Media Execs Face House Committee on Future of Video

WASHINGTON, D.C.: DISH Network chief Charlie Ergen and Netflix’s David Hyman were among the media executives testifying in front of U.S. lawmakers today in a hearing on "The Future of Video."

The hearing was organized by the House Subcommittee on Communications and Technology to discuss with several media executives issues over retransmission consent and program carriage deals, DISH’s contentious The Hopper DVR technology and the regulation of Internet-based video providers. Executives called to testify included Charlie Ergen, the chairman of DISH Network; Robert W. Johnson, CEO of Sky Angel, an IPTV platform; David Hyman, general counsel at Netflix; Jim Funk, VP of product management at Roku; David Barrett, the president and CEO of Hearst Television, speaking on behalf of the NAB; and NCTA’s president and CEO, Michael Powell.

In his written testimony submission, Ergen addressed the controversial Hopper DVR technology—which currently has DISH embroiled in a legal battle with the U.S. broadcast networks. FOX, ABC, CBS and NBC maintain that the Hopper and the Prime Time Any Time service—which store the channels’ prime-time programming for eight days and enable customers to "hop" over ads—violate their contracts with the pay-TV provider.

"Our new Prime Time Any Time and AutoHop technology takes the DVR to a new level, giving consumers the choice to more easily view their preferred programming when they want, while skipping what they don’t want to see," Ergen said in his written submission to the Committee. "This means that allowing your kids to watch TV doesn’t have to mean they have no choice but to see commercials for junk food and alcohol. Through AutoHop, DISH has done nothing more than improve upon existing, legally-accepted, and widely available technologies that give consumers the ability to record their television shows for playback at a more convenient time, when they are able to fast-forward through or skip over commercials."

Ergen also referenced retransmission consent and program carriage issues. "Broadcasters play the pay-TV providers against one another," Ergen said. "They cut off the most popular sports and entertainment programming if their demands for drastically higher rate increases are not met. Consumers lose because they cannot see the programming they paid for, they end up paying higher rates, or both. And, the problem is only getting worse—with more blackouts and more broadcaster abuses. From where we sit, the broadcasters cling to the status quo instead of meeting consumer demand and embracing new technologies and business models. The retransmission consent regime is a prime example of an outdated government policy in need of an overhaul by Congress and the FCC."

He concluded: "Just as businesses must foster change in a rapidly evolving video marketplace to keep pace with what the consumer wants, government should work to ensure its regulations mirror today’s competitive realities, consumer expectations, and advances in technology."

Netflix’s Hyman focused on Internet-delivered video. "A decade from now, choosing a linear feed from a broadcast grid of 200 channels will feel as odd as would using a television dial to change channels today," he said in his written submission. Hyman, referencing Netflix’s original content push, stated, "The Internet is helping to re-conceptualize how content is made and consumed." He also noted, "Video services like Netflix are also leveraging the power of the Internet to help consumers discover content they will love. Using recommendation and merchandising technology, Netflix is helping to expand the reach and popularity of video content." As an example, Hyman mentioned the ratings bump for season five of Mad Men on AMC after the first four seasons were made available on Netflix. "This is just one example of how traditional and emerging video distribution platforms can complement one another."

Hyman went on to say that traditional distribution platforms "will adapt to today’s shifting video landscape," as many have done with authenticated online services. "As traditional platforms and networks move to distribute their programming in an on-demand fashion over the Internet, they are beginning to compete more directly with pure-play or ‘over-the-top’ Internet video providers like Netflix. As this trend continues, issues such as discriminatory data usage caps and IP interconnection must be examined with a much more discerning eye. When you couple limited broadband competition with a strong desire to protect a legacy video distribution business, you have both the means and motivation to engage in anti-competitive behavior. Add to this mix a regulatory and legislative framework largely crafted before the modern Internet era and you have the makings for confusion and gamesmanship."

He went on to say, "In adapting to this changing landscape, these [traditional] platforms and networks should not be permitted to unfairly leverage their data delivery networks or content distribution relationships to stifle unaffiliated video providers."

Speaking for the cable industry, NCTA’s Powell noted in his prepared statement that a regulatory and business framework that "preserves and strengthens incentives to invest and innovate" is needed. He statement goes on to note, "While the premises for cable regulation have been shattered by competition and technological change, old rules based on aging snapshots of the video marketplace remain in effect…. A new dialogue is essential because the continue application of outdated rules creates uncertainty and marketplace distortions, encourages unproductive attempts at regulatory arbitrage and dampens incentives to invest."