Broadband Cable Association of Pennsylvania


April 4, 2014

The Commerce Department announced last month that the U.S. government intends to transition its authority overseeing the Internet's Domain Name System, which is run through a nonprofit organization called Icann (the Internet Corporation for Assigned Names and Numbers), under a contract that expires in late 2015. This announcement comes at a time when global Internet freedom has never been more important or under greater threat.

Governments around the world are considering measures to squelch free speech or free enterprise on the Internet, including efforts to suppress Twitter, YouTube and Facebook, and restrictions on cloud computing and other Internet data services. Multilateral organizations have already taken disturbing steps. At the 2013 International Telecommunication Union treaty conference in Dubai, a majority of countries joined Russia, Iran and China in supporting a measure calling on the ITU, a United Nations agency, to play an enlarged role in "international Internet governance." The ITU has historically had authority over certain international telephone rates and global spectrum allocations. At its next conference in South Korea in October, the ITU's 193 member states will likely consider extending the agency's authority to the Internet.

The U.S. can influence this and other multilateral gatherings, working to convince countries on the fence that a free and open Internet promotes economic growth globally and within countries that embrace it. Toward this end, changes in the U.S. relationship with Icann should be designed to preserve the unrestricted flow of information and data over the Internet. This means, first of all, that any entity that might replace the U.S. oversight role cannot be a government entity. Instead, it must be a multistakeholder body rooted in the private sector and civil society, preserving the decentralized, nongovernmental approach that has "governed" the Internet from its inception. Otherwise, no deal.

The Commerce Department made such conditions implicit when it announced its intention to eventually transfer its current oversight role with Icann. We believe these conditions should become explicit and nonnegotiable. First, the U.S. should not yield any authority to another government, group of governments or intergovernmental body, including the United Nations or a U.N. agency such as the ITU. Second, any transfer must be to an entity that is protected from governmental interference and includes both private sector and civil society organizations that depend upon the Internet remaining free of international actions that could impede innovation. Third, any transfer must guarantee the reliability, stability and resilience of the Internet, complying with official U.S. policy since the Bush administration. Finally, any transfer of authority over Icann must be subjected to "stress tests," hypothetical scenarios designed to expose potential vulnerabilities of any new oversight mechanism.

America's relationship with Icann has been used as an argument to grant governing authority to a United Nations agency like the ITU or to otherwise Balkanize the Internet through increased restrictions by individual countries. Not coincidently, the argument has spread since the Arab Spring demonstrated that widely available Internet connectivity threatens nondemocratic governments. More recently, and without irony, some governments have cited the Snowden matter to advance international governmental involvement, despite the fact that American oversight of Icann is wholly unrelated to NSA matters.

Bowing to these arguments would be a mistake. The Internet is the infrastructure of the modern global economy, and the free flow of data is essential to any country seeking economic growth. Global Internet consumption and expenditure now exceeds that of the agriculture and energy sectors. The Internet spurred 21% of GDP growth during the past five years in the world's 13 leading developed nations, according to a 2011 study by the McKinsey Global Institute.

Moreover, the Internet is a boon to small businesses and job creation. The Web helps new businesses start and young businesses expand, enabling them to sell more products and services across all industries. The lower infrastructure costs of the mobile Internet has brought innovation to countries that had given up on building a well-functioning communications system. And while it's caused disruption in some sectors, McKinsey also found that for every job eliminated, the Internet created more than 2.5 new jobs.

The Internet is also driving innovation in health care and education world-wide, saving lives and creating economic opportunity for millions. Innovators in Africa have led the way on mobile health initiatives, such as texting services that send health reminders and tips to pregnant women and young mothers. Innovators in Asia are using the Internet and technology to expand literacy and basic skills. South Korea, for example, has pledged to replace all paper textbooks with digital learning by 2015. A censored Internet will choke these opportunities. A flourishing and free Internet, on the other hand, will expand them. A January Boston Consulting Group study of 65 countries found that reducing limitations on online activity, through enhanced broadband connectivity and access, can increase a country's GDP by as much as 2.5%. A fragmented global network encumbered by international regulatory restrictions will only limit this potential for growth.

The good news is there's broad, bipartisan support for resisting measures to restrict Internet freedom. In 2012, both houses of Congress unanimously passed resolutions affirming that the policy of the U.S. is "to promote a global Internet free from governmental control." The Icann oversight transition presents a major opportunity to build on that consensus-to preserve and further Internet freedom world-wide. - Letter to the Wall Street Journal by FCC Chairman Julius Genachowski, now managing director at The Carlyle Group, and Gordon Goldstein, who served on the U.S. Delegation to the World Conference on International Telecommunications and is managing director at Silver Lake.

DirecTV subscribers may have to go without the Dodgers for this season and the foreseeable future. Time Warner Cable, handling distribution of the new Dodgers-owned channel SportsNet LA, said DirecTV has ended serious negotiations. "DirecTV has advised us that they will not carry the Dodgers this year, and they have walked away from the negotiating table," said Melinda Witmer, Time Warner Cable's executive vice president and chief video and content officer. A DirecTV spokesman countered that "nothing could be further from the truth" and added that "fans have already seen through Time Warner Cable's deception, and this is yet another transparent attempt to manipulate all TV customers throughout the region."

With more than 1.2 million subscribers in Los Angeles, DirecTV has an almost 30% share of the market. Not having DirecTV on board is a big blow to the Dodgers and Time Warner Cable, which launched the channel in February. No other major area distributors have been signed by Time Warner Cable, but Witmer said negotations with them are ongoing. About 70% of the market is without access to Dodgers games. DirecTV has previously indicated that the price Time Warner Cable is seeking for the Dodgers is excessive and that it wants to sell SportsNet LA on an individual or a la carte basis.

Time Warner Cable has countered that its price is reasonable and that no regional sports networks, including those owned by DirecTV, are offered a la carte. "Given the very aggressive and unprecedented terms they put forward, it seems they are very uninterested in carrying the Dodgers," Witmer said. Witmer added that Time Warner Cable is being flooded with calls from DirecTV subscribers wanting to switch services to get the games. "The phones are ringing off the hook," she said. DirecTV countered, "we do intend to keep working to resolve this in the fan's favor, we just didn't agree to accept their latest outrageous proposal. We will continue to engage with them until this gets resolved." Although Time Warner Cable has not disclosed the price it is seeking from distributors, industry sources have pegged the fee for the first year of the contract at north of $4 per subscriber, per month with increases throughout the deal.

Witmer said the terms are fair and fall behind what Time Warner Cable pays for the Fox-owned YES Network in New York, which carries the Yankees, a Pittsburgh network that DirecTV owns that is home to the Pirates and a Fox-owned channel in San Diego that has the Padres. "As a big buyer of regional sports networks, I'm very comfortable in saying the financial terms on the table for SportsNet LA are reasonable," Witmer said. Among the other demands Witmer said DirecTV made was one that would allow the satellite broadcaster to stop carrying the channel if the Dodgers went into a prolonged slump. "I refer to this as the `fair weather fan plan,' " Witmer said, adding that under that standard, DirecTV would have stopped carrying its own Seattle Mariners network years ago.

Time Warner Cable secured the rights to distribute the Dodgers after agreeing to an $8.35-billion, 25-year deal to run SportsNet LA, according to a valuation by the Dodgers and Major League Baseball. The annual fee that Time Warner Cable will pay to the Dodgers starts at $210 million this season and increases dramatically through the life of the contract. Before this season, Dodgers games were available on the Fox-owned channel Prime Ticket and the CBS-owned local television station KCAL-TV Channel 9. The rights fees for the team's games last season were about $50 million.

Without DirecTV, other distributors may also feel empowered to hang tough in negotiations with Time Warner Cable. Cox, Charter, FiOS, U-Verse and Dish have made no indication that they are near a deal to carry SportsNet LA. Witmer said Time Warner Cable is "working hard to make deals with everybody" and thought DirecTV's decision may encourage Dish to rethink its previous public stance about not carrying the channel. "They may well see this as a great opportunity," Witmer said of Dish.

A condition of the Dodgers contract, according to people familiar with the transaction, is that Time Warner Cable has to cover the subscription fees for any distributor that does not sign on to carry the network. The lack of distribution is reflected in the early ratings for the games. The Tuesday and Wednesday Dodgers games both averaged just 37,000 viewers, according to Nielsen. By comparison, the Angels, whose games are on the fully distributed Fox Sports West, have averaged well over 100,000 viewers in their games this week. Fans have taken to social media to bash everyone over the dispute. Many bars that don't have Time Warner Cable also face potentially being hit in the pocketbook because of the impasse. Los Angeles Times; also in the Times: DirecTV plays hardball with Dodgers and other sports channels

Pennsylvania Cable Network will air live coverage of a Democratic gubernatorial debate starting 7 p.m. Wednesday. The candidates include York County native Tom Wolf and Democratic primary challengers Katie McGinty and Allyson Schwartz. The three will debate from the Harrisburg campus of Widener University School of Law, with PCN partnering with the Pennsylvania Legislative Correspondents' Association and the Widener University School of Law for the debate. The candidates will take questions from a panel of association representatives. PCN President and CEO Brian Lockman will moderate. The debate is open to the public starting at 6 p.m. in room A180 of the Law School Administration Building on Widener University's Harrisburg campus, 3737 Vartan Way in Harrisburg. Viewers will get a chance to share remarks or ask questions after the debate by dialing toll-free (877) PA6-5001 during a call-in program at 8:30 p.m. York Daily Record