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Verizon CEO: Try a la Carte to Protect Cable

Lowell McAdam criticizes government regulation of retransmission fees

LAS VEGAS – Verizon chairman-CEO Lowell McAdam said Tuesday that in answer to cord-cutting and consumer pressure the TV industry should be open to the idea of a-la-carte cable subscriptions.

Speaking at the National Assn. of Broadcasters’ confab, McAdam said a move to a-la-carte would answer market pressures and customer feedback. Through its FiOS TV service, he said, Verizon can monitor how many of its 5 million TV subscribers are watching any channel at a given moment. “It might be in the hundreds,” he said. “I think there’s a pressure now from customers about why do I have to have 300 channels?”

He called a-la-carte “a novel way that could help protect subscriptions in the long run. … This isn’t a cause celebre for us but I think it’s an early warning that we should pay attention to.”

He compared cable bundles to bundled services on cell phone plans. “As more and more smartphones were out there, (customers) said why are you making me buy a text bundle, why are you making me buy a voice bundle? We said, you know, you’re right, so we did away with that.

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“It’s simpler for them, it’s frankly simpler for us. It’s a win-win.”

McAdam was  interviewed by NAB president Gordon Smith in front of a sparse crowd in the Las Vegas Hotel’s cavernous Paradise Room. During their discussion of retransmission fees, Smith, a former U.S. senator, said that Washington pols have learned that nothing makes their phones light up like a channel outtage during retransmission fee talks. McAdam said that the power in those talks had shifted over the last 20 years and is now tilted toward broadcasters and content owners.

“I sit there and I say, okay, I get 1992, cable companies were monopolies and broadcasters needed to be protected. Now there’s Dish and DirecTV and the phone companies and over-the-top and all that stuff. So why do you guys (broadcasters) need protecting now? They all get a little smile on their face. Okay, I got it, it’s a good gig if you can get it. People say AT&T and Verizon dominate wireless, but I’d love to have the status of some of the broadcasters.”

He added that if he could re-do the 1996 Communications Act, retransmission regulation wouldn’t be in it.

“It was hands off of wireless (in that bill) and I think that’s part of why wireless has been such a success in the United States. We were smart enough to let free markets run … A forced retrans fee feels like a bit of salt in the wound.”

Smith also brought up the impending spectrum auction and McAdam noted that the military controls quite a bit of spectrum, especially in the coveted low-frequency bands that easily penetrate walls and buildings. Smith recalled that when he was in the Senate, when the topic of reclaiming military spectrum was broached, “the quiet answer was ‘We have guns, come try and get it.'” The recent “sequester” budget cuts add to the military’s resistance, because if they shifted their spectrum use they’d need new hardware, which they can’t easily acquire with current cuts.

On the subject of mobile video, McAdam said that video is already 50% of traffic on Verizon’s wireless network and that figure is expected to reach 66%  by 2017. He said that to meet the demand for streaming video on live events the company worked with its technology providers so it’s no longer necessary to set up individual streaming channels for every customer who wants to watch; a single video channel can handle it.

McAdam said that when the NFL announced it would stream the Super Bowl via Verizon wireless, “some of my broadcaster friends said you just became the most hated man in America. That was not our intent.”

But he made it clear Verizon is far from done rolling out mobile video. “Last night I was out at meetings and would have loved to tune in the (Men’s college basketball) national championship. Couldn’t do it. Going forward you’ll be able to do that.”

McAdam also showed off a Verizon wireless dongle attached to an HD video camera that allows TV news to send broadcast-quality video via the Verizon cellular network without having to rely on a microwave transmitter or video truck. He said that it can send up to 720p.

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