broadcast networks. In 2009, there are eight. After 

the repeal of the Fin-Syn rules, we went from a system where studios competed with each other for ideas and networks competed 

with each other for programming to a system where studios and 

networks are now combined into enormous entities who favor doing 

business with themselves. 

Let us take a look at the next chart, 66 percent of the series airing on broadcast television this fall are produced by the networks’ 

own in-house studios. These studios no longer look for the best 

idea. They look for the idea that best helps their corporate sibling. 

But further consolidation of the industry like the proposed merger 

of NBC with Comcast certainly demands scrutiny and investigation 

into its impact on competition and diversity of programming. But 

what is the impact on the television audience and the American 

public? How does squeezing how the independent studio and eliminating autonomy for the writer/producer affect content? 

The answer is that fewer voices and fewer players reduces access 

and creates more homogenized product for the audience. Before the 

repeal of Fin-Syn, an independent studio like Carsey-Werner could 

produce a show like Roseanne which featured a working class family dealing with the struggles and conflicts common to working 

pwalker on DSK7TPTVN1PROD with HEARING

46 

families all over America. Roseanne was about a contractor and his 

sometimes working and sometimes unemployed wife and their efforts to keep a roof over their heads. This followed in a tradition 

of independent programming that spoke to the same sensibility of 

All in the Family where Archie Bunker worked on the loading dock 

or the Honeymooners where Ralph Kramden drove a bus and his 

best friend worked in a sewer. That sensibility, the voice of the 

broad American working class has vanished from television. These 

voices, these independent voices are missing and they are missing 

because a mono-culture has been allowed to be nurtured in TV 

where new ideas and new players face virtually impossible odds of 

getting their shows on the air. 

So what can be done? If this committee supports competition in 

video programming, there are many things you can do. First, across 

town today the Federal Communications Commission is taking the 

first steps to codify Internet freedom. An open Internet promises to 

be an extremely competitive marketplace where small entrepreneurs can be matched up against the media giants of today and 

thrive. Supporting a free, open and nondiscriminatory Internet will 

allow the next generation of creators and innovators to distribute 

their own content and compete for the hearts, and minds and eyeballs of the audience. 

Second, we must remember that traditional media still has by far 

the broadest reach into America’s homes. While broadcast networks 

complain of declining ratings, overall television viewership is actually increasing. Cable viewership is growing steadily and so the relationship between major cable distributors and programmers 

needs closer scrutiny. The practice of tying and bundling channels 

is one practice worthy of examination. When you learn that some 

of these bundled channels offer nothing more than a static weather 

map with national viewing levels in the tens of thousands, you realize that this is actually filler content whose only purpose is to 

block other programmers from gaining access to the cable satellite 

channels. Whether a la carte cable channel selection will eliminate 

those barriers is an open question but it is certainly worthy of further analysis by the FCC and this committee. 

In conclusion, I would like to point out that I have worked for 

major studios and networks my entire career. From Paramount to 

HBO to NBC Universal where Caprica is being shot this very day, 

I have found success in the corporate structure. These companies 

are not evil. They are not populated by modern-day robber barons 

intent on stealing the bread from my children’s mouths. These companies are only doing what makes sense to them financially. However, what makes financial sense to a handful of corporations may 

not be in the best interests of the audience, the television industry 

itself or the American people. These companies are run by and 

large by good and decent people who are simply working within the 

regulatory environment that they have been given and therein lies 

the rub. By setting up a regulatory environment in which there are 

no barriers to continual corporate consolidation and huge incentives to both centralize power and squeeze out smaller players, 

even good and decent people will participate in and promote a system that ends up weakening competition, monopolizing power and 

corrupting the free flow of ideas and opportunities for all. The danpwalker on DSK7TPTVN1PROD with HEARING

47 

ger we face is not that we work for bad men and women, it is that 

good men and women can produce bad results in the absence of a 

law. 

I thank you for the opportunity to appear before you today. 

[The prepared statement of Mr. Moore follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

48 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 54 74847A.028
49 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 55 74847A.029
50 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 56 74847A.030
51 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 57 74847A.031
52 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 58 74847A.032
53 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 59 74847A.033
54 

Mr. BOUCHER. Thank you, Mr. Moore. 

Mr. Denson. 

STATEMENT OF TERRENCE K. DENSON 

Mr. DENSON. Good morning, Chairman Boucher, Ranking Member Stearns and other members of the subcommittee. 

My name is Terry Denson and I am Vice-President of Content 

and Programming for Verizon. 

Mr. BOUCHER. Mr. Denson, could you pull that microphone just 

a bit closer, please? 

Mr. DENSON. Closer. 

Mr. BOUCHER. That is—thank you. Even a little closer than that 

would be good. Thank you. 

Mr. DENSON. I am responsible for obtaining access to video programming to support Verizon’s consumer services including FiOS 

TV. Verizon and its 200,000 plus employees are leading the way 

with investments in both wire line and wireless broadband networks. Verizon has invested over $80 billion in capital expenditures 

over the last 5 years, more than any other American company during that time period. Verizon is investing $23 billion to take fiber 

all the way to customer’s homes with our FiOS network. This enables both video competition and next-generation broadband networks and services to 18 million homes and businesses. Verizon’s 

FiOS Internet access service currently provides consumers with 

maximum speeds of up to 50 megabits per second downstream and 

we are already testing 100 megabits per second services. 

Our FiOS TV video service is an integral part of the business 

case for our FiOS investment. Set services provide additional 

choices and competition for consumers. FiOS TV brings head-tohead wire line video competition to the cable incumbents for the 

first time in several markets. FiOS TV has more capacity than traditional cable providers and is able to provide consumers with a 

wide range of video content including a robust lineup of HD programming, independent programming and international and multicultural content. FiOS TV is also designed to enable innovative and 

interactive services. For example, the IP functionality of Verizon’s 

network permits the company to offer unique service called FiOS 

TV widgets that allow consumers to access content in an interactive manner on their television, including some content and services from the Internet such as Facebook and Twitter, and other 

compelling interactive services that serve their community, weather widgets, traffic widgets and widgets that provide vital information to consumers when they want it and where they want it. 

While millions of customers are already enjoying our FiOS services, new entrants like Verizon face a number of challenges. For 

the most part, Verizon is able to deal with these challenges such 

as rising programming through creative negotiation. One significant challenge has proven difficult to solve with this market-based 

approach, access to regional sports programming controlled by 

cable incumbents. Regional sports is among the most popular programming to consumers, many of whom insist on the ability to see 

the games of their local teams. Given its very nature, this programming is unique and cannot be duplicated by new entrants who are 

denied access. 

pwalker on DSK7TPTVN1PROD with HEARING

55 

Some incumbent providers have exerted their control over this 

must have programming to handicap new entrants. In many cases, 

cable incumbents have sought to exploit the so-called terrestrial 

loophole in an effort to deny competitive providers access to this 

must-have programming. Cable incumbents know full well that a 

new entrant lacking regional sports or lacking the HD format of 

that programming will not provide a meaningful choice for consumers. There is a long record documenting that cable incumbents 

have used this loophole to handicap competitive providers including 

in San Diego, Philadelphia and New York. 

Verizon has experienced this problem firsthand when Cablevision 

refused to provide access to its regional sports networks, MSG and 

MSG plus in the New York City and Buffalo areas. While we obtained access to the standard definition version of these channels 

only after filing suit at the FCC, Cablevision has steadfastly refused to even discuss providing Verizon access to MSG and MSG 

plus in HD on any terms whatsoever. By its refusal, Cablevision 

is seizing on the growing import of HD technology to consumers, 

particularly in the context of sports programming. A recent consumer survey conducted for Verizon found that nearly 60 percent 

of New York City subscribers say they are not likely at all to consider switching to a provider that does not provide their regional 

sports in HD. 

We have urged the FCC to take action because denial of access 

to this programming denies any meaningful choice to the many 

consumers for whom local sports are critical. In order to eliminate 

any disputes however, Congress should adopt a targeted, legislative 

fix to ensure access to the unique regional sports programming 

that consumers demand. 

Thank you. 

[The prepared statement of Mr. Denson follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

56 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 63 here 74847A.034
57 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 64 here 74847A.035
58 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 65 here 74847A.036
59 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 66 here 74847A.037
60 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 67 here 74847A.038
61 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 68 here 74847A.039
62 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 69 here 74847A.040
63 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 70 here 74847A.041
64 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 71 here 74847A.042
65 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 72 here 74847A.043
66 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 73 here 74847A.044
67 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 74 here 74847A.045
68 

Mr. BOUCHER. Thank you, Mr. Denson. 

Mr. Thierer. 

STATEMENT OF ADAM THIERER 

Mr. THIERER. Thank you, Mr. Chairman and members of the 

committee, and I appreciate you inviting me here today to speak 

about this important issue. 

My name is Adam Thierer and I am the President of the 

Progress & Freedom Foundation, a digital economy think tank here 

in Washington, D.C. I have written extensively on this important 

subject, including two books on the topic and in my work I have 

argued that regardless of underlying business structures or ownership patterns, the critical question that must govern this debate 

about the state of the media marketplace is do citizens have more 

news, information and entertainment choices at their disposal 

today then in the past? And I am pleased to report that all of the 

evidence suggests that the answer to that question is unambiguously yes. 

Indeed, we now live in a world of unprecedented media abundance where consumers can increasingly obtain whatever they 

want wherever they want however they want to. Citizens of all 

backgrounds and belief are benefiting from this modern media cornucopia and nowhere has this abundance been more evident then 

in the field of video programming. Although the provision of video 

services entail significant upfront investment at every step of the 

value chain, we have more video options and diversity at our disposal today than ever before and at generally falling prices. In 

sum, there is more competition for our eyes than ever before. 

Consider traditional broadcasting which was once synonymous 

with television itself. Most of us can remember when just three or 

four VHF channels and a few fuzzy UHF channels were all we had 

at our disposal. Today we have seven nationwide broadcast networks and the number of local broadcast stations has doubled since 

1970. Competition against and among traditional broadcasters is 

intense and the viewing audience has become remarkably fragmented. The collective audience share for broadcast networks has 

fallen every year for the past decade. 

Competition is also intensifying among cable, telecom and satellite-based platforms. Better yet, the number of channels available 

on these platforms has skyrocketed from just 70 in 1990 to 565 in 

2006, the last year for which we have FCC data. Resulting diversity on the dial has been truly breathtaking and almost every 

human interest is now covered by some sort of video network and 

some of the most impressive gains have been made by minority oriented, foreign language, religion and children’s based programming. Importantly, the largest share of the growth in the multichannel video marketplace has actually come from independent 

programmers and owners. The percentage of pay-TV channels 

owned by cable distributors has plummeted from 50 percent in 

1990, to under 15 percent today, and that percentage is now significantly lower following the split between Time Warner Cable and 

Time Warner Entertainment. In fact, that percentage of vertical integration is probably in the single digits now. 

pwalker on DSK7TPTVN1PROD with HEARING

69 

Thus, while the Cable Act of 1992 was motivated by fears of excessive vertical integration and gatekeeper power in the delivery of 

video programming, today’s marketplace is actually intensely competitive and rich in its diversity. Meanwhile, new video empowerment technology such as DVRs, VOD, Blu-Ray and so on, have revolutionized the way that the public consumes visual media and 

given viewers unprecedented control over their preferences and 

timetables. 

While traditional platforms like cable and satellite offer a sea of 

diverse programming, the Internet’s digital distribution platforms 

offer oceans of new content. Even defining a media outlet today has 

become very difficult as new technologies and power average citizens to become producers of news and entertainment themselves. 

Thanks to personal computers, Web sites, blogs, camcorders, digital 

cameras, cell phones and so on, anybody can be a one-person newspaper or broadcaster. Some might call it amateur media creation 

but it is media creation and it certainly is competing for eyeballs. 

The Internet has also empowers a growing number of consumers 

to cut the video cord all together by canceling their monthly video 

multi-channel video subscriptions and getting their video from a 

combination of other sources. If the committee wants a glimpse into 

the future, I suggest a few teenagers or 20-somethings to testify 

about how they consumer video today. They probably couldn’t name 

most broadcast networks or multi-channel video providers but they 

would regale you with stories about how they have seen or shared 

video on platforms ranging from YouTube to I–Tunes, Video Views, 

Fusebox, Evio, Hulu, Netflix, Amazon On Demand, Sony’s 

Playstation Store, Microsoft Xbox 360 Marketplace and so on. 

While some here in town often wring our hands about the supposed gatekeeper power of old media providers and platforms, our 

kids are increasingly ignoring those platforms and moving on. This 

begs the question, instead of fretting that some traditional media 

providers have too much power perhaps it is time to ask if some 

of them actually have too little, a concern we have today in the 

newspaper business, for example. Indeed, the very viability of traditional media operators is increasingly in doubt as they lack the 

pricing power and the ability to control when, where and how their 

content is delivered and consumed. 

Meanwhile advertising, the traditional lifeblood of the media sector is increasingly spread across multiple platforms and being subjected to new scrutiny and potential regulation here in town. And 

copyright infringement has also made modernization far more challenging and places serious strains on many content operators. 

In sum, traditional media operators could be in serious trouble 

and now certainly isn’t the time to be considering new rules and 

red tape that could hamstring their ability to respond in new competitive pressures. Regardless, America’s video marketplace should 

be viewed as a pro-consumer success story with an abundance of 

choices, competition and diversity in options. The only real scarcity 

that is remaining today is our personal time and attention spans, 

not video marketplace options. That is something we are celebrating. 

Thank you again for inviting me today. 

[The prepared statement of Mr. Thierer follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

70 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 78 here 74847A.046
71 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 79 here 74847A.047
72 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 80 here 74847A.048
73 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 81 here 74847A.049
74 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 82 here 74847A.050
75 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 83 here 74847A.051
76 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 84 here 74847A.052
77 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 85 here 74847A.053
78 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 86 here 74847A.054
79 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 87 here 74847A.055
80 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 88 here 74847A.056
81 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 89 here 74847A.057
82 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 90 here 74847A.058
83 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 91 here 74847A.059
84 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 92 here 74847A.060
85 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 93 here 74847A.061
86 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 94 here 74847A.062
87 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 95 here 74847A.063
88 

pwalker on DSK7TPTVN1PROD with HEARING


Insert offset folio 96 here 74847A.064
89 

Mr. BOUCHER. Thank you very much, Mr. Thierer, and thanks to 

each of our witnesses for joining us this morning for some very informed commentary on the subject matter before us. 

I recognize myself for the first round of questions. I am not entering this conversation with any preconceived ideas about whether 

or not we should legislate anything and I would like to make that 

clear at the outset. I did support in 1992 the program access provisions as a part of the legislation that we passed in that year. I did 

so because cable at that time was a monopoly and we wanted to 

encourage competition. The direct broadcast satellite industry had 

not really launched and those companies were not established. 

They were clearly not in a position to generate their own content 

with their own expenditure at that early state, and the only way 

they could be successful in providing competition was to have access to the programs generated by cable so we provided that access. 

And I think that law has been successful for the reasons I mentioned in my opening statement. Now that marketplace is competitive. The two satellite providers have subscribers typically equal to 

the very large cable systems. And now we welcome into the market 

the very large telephone companies, in fact telcos across the country that are beginning to offer multi-channel video further expanding the competitive choice. 

And, Mr. Denson, I want to ask you some questions about your 

arrival in the market, what that means for competition and whether we ought to consider making any changes in the law in order 

to sustain it or perhaps further encourage it. Some would say that 

a company that is well-financed like Verizon either individually or 

in partnership with other large telecommunications companies 

could finance the creation of your own content and that is a situation very unlike the situation the direct broadcast satellite industry 

was in in 1992. And so how do you respond to the idea that you 

could generate your own content given the fact that you are a very 

large, well-established company and could even partner with others 

in joint ventures in order to do that? I know you are particularly 

concerned about regional sports and I am going to come to that in 

a moment but as a general matter, let me just ask you about 

whether or not you are in a position to generate much of your own 

content? 

Mr. DENSON. Certainly, you know, we actually have financed the 

creation of our own programming. We created local, three local 

hyper-local news channels, FiOS1, Long Island FiOS1, New Jersey 

and FiOS1 here in the D.C. metropolitan area. What we found is 

that local hyper-local content was crucial in order to win over customers. Customers, it wasn’t enough just to have content that addressed their entire region. Customers really wanted to know what 

they smelled when they looked out the door. If they were smelling 

smoke they wanted a channel that actually would tell them where 

that fire was in their neighborhood and we do that. We also offer 

compelling stories within the community so that everyone sees 

themselves in the community in a positive way. So we invested 

heavily in that and to be honest with you, given our number of customers the true benefit for the customers is the customer itself. We 

are not seeing that financial return but we are doing it to benefit 

the customer. 

pwalker on DSK7TPTVN1PROD with HEARING

90 

Mr. BOUCHER. How important is the 1992 program access provision to you as a general matter? 

Mr. DENSON. Well, I think in terms of how important that was 

for us in the creation of that content I think. 

Mr. BOUCHER. Well, not in the creation of the content but getting 

access to other peoples’ content, cable-affiliated content. 

Mr. DENSON. Oh, absolutely vital. 

Mr. BOUCHER. That was vital to you? 

Mr. DENSON. Absolutely vital at the time. 

Mr. BOUCHER. You could not have launched FiOS without that? 

Mr. DENSON. We would not have launched FiOS without having 

the assurances that were provided in the Act. 

Mr. BOUCHER. All right, let me come to the regional sport question because that is something you focused on in your commentary. 

As I understand the situation as it pertains in Philadelphia and to 

some extent in San Diego and maybe other markets around the 

country, one cable provider has under contract the major sports 

leagues. I think that is true almost entirely in Philadelphia and the 

FCC found in a study that as a consequence of that the number 

of DBS subscribers is about 40 percent less in Philadelphia than 

one would expect under different circumstances. And in San Diego 

the Padres are under contract with one cable company, and as a 

result of that the FCC found the DBS subscribership was about 30 

percent, 33 percent less than otherwise it would have been. Some 

would say that this is merely the functioning of the private market, 

that these contracts expire periodically and I assume they do. 

Maybe you know how often they expire and can tell us but upon 

that expiration why could other competitors within the multi-channel distribution space not go into the market, bid for those contracts and if they offer more money prevail and become the offerers 

of those programs? Now, assuming all of that is true why should 

we be concerned about this? Why not just let the market operate? 

Mr. DENSON. Well, for certain regions. 

Mr. BOUCHER. First of all, can you tell us when those contracts 

expire? 

Mr. DENSON. The every market is different. Every team is different. They typically expire on a 5-year basis however there are 

some contracts specifically between the Yes Network and the New 

York Yankees which I know run significantly longer than that. In 

terms of the competition, for sure regional sports networks are 

unique and we cannot duplicate that, and the cost of sports rights 

are enormous and there is no way in which we could monetize it 

so to that end we would not be able to actually make a meaningful 

bid for those regional sports networks. I think what we have here. 

Mr. BOUCHER. So is it the concern that contracts are exclusive 

that troubles you the most or is it the length of the contract that 

troubles you the most? 

Mr. DENSON. It is, well, it is two things really. It is one, it is the 

partnership with the joint ownership of a cable operator and a 

team and the actual regional sports network there that is definitely 

vital. But for certain areas. 

Mr. BOUCHER. Well, I am taking more time than I should here 

but we really need to understand how this works. I don’t understand why it is a problem. If the contract expires within a suffipwalker on DSK7TPTVN1PROD with HEARING

91 

ciently short period of time and that contract is then available for 

you and direct broadcast satellite and other cable companies to go 

in and bid on, why is that a problem? 

Mr. DENSON. Well, let me take just the issue head on. It is a 

problem because I don’t see how we could reasonably expect a company like Cablevision who owns the New York Rangers, it won’t 

even offer us, it won’t even negotiate with us with respect to the 

delivery of high definition content to entertain a bid where we 

would actually secure the rights for the telecast distribution of the 

New York Rangers and their market. 

Mr. BOUCHER. So you’re saying Cablevision has some kind of permanent right associated with the sports leagues under the terms 

of which it can deny high definition carriage or in fact any carriage 

at all to a competitor? 

Mr. DENSON. Absolutely, they own the New York Rangers. 

Mr. BOUCHER. So there is a permanent right so the actual contract doesn’t expire. They actually own the league, is that what you 

are saying? 

Mr. DENSON. They own the team. They own the New York Rangers. They own the New York Knicks and they are free to contract 

with whomever they like and they contract with themselves and 

then they deny the HD content to us. Now, on the other hand, a 

tale of two cities, we look at Philadelphia and Comcast. Through 

creative negotiations we have actually been able to secure the 

rights even though that content is protected by the terrestrial loophole, we have been able to secure those rights with Cablevision, the 

largest provider right in and where it is a similar situation. We are 

competing head-to-head in Philadelphia and they could deny it but 

cable Comcast took a different route and we are willing to negotiate and bargain in good faith with Cablevision at any time they 

denied us the access so that is specifically what we are looking for 

in this instance. 

Mr. BOUCHER. All right, let me just ask if there is anybody else 

on the panel that wants to comment and the Chair will tell other 

members I will be generous with their time for questions in view 

of the fact that I have consumed so much. Does anyone else want 

to comment on this? 

Mr. Rutledge. 

Mr. RUTLEDGE. I just want to make a brief comment. 

Mr. BOUCHER. Yes. 

Mr. RUTLEDGE. Mr. Chairman, I just want to be clear that Cablevision provides every game on our regional sports networks to 

Verizon. What hasn’t been provided to Verizon is a high definition 

feed but all of their customers have access to every game on the 

regional sports channels we own, and in New York there are four 

regional sports channels. The Yankees have their own, the Mets 

have their own and Cablevision owns two channels, one service. 

And it is interesting Dish TV which we do sell our service to has 

the right to carry the high definition feed and does not for their 

own competitive and business reasons. They don’t carry the Yankees so they carry the Mets and they carry our services but don’t 

carry the Yankee network for whatever competitive reason they 

have decided. And Cablevision has been without the Yankees for 

up to a year at a time in various contractual arrangement problems 

pwalker on DSK7TPTVN1PROD with HEARING

92 

and succeeded in the marketplace so there are a variety of approaches that different distributors make to the marketplace and 

it is quite robust and there are quite a few regional sports up there 

as well. 

Mr. BOUCHER. All right, OK, that is fine. Thank you very much. 

The gentleman from Florida, Mr. Stearns. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Recently I attended an open mobile TV forum and spoke to all 

the operators and it was sponsored I think by LG and Ion and they 

had all these mobile devices where I could get television on here. 

So it appears that to me the next challenge is going to be when the 

TVs are sold to the consumers and they have an Internet chip in 

it so I can decide do I want to get cable or do I want to get DirecTV 

or do I want to go the Internet and get live streaming of digital 

or high definition programming, and that seems to me as a consumer that that is where I would go. I would have the digital and 

high definition streaming on my mobile and I would have it at 

home on my television and there might be a point where I might 

not say I even need a cable or DirecTV, satellite TV because I am 

just going to get it through the Internet. I think that after I went 

to this forum it seemed to me the next really growing demand is 

going to be that everything is going to come through the broadband 

Internet and it will be high definition and it will be high speed. 

So, Mr. Rutledge, if I am wrong you can tell me but it seems to 

me that is where you folks should be making your investment for 

programming over the Internet in the future. And I guess my question is, is that true and if it is true what kind of deregulation or 

regulation should be involved? And certainly you might want to 

comment on network neutrality or network regulation, as I call it 

which would be even as we speak today I think the FCC is going 

to have a vote on it so I would be curious about your opinion and 

then Mr. Denson and Mr. Moore. 

Mr. RUTLEDGE. Ranking Member Stearns, thank you. 

Mr. STEARNS. Does the future as I explained, does that seem a 

likelihood? 

Mr. RUTLEDGE. Yes, I think it is a very complicated future and 

what is happening is that devises. 

Mr. STEARNS. I need you to make your answer pretty short so I 

can move around here. 

Mr. RUTLEDGE. Yes, devices, there is a device of convergence so 

that what looks like a phone is a television and what looks like a 

television is a phone. 

Mr. STEARNS. OK. 

Mr. RUTLEDGE. And we have products that work really well and 

one of the things Cablevision has done is launch the first 100 

megabit data service across its entire footprint. We are the fastest 

data service in the country and the only company offering speeds 

at that level to all of its customers. 

Mr. STEARNS. So you have already made an investment in this? 

Mr. RUTLEDGE. Yes, we have been putting investments in what 

is called DOCSIS 3.0. 

Mr. STEARNS. OK. 

Mr. RUTLEDGE. Which is the most advanced platform out there 

in terms of high speed capacity. We believe that if our customers 

pwalker on DSK7TPTVN1PROD with HEARING

93 

can use that network and be happy with the way that network operates that we will be able to sell our network services and as part 

of that we encourage developers of programming to make applications that work on a big fat network like we sell. And so our goal 

is to have content providers flourish and have people subscribe to 

us because we have the best network. 

Mr. STEARNS. OK and Mr. Denson. 

Mr. DENSON. Yes, and I think we are in a similar position and 

I think you are exactly right as how you see the future and what 

you have really described is the TV everywhere initiative which is 

a collaborative initiative amongst all distributors in the multi-channel video marketplace. So in that situation I think what you are 

looking at is programmers, content providers are looking to drive 

their revenue from subscription-based services as are we as distributors. So the—but your unique insight was well if I have a 

phone, I would like to see it on the phone. If I have it on the PC 

I would like to see it on a PC and TV. You subscribe one place and 

then you get access to the content across every device and what 

that does is that spurs the innovation on our side. As a distributor 

we need to make sure that we have the fastest networks and we 

do. We need to make sure that we have the best picture quality, 

not just across one platform FiOS but broadband and also our Vcast video, the Verizon wireless video service as well. So we are enabling those services and we are doing it across carrier so we are 

not looking to make it unique for Verizon itself. We want to work 

with the Time Warners, the Comcasts, the Cablevisions of the 

world so it doesn’t matter where a customer is, that customer can 

actually access their content by paying just one time to one distributor. 

Mr. STEARNS. OK, Mr. Moore, based upon sort of what I sort of 

prophesize what I think is going to happen here, why couldn’t I get 

a Web site and I go to you and say, Mr. Moore, you know, I am 

very impressed with what you did with Star Trek and the Next 

Generation. I want you to do the next Next Generation and I will 

pay you. You come onto my Web site and we will be through the 

Internet everywhere and that gives you access. That seems simple 

to me but based upon what I say is going to happen in the future, 

do you see problems of you and others with your talent and your 

skill getting this programming to the consumer market? 

Mr. MOORE. Well, I think you are correct and that is theoretically possible. I think that, however, the convergence that I think 

we all agree is coming is going to take awhile and that history 

shows is that these sorts of technologies don’t completely wipe out 

prior technologies. When television came along everyone said that 

the movies are going to die. 

Mr. STEARNS. Right. 

Mr. MOORE. And when the VCR came along they all said the 

movies and television were going to die and none of those things 

have proven true, and I think the point is that traditional media 

and the way that we have known television for a very long time 

is probably going to continue in some form for quite—for the foreseeable future. An Internet—a web startup site like the one that 

you are postulating will have its biggest problem to get people to 

come see it so it is all about getting the consumer access to it. 

pwalker on DSK7TPTVN1PROD with HEARING

94 

Mr. STEARNS. No, I like the advertising. I would say Mr. Moore 

who did this in Star Trek has got something, you know, and I 

would create a sensation like they are trying to do with Dan 

Brown’s new book, The Symbol. They are creating all this sensation 

to try and sell it and I would have to do all of that as part of the 

contract with you to get you. 

Mr. MOORE. It is a viable form that your are postulating. Again, 

it takes a tremendous amount of money to create television programs like the ones that I have done. It then takes a tremendous 

amount of money to make them accessible to the audience. 

Mr. STEARNS. So only the big players can do it then? 

Mr. MOORE. Only the big players basically can do it and if the 

big players have basically own the means of their own production, 

they tend to go to those. 

Mr. STEARNS. OK. Yes, sir, Mr. Knorr. 

Mr. KNORR. Thank you, Congressman Stearns. 

I think this is an excellent question that you are posing and really our concern about the ESPN360 business model goes directly to 

this. In your hypothetical, if Mr. Moore was able to put together 

a Web site and put on his content, under the business model that 

we are concerned about where all of our broadband subscribers are 

paying, in this case ESPN but it could be any of the existing major 

brands could leverage this type of arrangement, that anyone of my 

customers that access Mr. Moore’s content not only would be paying Mr. Moore but would be paying all these other existing content 

providers. In which case a competing entity never would be able to 

get ahead because every time someone went to this new entrant, 

the existing companies would make money, and there would be no 

way that someone could get a pure connection to the Internet and 

choose to take a different path. It would carry over the existing 

cable business model and in many cases the existing cable participants onto the Internet and replicate. 

Mr. STEARNS. My time has expired unless there is someone else 

who wanted to answer the question. 

Mr. Pyne. 

Mr. PYNE. I just would like to briefly comment on the ESPN360. 

The ESPN.com is a free Internet site that everybody who has an 

Internet connection can access. It is a very, very competitive business whether in every months we look at Yahoo Sports, ESPN.com, 

FOX Sports, CBS Sportsline, but that is there is more video on 

ESPN.com itself then any of the other dotcom sites. ESPN360 is 

the unique per-sub business model that in fact we created to help 

broadband adoption and today there is—we have no evidence of 

someone raising their ISP fee to a consumer because they have 

launched ESPN360 and it is we don’t force people. We are only— 

we are in 50 million homes. It has doubled over the last year because of the popularity of the service but the whole purpose of 360 

was to help broadband get further adoption in our country because 

it is programming that drives—that will help drive adoption. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The gentleman from Michigan, Mr. Stupak, is recognized for 5 

minutes. 

Mr. STUPAK. Thank you, Mr. Chairman. 

pwalker on DSK7TPTVN1PROD with HEARING

95 

Mr. Knorr, in your testimony you state that the ACA members 

pay 10 times as much as your competitors for the same content. 

How have you been able to make this determination and by competitors do you mean like satellite providers like Dish and 

DirecTV? 

Mr. KNORR. Competitors in some cases DirecTV and the satellite. 

In other cases, larger cable operators and a lot of it is anecdotal 

based on smaller cable operators that acquire cable systems from 

larger providers see the discrepancy in their cost of programming 

and that is, you know, that is anecdotal. That is one of the things 

that we are putting out there is we would like the FCC to empirically examine and review programming to determine what level of 

price discrimination occurs. I mean based on acquisitions and other 

things, we know it is occurring. Documenting that is what we want 

to do so that we can address the problem. 

Mr. STUPAK. Well, like in my district there I get very rural districts, Sunrise Communications pay in about $40 for 35 channels 

and that is a cable but then yet the same area, Dish is offering for 

$30 over 100 channels. Is that where you are doing your because 

that is about a 300 percent increase if you look at the number of 

channels. 

Mr. KNORR. I think there are a lot of things that figure into that. 

One is the disparity in cost of programming. Another one is again, 

the unique burdens of being a small operator. I mean regulatory 

costs, retransmission costs, disparities in all those costs make it 

more difficult for a small operator to make investments. 

Mr. STUPAK. You are taking all of those into consideration when 

you say 10 times more than? 

Mr. KNORR. No, in programming alone it can be up to that much 

just in programming. 

Mr. STUPAK. OK. 

Mr. KNORR. And then those other things would explain the disparity you are talking about of having 35 channels for a higher 

price than 100 channels. 

Mr. STUPAK. All right, well, you also said that you are given a 

take it or leave it offer when attempting, take it or leave it when 

you are attempting to negotiate a program carriage. 

Mr. KNORR. Especially in regards to retransmission consent. 

Mr. STUPAK. OK, how does that negotiation go? It is just take it 

or leave it, or do you have any input? Do you have any room to 

negotiate or is it just here is what we are offering, that is it. 

Mr. KNORR. It varies. In many cases it is getting a contract and 

saying here is the deal if you want to carry the network, and well 

that deal doesn’t work for us. OK, here is the deal, you sign it, you 

don’t sign it. It is up to you. 

Mr. STUPAK. Sure. 

Mr. KNORR. As opposed to—oh, go ahead. 

Mr. STUPAK. OK, I was—Mr. Pyne was shaking his head there. 

Do you want to add something on that one? 

Mr. PYNE. Well, I shouldn’t have shaken my head. 

Mr. STUPAK. I was going to ask anyways even if you didn’t shake 

your head. 

Mr. PYNE. OK. 

pwalker on DSK7TPTVN1PROD with HEARING

96 

Mr. STUPAK. Because you are one of the bigger ones so I was 

going to ask. 

Mr. PYNE. Well, as it I mean, we work very hard to work and 

help our smaller cable affiliates as I mentioned in my testimony. 

I mean two specific things as it relates to retransmission consents 

for our own stations, in this last round we in fact in an effort to 

help, I mean it was a take it or leave it offer but it was free retransmission consent. In other words, the 1992 Cable Act allows us 

to make a cash offer available. 

Mr. STUPAK. Right. 

Mr. PYNE. Or negotiate some other consideration. We have practiced that successfully for since 1993 actually but in this last round 

in an effort to help our smaller operators we said OK for these 90 

in these smaller territories we will not extract any cash or ask for 

any other consideration. You can have it for the next 3 year cycle. 

Mr. KNORR. And I think honestly Mr. Pyne makes an excellent 

point. ESPN generously offered free carriage to about 90 of our 

1,000 cable systems but he also said exactly what the fact is it was 

a take it or leave it offer. ESPN generously made a zero cost take 

it or leave it offer to those smaller cable operators. Many, many, 

many of the broadcasters in this country are not so generous and 

that is the problem. 

Mr. STUPAK. Well, Mr. Pyne, let me ask you this. Are you planning to see access to that ESPN360 directly to consumers over 

their Internet if their service provider does not pay for access? 

Mr. PYNE. That is not in our business model today, no. 

Mr. STUPAK. Thank you. 

Mr. PYNE. We have other products at ESPN.com and actually 

throughout the entire portfolio such as ESPN Insider which is 

something that if you are subscribing, I mean if you get ESPN.com 

you can subscribe that goes into deeper that we offer directly consumers but ESPN360, no. 

Mr. STUPAK. OK, well, if the content is so compelling, I would 

think you would want to get it out there without having to go 

through the ISP, just sell it directly to consumers. 

Mr. PYNE. Again, in this fascinating space of the Internet we are 

looking for multiple different models to get our content to consumers and we have ESPN.com which is for free. We have an 

ESPN mobile product. We have ESPN Insider. 

Mr. STUPAK. Right. 

Mr. PYNE. We have ESPN VOD but in this particular case, we 

believe this business model actually helps the adoption and we 

don’t force it on anybody but which is our decision but we think 

it will actually help the adoption and in fact Beta does research 

which is a sort of cable industry entity that sort of values the different programming and ESPN360 has been named the number 

one broadband service to help adoption of broadband and that is 

our goal. That is why we would do it. 

Mr. STUPAK. OK, but the service provider is still paying something, right? Someone is paying somewhere along the line here because if we go on the Internet we think we can have access and 

have it pretty much free. 

Mr. PYNE. Right. 

pwalker on DSK7TPTVN1PROD with HEARING

97 

Mr. STUPAK. But in a way you are no longer, you are putting an 

extra hurdle up there for someone to. 

Mr. PYNE. Well, I think as the way we look at it is it is the service provider’s option. 

Mr. STUPAK. Right. 

Mr. PYNE. To work to negotiate a deal or not from, you know, 

and we again, there are many providers who don’t. In fact, Cablevision doesn’t carry 360 nor does Time Warner at the moment. 

Comcast and Cox Communication has just signed up and Verizon 

has it so it is a competitive product in the marketplace, and I will 

just say that the reason we developed the product was that as we 

saw Internet or broadband penetration grow, we saw that there 

would be a plateau at some point and that it would need extra content. And ultimately we are here trying to provide that content and 

the margins in the ISP world for providers are, you know, depending on who you look at, anywhere from 40 percent to 70 percent 

so we are ultimately helping to support that model. 

Mr. BOUCHER. Thank you very much, Mr. Stupak. 

The gentleman from Texas, Mr. Barton, is recognized for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

I think we have a vote on the floor so I know that we need to 

be. 

Mr. BOUCHER. We do but we have got 8 minutes left here so I 

think we can probably fit you in. 

Mr. BARTON. Eight minutes, I can probably give some of that 

back. 

I didn’t hear the opening statements of the panel and I didn’t 

hear all the statements of our witnesses but I am trying to figure 

out why we are having this hearing. It looks like we have got a 

food fight going on between some of the folks that at some point 

in the past decided to buy a sports team and a venue and a medium to distribute that programming, and the people that didn’t do 

that don’t like it. Am I wrong? 

Mr. DENSON. I will take that. I think are you wrong, I wouldn’t 

go so far to say that you are wrong but what I would say is that 

there is certain baseline content that is unique in a community 

that without it we cannot compete and we would like very much 

better to compete on the services that we do have and the innovation that we have created. We offer over 400 digital channels, over 

17,000 video-on-demand channels, the highest broadband speeds 

with the best picture quality and we want to make that choice to 

the customers. We offer more foreign languages then any other distributor yet if we do not have the regional sports networks that are 

germane to that particular community then it is not meaningful 

choice. 

Mr. BARTON. Now, is there any prohibition with you buying your 

own team? 

Mr. DENSON. There is no prohibition. 

Mr. BARTON. I think a lot of people would want you to buy the 

Redskins right now. I mean, you know, is anybody on the panel say 

that there is less competition today then there was in 1992? Are 

there less programs available? Are there less mediums available? 

Is there less content available? 

pwalker on DSK7TPTVN1PROD with HEARING

98 

Mr. MOORE. Well, I would say in response to that to when you 

look at the dial there is a tremendous amount of competition. 

There is a tremendous amount of choices but the point that I would 

like to make is that the people that provide that content are becoming a smaller and smaller number. 

Mr. BARTON. And I did get to hear you and but even there is, 

if I heard you correctly, there is still eight, didn’t you say eight 

companies that are in the provider business? 

Mr. MOORE. Yes, there are eight and of those eight, two of them 

are reality-based or do reality shows and are based in the UK and 

only one is an actual independent, and these others are the multinational media block. 

Mr. BARTON. But even there, is there some bar that would prohibit entry into that arena if one was predisposed and felt they had 

the creative ability to do so? 

Mr. MOORE. Well, the marketplace is developed in such a way 

that if a network owns its own in-house production studio, there is 

a tremendous incentive to buy from that studio and not from independent producer. 

Mr. BARTON. Right. 

Mr. MOORE. So and because these shows cost so much to produce 

and get on the air, if you are going to set yourself up as an independent studio and risk all this capital, you should be able to compete fairly. But unfortunately what happens is that networks turn 

to their corporate sibling for programming more and more and 

more, and that is essentially why you have seen a decrease from 

18 production studios who provided content in 1989 to only eight 

today, and as I said only one of those is a true independent and 

the other two are reality providers from the UK. 

Mr. BARTON. OK, well, Mr. Chairman, I know we are short of 

time. I am going to yield back the last minute and a half but my 

advice to our witnesses is go have lunch together and work it out 

and, you know, if this is really—if the Yankees not being available 

on Verizon is a huge problem then Verizon ought to be able to come 

up with an incentive package to encourage some of the Yankee 

games being on Verizon or the 76ers being on whatever in Philadelphia or whatever it is. I just don’t think, Mr. Chairman, I mean 

this is an entertaining hearing but I don’t think this is worthy of 

Congressional oversight unless the goal is just to get these guys to 

work it out amongst themselves at which you and Mr. Markey are 

past masters at that. 

Mr. BOUCHER. Well, thank you very much. 

Mr. BARTON. So I will join you in that effort if that is what the 

goal of this is. 

Mr. BOUCHER. Thank you very much, Mr. Barton. There are a 

number of people who are quite interested in this subject matter, 

and I choose to think it is an appropriate hearing but it is going 

to have to be recessed because we have three votes pending on the 

floor of the House and we need to respond to those. We will be gone 

for probably 40 minutes, 45 minutes and so stay tuned and stay 

close and we will be in recess until the conclusion of the third vote. 

[Recess.] 

Mr. BOUCHER. I thank everyone for your patience while we attended to business on the floor. 

pwalker on DSK7TPTVN1PROD with HEARING

99 

The gentlelady from Tennessee, Ms. Blackburn, is recognized for 

5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I will probably 

not use my full 5 minutes. I know that you all have been very patient with us and you are probably ready to move on with your day 

and I know some of you have flights that you want to catch so you 

can get back to business. 

A couple of quick questions, Mr. Pyne, I will start with you. I 

have got to say if I understood you right you said the whole purpose of ESPN360 was to spur the adoption of broadband. That was 

quite a generous offer and I thank you all for doing that to spur 

broadband. I hope that we continue to make certain that we look 

at how that is available to people that do have broadband but 

thank you all for making that the whole purpose of ESPN360. I 

know that 50 million users are pleased with that decision that you 

all carried out. 

A couple of quick questions and this is a yes or a no, and I want 

to just go down the list. Mr. Rutledge, I am going to start with you. 

Currently, do you think that the current marketplace needs government intervention at this time, yes or no? 

Mr. RUTLEDGE. No. 

Mrs. BLACKBURN. No. OK, Mr. Pyne? 

Mr. PYNE. No. 

Mrs. BLACKBURN. No. OK, Mr. Knorr? 

Mr. KNORR. Yes, in some areas. 

Mrs. BLACKBURN. Yes, in some areas. OK, Mr. Moore? 

Mr. MOORE. Yes. 

Mrs. BLACKBURN. Yes. OK, unequivocal yes? 

Mr. MOORE. In some areas I would say. 

Mrs. BLACKBURN. In some areas, OK, so a qualified yes. Mr. 

Denson? 

Mr. DENSON. Qualified yes, narrow legislative act, yes. 

Mrs. BLACKBURN. OK. Mr. Thierer? 

Mr. THIERER. No, ma’am. 

Mrs. BLACKBURN. No. All right, OK, are you in favor of net neutrality? We have the principles that were released this morning. I 

call it fairness doctrine for the Internet. Some of you call it net 

neutrality, some of you not so neutral. So, Mr. Rutledge, aye or no? 

Mr. RUTLEDGE. No. 

Mrs. BLACKBURN. No. OK, Mr. Pyne? 

Mr. PYNE. Yes, to the extent it allows network management to 

help with piracy. 

Mrs. BLACKBURN. OK, so you are a qualified and so qualified on 

piracy, is that what you said? 

Mr. PYNE. Right, traditionally we have not been proponents of 

net neutrality but as it relates to helping with piracy. 

Mrs. BLACKBURN. To piracy. OK, Mr. Knorr? 

Mr. KNORR. Having not seen exactly what came out today but my 

understanding it would apply narrowly just to distributors in which 

case that would be a concern. 

Mrs. BLACKBURN. OK, so are you a yea or a nay? 

Mr. KNORR. It would be a nay if it is only applied to distributors. 

Mrs. BLACKBURN. OK, all right. Mr. Moore? 

Mr. MOORE. From my understanding, I would support it, yes. 

pwalker on DSK7TPTVN1PROD with HEARING

100 

Mrs. BLACKBURN. OK. Mr. Denson? 

Mr. DENSON. Nay. 

Mrs. BLACKBURN. OK, all right. Mr. Moore, I appreciated what 

you had to say about the change in cable rules in the ’90s and I 

know you are concerned about you feel like that that really impeded some of the independent producers and I appreciate the 

charts and the graphs that you brought forward in your testimony 

today. So let me ask you this, it seems like there were fewer cable 

channels just a few years ago and so there were fewer outlets. A 

lot of our cable programming producers in Tennessee said there 

were fewer outlets to sell their content and turn that intellectual 

property and that work product into something that could be monetized. And so I would ask you this, I know you are saying you favor 

government intervention, don’t we need to be careful about intervening now given the possibility of unintended consequences like 

reducing the incentive for the continued carriage of some of these 

channels and your concerns over consolidation? 

Mr. MOORE. Well, my concern is about, oh, I am sorry. My concern is about the ability to provide content to a variety of forums 

and the way that the rules use to be in traditional television was 

that networks could not actually own or could not program most of 

their programming from in-house production studios like say Disney owns ABC Studios that then provides most of their content for 

ABC. However, on the Internet where we are going now what we 

are trying to do is with Internet neutrality is to maintain an environment where we have an ability to sell our wares to multiple 

places and not to have the Internet sort of turn into what has happened in the repeal of the financial interests in syndication rules. 

Mrs. BLACKBURN. OK, so the piracy issue is a part of your concern also? 

Mr. MOORE. Oh, we are very concerned about piracy as well. I 

mean, you know when people pirate. 

Mrs. BLACKBURN. Mr. Thierer? 

Mr. THIERER. Yes, Congresswoman, with all due respect to Mr. 

Moore, I believe that the fact is is that he is a pretty good example 

of why the repeal of the financial syndication, informational syndication rules have made sense because we have a lot more platforms then ever before for things like Battlestar Galatica to go out 

over. I watched all four seasons on a combination of DVD, Blu-Ray 

and downloads from my Xbox 360. I never watched it once on television per se. Number two, the cost of programming, the cost of 

producing a show like Battlestar is enormously expensive and the 

Syfy Channel itself is an example of a station that did not exist 10– 

20 years ago. Universal and others put a lot of money into that to 

create a platform for folks like Mr. Moore. And then third, you 

know, this whole question about is it evil to have too much ownership and in-house production is a classic make versus buy decision. 

Newspapers and magazines produce the vast majority of their content in-house. Is that good, bad, evil, in-between? I don’t think it 

is any of those things. It is just a business choice. Sometimes it 

makes a great deal of sense because you are sharing the risk and 

the rewards of the enormous expense associated with the production of television. 

pwalker on DSK7TPTVN1PROD with HEARING

101 

Mrs. BLACKBURN. I appreciate that and I thank you all for your 

answers. And, Mr. Pyne, I picked on you at first so I am going to 

come back to you and let you answer your question. Go ahead. 

Mr. PYNE. I just wanted to make one further point in terms of 

broadcast networks and where they get programming from. This 

year, ABC in its own studio developed 26 pilots at great expense 

and of the 11 new shows that are on ABC this fall only three of 

those 26 will actually appear. The other eight are from other studios so it is I mean we try—all of the broadcast networks and all 

of the cable networks try—to do the best to get the best programming and content on the air. 

Mrs. BLACKBURN. OK, great. I have two questions I will submit. 

Mr. Rutledge, one to you—I want to ask you an MVPD question 

that I will submit to you for writing—and, Mr. Denson, I am going 

to come back to you because I want to go back to this exclusivity 

issue with you and how you view that differently from sports networks to handset exclusivity. So with that I thank you all very 

much and I yield my time. 

Mr. BOUCHER. Thank you very much, Ms. Blackburn. 

The gentleman from Pennsylvania, Mr. Doyle, is recognized for 

7 minutes. 

Mr. DOYLE. Thank you, Mr. Chairman. 

I live in Pittsburgh where we have division one college sports, 

the defending Super Bowl Champions, the Stanley Cup Champions. 

I am sorry Mr. Stupak isn’t here because he is a Red Wings fan. 

In Pittsburgh we love our sports but I am also sympathetic to my 

constituents that want to have their broadband at an affordable 

price. Now, as I understand it for any of the ISP customers to have 

access to ESPN360 all of them have to pay for it and that strikes 

me in some of ways as fundamentally unfair. I have read that some 

independent ISPs were quoting as much as 79 cents per subscriber 

per month for ESPN360. Even if only one subscriber watched it, all 

of them would have to pay for it. Now, Mr. Knorr, you are a small 

cable person. Do you believe that all your broadband customers 

want and will watch ESPN360? 

Mr. KNORR. No, I mean I think fundamentally and know for a 

fact and where in Lawrence, Kansas is a huge sports market with 

the Jayhawks. We have the Chiefs although that is down this year 

but we know our customers aren’t all sports fans and we think the 

ones that are, 360 is a great product. But for the ones that aren’t 

as I said in my testimony, if you are just the only reason you are 

getting your Internet access is because you lost your job and you 

have to find a new one, having that Internet access be more expensive just for those that want that product, again we don’t think 

that is right. 

Mr. DOYLE. Yes, I mean it seems to me if they are going to quote 

79 cents per month per subscriber that wants to watch it, that 

seems like a perfectly reasonable thing to do but if you are going 

to charge the ISP and people start to try to out-exclusive one another, you know, if this is this business model what happens when 

we have a dozen more ESPN360 business models? What happens 

to broadband prices for the average consumer when they are forced 

to pay, you know, whether they are watching this or not and if evpwalker on DSK7TPTVN1PROD with HEARING

102 

erybody would adopt that kind of a model what would happen to 

pricing? And, Mr. Pyne, I will let you maybe discuss that. 

Mr. PYNE. Well, as I mentioned earlier but will reaffirm now, for 

all the research and work that we have done on ESPN360, no one 

has told us they are raising prices to consumers because of launching ESPN360 and in fact when the broadband margins that operators or ISPs are making can be up to 70 percent. It varies by market for sure but it is certainly well worth their while to get another 

subscriber and if ESPN360 can help with that, that is fantastic. 

And I am able—I don’t think.—— 

Mr. DOYLE. You are saying in Pittsburgh they are not passing 

that cost on? They are absorbing that cost because they want the 

ESPN360? 

Mr. PYNE. To be clear, we don’t tell our distributors how they 

need to manage their retail pricing, just as we don’t tell people who 

carry ESPN how to manage their retail pricing. That is between 

them and the consumer but if we are offering a business proposition to ISPs to make them valuable in their marketplace and it 

is actually up to them what they want to do with it. I mean in the 

New York market. 

Mr. DOYLE. But wouldn’t you concede if there were half a dozen 

other business ventures like your own that adopted that same 

model that were attractive content and the ISPs had to pay for it 

for every subscriber they had regardless of whether every subscriber watched it or not, at some point they have to pass that cost 

on to their especially the small. I mean what does it do to a small 

cable operator, Mr. Knorr, that is having to pay 80 cents per person per subscriber per month? 

Mr. KNORR. Well, I mean it has two impacts. I mean we can absorb it but that reduces the capital we have available to launch 

things like DOCSIS 3.0 and more advanced broadband services or 

we can pass it along to our customers which raises the price of the 

service and if everybody is raising the price of the service, I mean 

that is fine, it doesn’t put me at a competitive disadvantage if everybody carries ESPN360 but it certainly doesn’t do anything to 

make broadband more affordable. One of the key concerns that we 

have is what has been stated several times by Mr. Pyne today is 

that it is a negotiation with the operator. It is up to the operator 

to decide whether or not they want to take the deal. That is one 

of our concerns that we are replicating one of the chief concerns of 

the cable business model onto the Internet and that distributors 

will decide what customers can access. You know, I can choose to 

say no, I am not going to do a deal and my customers can’t get it 

or I can choose to do a deal and all my customers have to pay for 

it. When in the age of the Internet the great promise of the Internet was that customers would have control. Customers would be 

able to make choices more like more than ever before and this 

model would take away that great promise of the Internet. 

Mr. DOYLE. Yes, thank you, Mr. Knorr. 

I want to ask Mr. Denson a question too and it is a different 

question. Mr. Denson, we all agree that competition is good for consumers. FiOS is rolling out in my district and I understand why 

Verizon wants popular programming in HD. I mean that kind of 

programming certainly makes for a compelling package so it seems 

pwalker on DSK7TPTVN1PROD with HEARING

103 

here that Verizon supports government intervention for competitors to have access to programming that incumbents own saying 

that it will help competition. But if my memory serves me correct, 

I have sat in this committee and watched Verizon oppose the CLEC 

industry from line-sharing. You have opposed government intervention to help small wireless carriers struggling because big wireless 

carriers have lengthy handset exclusivity contracts. And yesterday, 

your CEO reiterated Verizon’s opposition to net neutrality rules 

that would ensure that companies offering competing services won’t 

be blocked. So those are all exclusivities that Verizon likes. What 

makes this exclusivity that you want different? 

Mr. DENSON. Well, I think the most important part of this exclusivity is that it benefits the consumers and it provides the consumers with the maximum amount of choice. If we don’t provide— 

it is not a choice for consumers. You are from Pittsburgh and if you 

could not watch the Pittsburgh Pirates or the Penguins in high definition—— 

Mr. DOYLE. I could probably go with not watching the Pirates. 

Mr. DENSON. OK. 

Mr. DOYLE. The Steelers might have been a better pick, yes. 

Mr. DENSON. So let us take those Stanley Cup Champions Pittsburgh Penguins, if you could not get the Penguins in HD you might 

not choose Verizon even though we will have a wealth of services 

and content and innovations and applications that would make us 

all told a superior service for consumer choice. The promise we like 

to make is that every customer should want to consider or be in 

a position to consider FiOS and that is what is being defeated if 

we don’t have access to that highly valuable unique regional sports 

network programming. 

Mr. DOYLE. Thank you. 

I see my time is up, Mr. Chairman, thank you. 

Mr. BOUCHER. Thank you very much, Mr. Doyle. 

The gentleman from Georgia, Mr. Deal, is recognized for 5 minutes. 

Mr. DEAL. Thank you, Mr. Chairman. 

Mr. Pyne, I think we have established a couple of things and everything seems to revolve around sports it seems. The ESPN360 is 

not available on a subscriber basis over the Internet to individuals. 

That is what you said, I believe. It is only available if an Internet 

provider chooses to participate with you and I assume that when 

you negotiate with that ISP that it is on a per customer basis 

which your fee is based. Would that be a logical assumption? 

Mr. PYNE. Per ISP customer? 

Mr. DEAL. Yes. 

Mr. PYNE. That is correct. 

Mr. DEAL. OK, but that so far you don’t think anybody is passing 

that cost on to their customers. 

Mr. PYNE. Correct. 

Mr. DEAL. They are absorbing it. It is interesting that it appears 

that ESPN360 is being sold to potential ISP providers on the basis 

that it gives them a competitive advantage over perhaps their competition. But on the television side it appears that ESPN doesn’t 

seem to follow that same model because it is under current statutes 

a cable operator or a satellite provider cannot simply enhance their 

pwalker on DSK7TPTVN1PROD with HEARING

104 

offerings in a package that would include niche tiers or a per channel basis in order to gain competitive advantage over their competition. Why is it that it works in one environment as a free market 

opportunity but in the other environment it is not considered to be 

that? 

Mr. PYNE. I am not sure if I understand. What do you mean by 

in the other environment? 

Mr. DEAL. Well, let us just take the television environment in 

terms of cable, operators cannot simply just pick and choose their 

packages they are required to take. 

Mr. PYNE. Actually I don’t think that is true. No, if people would 

like ESPN they don’t have to take any other ESPN, Disney or even 

ABC service. We have been—in fact, they have affidavits that I 

have submitted that if you want—there are two most popular services, Disney Channel and ESPN. There is absolutely nothing else 

a cable operator, telco or satellite provider needs to take. We make 

it available on that basis. 

Mr. DEAL. Mr. Knorr, does that reconcile with what you are? 

Mr. PYNE. And in fact just to add I mean we have several hundred situations where people just take ESPN around this country. 

Mr. DEAL. Mr. Knorr? 

Mr. KNORR. To my knowledge, I mean there is significant financial incentives to take the bundle of services that ESPN offers on 

the video side and so I believe that most operators choose to take 

that route. Fundamentally, whether it is the Internet side and 

ESPN360 or on the programming side and this is true for most of 

the top programmers, there is very little options in how we can 

package that content to our customers. 

Mr. DEAL. Now, with regard to all of this, let me preface what 

I am about to ask by saying I believe that negotiations are private 

in private business. They should remain private; however, we are 

operating in somewhat of a public domain. Mr. Moore alluded to 

some of the problem here. Do you think that the FCC should have 

some availability to know what the negotiations are among providers and carriers in terms of determining if in fact the rules, general rules of fairness are being followed even though the public 

may not have access to that, even though individual subscribers 

may not know what a per channel cost is being allocated to them 

on? Is there reason to say that this is a type of transparency at the 

FCC that we currently don’t have but we should be encouraging? 

Mr. Moore, I will start with you since that is sort of in an area you 

have alluded to. 

Mr. MOORE. I think generally speaking, you know, transparency 

is a good thing when we are dealing with the public airwaves and 

when we are dealing with content providers and so on. I don’t know 

that I can speak to that specific example of whether the FCC 

should have the authority to look into all the details of these kind 

of negotiations. I think I would want to probably confer with the 

Writers’ Guild and sort of study that before I gave you a definitive 

answer. 

Mr. DEAL. OK, I will try to—yes, Mr. Thierer? 

Mr. THIERER. Congressman Deal, I think you really hit the nail 

on the head when you said first and foremost that sports is really 

what is the thorn in our side here on so many of these issues right 

pwalker on DSK7TPTVN1PROD with HEARING

105 

but I hope that the committee doesn’t lose sight of the fact that 

that is a very, very unique problem and that we don’t have this 

problem in most other types of content. Second of all, to the extent 

it is a problem I think we need to understand that some of these 

fields might be—the role of the FCC could be more of a, to rip a 

page from baseball if you will, could be baseball style arbitration. 

Bring parties together, ask them to sit at a table and hammer out 

a deal and then maybe set a clock and set some sort of an independent person or group together there as an arbitrator to help 

them hammer out that deal if they don’t reach it at the end of a 

certain timetable. But one final point let us not lose sight of the 

fact that exclusivity also has competitive benefits. Many of these 

regional sports networks would have never existed without a fair 

degree of exclusivity and I do wonder would a national service like 

DirecTV have the legs it does today without exclusivity for the 

Sunday ticket. It really does help create new forms of entertainment and new platforms that weren’t there before. These things 

did not exist 10–15 years ago. Are new problems created because 

of that? Yes, it is true especially about sports but that is again I 

think a unique situation. 

Mr. DEAL. Well, I would suggest it is broader than that, that the 

packaging and bundling is a much broader issue that goes far beyond just sports programming but my time is up. 

I will yield back. 

Mr. BOUCHER. Thank you, Mr. Deal. 

The gentleman from Vermont, Mr. Welch, is recognized for a 

total of 7 minutes. 

Mr. WELCH. Thank you, Mr. Chairman, thank you very much. 

Mr. Rutledge, your company owns the sports teams and does the 

distribution and broadcast, is that correct? 

Mr. RUTLEDGE. Cablevision owns the Knicks and Rangers. 

Mr. WELCH. Right, so if I am in New York and I want to watch 

the Knicks and Rangers I have to get it through you? How does 

that work? 

Mr. RUTLEDGE. No, it works this way. There are in the service 

footprint that Cablevision serves, we are a cable TV company as 

well, there are four providers of Knicks and Rangers and all of the 

other sports services that are sold in the market. Verizon, for instance, has access to every Knicks and Rangers game. 

Mr. WELCH. Right, but if I want to get it in HD, I have to get 

it from you? 

Mr. RUTLEDGE. Yes and they don’t have it in the HD. 

Mr. WELCH. So why won’t you allow Verizon or others to get it 

in HD? 

Mr. RUTLEDGE. I do allow others but I want to have a competitive differentiation against Verizon so that I can be more successful. 

Mr. WELCH. So that is good for you but not necessarily for the 

consumer. 

Mr. RUTLEDGE. Well, it is for the consumer to have companies 

that create products that are new and innovative. We invested and 

created this high definition regional sports programming service 

more than 10 years ago and we invested and created it, distributed 

it. 

pwalker on DSK7TPTVN1PROD with HEARING

106 

Mr. WELCH. All right, I get it. 

Mr. RUTLEDGE. And we are trying to get our return to it. 

Mr. WELCH. All right, Mr. Pyne, I just want to make sure I understood this. You were asked about your position on net neutrality. What I thought I heard you say and I just want to confirm 

this is that you want to deal with the piracy question because that 

is your product but if that is dealt with Disney favors net neutrality or opposes it? I just want some clarification on that. 

Mr. PYNE. I mean traditionally we have not been proponents of 

net neutrality. We haven’t really been part of the discussion but we 

do support it to allow ISPs to manage their networks, particularly 

around piracy. 

Mr. WELCH. I am not sure I understand you. So you have a piracy issue but dealing with that. 

Mr. PYNE. Well, the piracy is to make sure that—— 

Mr. WELCH. I understand what that is. You have got to protect 

your product. You invested in it and people are stealing it and I 

have some sympathy for that, but dealing with that are you saying 

yes or no that you are for net neutrality as you were asked by Congresswoman Blackburn? 

Mr. PYNE. I think we support it to the extent we believe ISPs 

should have the ability to manage their networks. 

Mr. WELCH. OK, I come from Vermont where we have a lot of 

small rural carriers, Waitsfield Champlain Valley Telecom probably 

has, I don’t know, fewer than a thousand folks and it is very, very 

tough for them to bring cable programming and Internet services 

to those rural markets that aren’t served by the larger cable companies, tough markets to serve. There is a lot of difficulty in getting affordable terms for programming services that make that 

business even more difficult and I heard some conversation back 

and forth really between Mr. Pyne and Mr. Knorr and I want each 

of you to comment on what the obstacles are, and perhaps you too, 

Mr. Moore, as well, but, Mr. Knorr, why don’t we start with you? 

What are some of the impediments that have to be addressed in 

order to provide fair access to the consumer? 

Mr. KNORR. Well, I think especially when it comes to retransmission consent, I think some type of balancing of the equation 

that is one thing that was brought up in testimony by ESPN is we 

have a buying cooperative but that buying cooperative is for national content. It does not and cannot scale to market by market 

broadcasters to negotiate those agreements. 

Mr. WELCH. And I think what you had said in your testimony, 

if I remember, is that you have got a take it or leave it type of document that I guess is faxed to you or submitted? 

Mr. KNORR. Correct, yes, for the smaller operators, yes, often it 

is a faxed document or just a letter that comes in the mail with 

the election notice that says here are the terms and so I think injecting some fairness and some transparency giving us the ability 

that other DBS operators have to tier broadcasters would be one 

negotiating element. And then also for many small broadcasters 

who are outside the exclusion zone that broadcasters have and if 

they had the right to pick neighboring channels as well, I think 

that would help competition. 

pwalker on DSK7TPTVN1PROD with HEARING

107 

Mr. WELCH. OK, let me go to Mr. Pyne, just I want to add something too to you. You were talking about the ESPN360 and that 

you don’t get involved in how that is priced by the people you sell 

it to but the bottom line is if the buyers can’t absorb the cost indefinitely without passing that on obviously so isn’t there down the 

road a problem that ultimately will result in higher cost to the consumers in order to have access to this with the approach that Disney is taking on this? 

Mr. PYNE. I don’t believe so. I am sorry. I don’t believe so for the 

following reason is that as broadband has still not fully penetrated 

in the United States and just a point is if because an ISP has a 

very strong programming service like ESPN360 and it gets additional subscribers, it actually will get more margin or profit margin 

to help in fact reduce its overall. 

Mr. WELCH. So if I understand what you are saying, it helps on 

the build out but, you know, I think Mr. Doyle had a fair question. 

If he wants that service and is going to pay 79 cents for it or $7.90 

and I don’t want it, as a consumer my preference is to let Doyle 

pay and not me help him pay. Mr. Knorr. 

Mr. KNORR. Well, I mean I would like to answer that directly. 

I mean we have in our community with very high adoption, I think 

it might be as high as 80 percent. Fundamentally, I don’t think 

there is any operator and we have several right here that feel that 

the only impediment to broadband adoption at this point is price 

sensitivity. I don’t think any—there are customers out there that 

are requiring incentive to get onto the Internet. I mean everybody 

is getting on the Internet. I mean the Internet has been growing 

exponentially. 

Mr. WELCH. OK, I only have another minute and I want to go 

to Mr. Moore. I happen to be somebody who thinks that the programming that we had before was an awful lot better than the programming we are having now and you mentioned a number of 

things in your very good testimony. The tying and bundling you 

mentioned was a bit of a problem and I wonder if you can elaborate 

on that? 

Mr. MOORE. Well, what is happening is that as you are aware 

in bundling, you know, the operators are given here is a bundle of 

programs, channels that you have to take, you know, take it or 

leave it because you can’t just a la carte differentiation them out. 

Mr. WELCH. Right. 

Mr. MOORE. And what we have discovered is happening is that 

some of those channels are being occupied by essentially just filler. 

They are weather maps with a crawl going across the bottom. They 

are sub-genres of music videos in some cases and these channels 

basically have national viewership in the tens of thousands and a 

viable cable operation needs at least, a cable channel needs around 

200,000 to just to make it sort of a going concern. So when you look 

at what they are actually providing and the numbers of people that 

are actually watching this and the money that they are making, it 

is clear that they are not actually a business opportunity. They are 

not actually being innovative. They are simply squatting on the 

space and keeping other people off the dial. 

Mr. WELCH. OK, thank you. 

I think my time is up, Mr. Chairman. 

pwalker on DSK7TPTVN1PROD with HEARING

108 

Mr. BOUCHER. Thank you, Mr. Welch. 

The gentleman from Massachusetts, Mr. Markey, is recognized 

for 5 minutes. 

Mr. MARKEY. Thank you, Mr. Chairman, very much. 

Mr. Denson, the program access rules specifically are designed to 

prohibit discrimination and they provide for a case by case enforcement regime to stop any such discrimination. Moreover, Verizon 

supported extending the program access rules when they are scheduled to expire asserting that nondiscrimination rules were needed. 

And so for me as I listen to this discussion and I can understand 

why Verizon would vigorously oppose any efforts to deny it access 

to programming particularly sports programming, although my 

concern for people’s access to Yankee games would only be received 

with crocodile tears but the principle is the same, OK, for any community in American for their sports teams. So I understand that 

debate but the principle of nondiscrimination is extremely important to me and to our economy. So what I would ask you to do is 

square that up then with the position that Verizon is taking on the 

question of nondiscrimination in the net neutrality bill and the net 

neutrality rulemaking because I kind of feel that there should be 

a presumption that if you are going to support nondiscrimination 

over here because it is, you know, good for the company, that the 

same kind of principle will then be adopted when it comes to other 

things that are unrelated to that issue but the principle is the 

same. So could you talk about how you square that circle internally 

in terms of your views on nondiscrimination? 

Mr. DENSON. Yes, to be sure that area is outside of my area of 

expertise. I am video content across multiple platforms. I program 

all of the platforms at Verizon, broadband, wireless and the FiOS 

Service but I am not involved in our net neutrality, however what 

I would say is that for us it is about the competition is for benefit, 

direct benefit to the customer and that our position on the regional 

sports network is that it actually precludes a customer from making a choice that they might otherwise want to make or just consider another provider that they might otherwise want to. 

Mr. MARKEY. No, and I appreciate that but you can understand 

how someone who sat on this committee for 33 years and understands that there are protections on the books for—AT&T lobbied 

me for 10 years to kind of mandate that they be allowed reasonable 

cost to deliver long distance service into the network and they 

begged me, you know, and I worked with them to give that to 

AT&T in their access to the local loop so that they could provide 

as a long distance company more competition to Verizon and towards other companies. And so when AT&T and Verizon get together and start to because they were bitter enemies and we are 

in a new era, you know. It is kind of like, you know, just got to 

adjust to this changing terrain and now they are aligned against 

allowing for this open Internet. What Mr. Moore next to you, he 

supports net neutrality. Mr. Pyne says that he could be open-minded to it as long as illegal activity, as long as piracy is not allowed 

and in my bill and I don’t think there is any of us who have ever 

advocated that illegal activity should be condoned. In fact, it should 

be punished to the full extent of the law. And you are here, Mr. 

Denson, kind of with a portfolio that does not give you authority 

pwalker on DSK7TPTVN1PROD with HEARING

109 

for fear of jeopardizing your job to speak on net neutrality or can 

you speak on net neutrality at all? 

Mr. DENSON. I cannot and I think the best way that I can portray it here in terms of what I do and in my testimony today is 

that the Red Sox and the Bruins and the Celtics are each owned 

by different entities and if you had to choose between or among 

cable providers or satellite providers because each one had an exclusive right on one of those particular teams, that might be an unfair choice. You might not want to have to make your determination based upon that so that is what I am testifying on today. 

Mr. MARKEY. No, and I appreciate that, Mr. Denson, and back 

in 1992 when the Chairman and I were working on the programming access rules we were thinking about how do we get HBO and 

ESPN, I think there was only one ESPN then, and other cable programs over to the satellite dish industry. Because I think more 

than any reason because the Chairman was getting tired of having 

eight foot size dishes try to get zoning variances all over his district. So if we could get that programming access maybe we could 

get an 18 inch dish and we have 30 million people with it. And you 

kind of evolve to this question now that you are talking about 

which is the Yankee question or, you know, the Bruins question or 

whatever it is which is just kind of a perfect form of that same 

question that HBO, ESPN question back then. You just have to 

keep—how far do you take nondiscrimination? How far do you, you 

know, do you take it but you are advocating for kind of an outer 

limit definition here and all I am saying is that the same thing is 

true in net neutrality. What we are trying to do I would say to your 

company through you though it is not your responsibility that what 

we are trying to do is to protect those startups, those Steve Jobs 

and Serge Gurins and Larry Pages of today who are in the garage 

and they have got a gadget or they have got an application that 

they would want to get out there and they have got some ideas, you 

know, and that is where the revolutions come from. And we are 

just trying to make sure that the marketplace doesn’t stultify, that 

is we shouldn’t have a world where you innovate by permission. 

OK, you should be able to innovate and you shouldn’t be able to 

be stultified and that is the point that I would make. 

I thank you, Mr. Denson, for being here. I thank all the rest of 

you, as well. 

I thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Markey. 

The gentleman from Florida, Mr. Stearns, you have asked questions I think. I am going to ask unanimous consent that we put two 

documents in the record for today’s hearing. One is a letter from 

Wealth TV. The other is a response from Comcast to the letter 

from Wealth TV and without objection these items shall be admitted to the record. 

[The information appears at the conclusion of the hearing.] 

Mr. BOUCHER. I want to say thank you to our witnesses this 

morning and I will say again that this hearing from my perspective 

is entirely informational. We wanted to get the benefit of your 

views on the current state of competition in the video marketplace. 

You have provided that well. We are well-informed on the subject 

thanks to you and I think some additional questions are going to 

pwalker on DSK7TPTVN1PROD with HEARING

110 

be submitted to you. Ms. Blackburn indicated her intention to submit questions to at least two of the witnesses. When they are received, please submit them back to us promptly. We will hold this 

record open for about a 2-week period in order to receive your responses. So with the committee’s thanks to our witnesses this 

morning, this hearing stands adjourned. 

[Whereupon, at 1:05 p.m., the Subcommittee was adjourned. 

[Material submitted for inclusion in the record follows:] 

pwalker on DSK7TPTVN1PROD with HEARING

111 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 119 74847A.065
112 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 120 74847A.066
113 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 121 74847A.067
114 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 122 74847A.068
115 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 123 74847A.069
116 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 124 74847A.070
117 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 125 74847A.071
118 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 126 74847A.072
119 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 127 74847A.073
120 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 128 74847A.074
121 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 129 74847A.075
122 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 130 74847A.076
123 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 131 74847A.077
124 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 132 74847A.078
125 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 133 74847A.079
126 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 134 74847A.080
127 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 135 74847A.081
128 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 136 74847A.082
129 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 137 74847A.083
130 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 138 74847A.084
131 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 139 74847A.085
132 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 140 74847A.086
133 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 141 74847A.087
134 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 142 74847A.088
135 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 143 74847A.089
136 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 144 74847A.090
137 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 145 74847A.091
138 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 146 74847A.092
139 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 147 74847A.093
140 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 148 74847A.094
141 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 149 74847A.095
142 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 150 74847A.096
143 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 151 74847A.097
144 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 152 74847A.098
145 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 153 74847A.099
146 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 154 74847A.100
147 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 155 74847A.101
148 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 156 74847A.102
149 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 157 74847A.103
150 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 158 74847A.104
151 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 159 74847A.105
152 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 160 74847A.106
153 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 161 74847A.107
154 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 162 74847A.108
155 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 163 74847A.109
156 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 164 74847A.110
157 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 165 74847A.111
158 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 166 74847A.112
159 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 167 74847A.113
160 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 168 74847A.114
161 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 169 74847A.115
162 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 170 74847A.116
163 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 171 74847A.117
164 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 172 74847A.118
165 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 173 74847A.119
166 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 174 74847A.120
167 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 175 74847A.121
168 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 176 74847A.122
169 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 177 74847A.123
170 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 178 74847A.124
171 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 179 74847A.125
172 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 180 74847A.126
173 

pwalker on DSK7TPTVN1PROD with HEARING


Insert graphic folio 181 74847A.127