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NCTA Canvassing Members To Formulate Industry Position On VoIP

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NCTA Canvassing Members To Formulate Industry Position On Voip

December 19, 2003

By Brigette Greenberg

NCTA Pres. Robert Sachs said the cable industry wouldn't stand in the way of Vonage's riding aboard cable modem lines to provide voice-over-Internet protocol (VoIP) service to cable's high-speed Internet customers. This was the first indication of how the industry would approach Vonage, although some in cable privately had described the company as a freeloader seeking to exploit the upgraded fiber for which the cable industry had spent millions of dollars. Sachs's statement came as several cable companies -- Time Warner Cable, Cox and Cablevision -- were rushing their own Voip services to market.

At a news briefing Thurs., Sachs also said NCTA was canvassing its members as the association worked toward formulating a consistent policy on how it believed Voip should be treated by the FCC within a regulatory framework.

NCTA historically has embraced deregulation and marketplace solutions as its overarching policy, but Sachs declined to give specific policy positions yet on VoIP, a technology that will bring cable in head-to-head competition with traditional phone companies, as well as new entrants such as Vonage. Speaking in general terms, Sachs said NCTA members believed in deregulation and Voip was a new technology that needed time to develop before regulations were placed upon it.

Asked about Vonage and whether the cable industry might seek to strip the voice bits out of a Vonage-type service, Sachs said the industry saw the issue in much the same way it did the idea of a permanent govt. policy of "network neutrality."

The industry believes such a policy is unnecessary because there's no evidence cable companies restrict what cable modem customers download. "A cable broadband customer is free to access any Internet content or use any Internet application and attach any DOCSIS-certified modem device to use with its broadband service, so it would be inconsistent if we were to say, whether it's Vonage or some other user, that that should somehow be disallowed if a customer of ours wishes to use that service to enhance their broadband experience," Sachs said.

A Vonage spokeswoman said she thought it was important for the cable industry to come out with that statement as the FCC worked toward establishing a Voip policy: "The more unfettered broadband becomes, the better it is for consumers. This is a great move. This is really important for them to come out and state this now because it has been a question on people's minds. It's great that they provided some clarity to it."

For the coming year, Sachs said NCTA was concentrating on reaching a 2-way plug-&-play agreement with the consumer electronics (CE) industry and on affecting the FCC's thinking on VoIP. "VoIP is likely to catapult cable into a competitive phone provider," he said. "We believe that cable will emerge as the leading retail provider of Voip service, a competitor to the Bells in providing Voip services and certainly the leading facilities-based competitor." He said the cable industry would compete on price as well as features.

The FCC also appears poised to resolve in early 2004 the cable industry's long-standing dispute with broadcasters on dual must-carry, multicasting and other issues related to the digital transition. NCTA also expects that the Senate Commerce Committee might schedule hearings on video competition, although major legislation isn't expected, Sachs said. "We never want to take anything for granted, but we do not sense much congressional interest in cable reregulation," he said.

Asked about the digital transition, Sachs said NCTA had always believed the 85% trigger set by Congress to be a "flawed mechanism." He didn't discount the idea that the govt. might want to provide subsidies to certain consumers to buy DTV equipment, pointing to the DTV transition in Berlin, where the govt. assisted those who could least afford it and had relied solely on over-the-air broadcasting for news and information.

Sachs said he believed competition had "reduced pressure for regulation of cable," noting that a recent report by the General Accounting Office (GAO) found that satellite was a significant competitor (CD Oct 27 p1). "With 21 million customers and growing and the likely government approval of News Corp.'s acquisition of DirecTV, satellite competition is only going to intensify," Sachs said. NCTA hasn't taken an official position on whether the FCC should approve that deal.

Sachs touted cable's accomplishments for 2003, saying seasonal ratings showed more people were watching ad- supported cable networks than the broadcast networks, that the industry had more than 71 million basic video customers at the end of the 3rd quarter, more than 21.5 million digital video subscribers, 15 million high-speed data subscribers and 2.5 million digital phone customers.

Cable is offering HDTV in 96 of the top 100 U.S. markets and cable operators are carrying 304 digital broadcast signals, "disproving claims that cable operators are not desirous of or willing to carry broadcast HD programming," Sachs said. The plug-&-play and broadcast flag agreements had obviated the need for legislation, Sachs said.

Although cable officials were disappointed with a decision by the 9th U.S. Appeals Court, San Francisco, in the Brand X case on the regulatory classification of cable modem service, Sachs said he believed the FCC, with NCTA's support, would be successful in its appeal. He also expressed disappointment that Congress had not extended the Internet tax moratorium, increasing the prospect for local governments to levy taxes on cable modem services, something NCTA was seeking to stop.

Cable horizontal ownership rules don't appear to be a priority at the FCC right now, Sachs said.

Sachs said disputes between cable operators and sports networks had generated a lot of headlines in 2003 but he pointed to a recent agreement between Cox and Fox Sports Network (CD Dec 4 p5) as an example of how such disputes could be worked out. Cox and ESPN continue to struggle over a new contract and Time Warner Cable has run ads in the N.Y. area warning that it may drop the Cablevision-owned Madison Sq. Garden Network and Fox Sports New York regional network in 2004. -- NCTA CANVASSING MEMBERS TO FORMULATE INDUSTRY POSITION ON Voip

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  • Washington Internet Daily, 12/19/03

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