FCC testimony on media ownership: Diane Lachel

Commissioners Copps and Adelstein, and all those who made this possible, thank you for this opportunity to speak on behalf of one of the largest municipal telecommunications companies in the country. I am Diane Lachel, and I am the Government Relations Manager for Tacoma Power's Click Network. I have seen many changes in the regulatory landscape in my 37 years in this field. Some changes made logical sense. Others, quite frankly, seemed irrational. One area of regulation that needs careful scrutiny is media ownership. And I applaud your efforts.

I plan to cover three topics associated with ownership: the lack of local news, anti-competitive practices, and retransmission consent. First, the lack of local news. I live in Gig Harbor. It is a little suburb of Tacoma, down the road a piece. The City of Tacoma is Washington State’s second largest city. Back in 1984, the Tacoma market was awash in localism. It supported two commercial broadcast TV stations, one PBS station, one city-run cable channel and an independent cable channel as well. The impact of media consolidation in our market means very little local television news. Many evenings it means no coverage at all. It actually boggles my mind to think that in a city with a population of 200,000 in a region twice that size, a Seattle station can’t find a nugget newsworthy enough from 23 different cities in that county. Sadly, I don’t feel very well served by those who have free access to the public’s airwaves.

My second point: anti-competitive tactics. Here is an example of the impact of vertically integrated media ownership to our little competitive business. As you know, Congress’s primary intention of the [Telecommunications] Act of ’96 was to encourage competition amongst wire line providers. That legislation allowed traditional phone companies to get into the video delivery business. It allowed cable companies to get into the phone business, and it dropped barriers to entry for power companies to do both (if actually allowed to by their state authorities). Tacoma Power, a municipal corporation operated by the City of Tacoma, was way ahead of the game. After years of unsuccessfully trying to get the phone and cable companies to provide critical connectivity from 65 substations throughout the utility’s 180-square-mile area back to a central location for the purpose of monitoring the electric system, the utility had no other choice but to construct its own telecommunications network. The two incumbent wire line providers admitted at the time they did not have the capacity to provide the kinds of services the utility needed nor did they have any plans to upgrade their networks any time soon.

Thus, in 1997, Click Network was born. After getting unanimous approval by the Public Utility Board and City Council, we began constructing a state-of-the-art network for the utility’s own use. We also added capacity to the network to offer retail cable-TV, wholesale internet, and wholesale high-speed data services. When we began lining up channels for our cable service, several programmers refused to work with us, after receiving pressure from their corporate owner. Their owner just happened to be our competition. The programmers were pressured not to work with us because we were overbuilding their cable arm of their parent company. It took the threat of an anti-competitive lawsuit before the programmers would offer their channels. This was not an isolated case; it has happened several times with programmers in the last decade and also with equipment manufacturers and distributors. Essential electronic component deliveries were delayed due to pressures exerted by our competition. It happened this week.

My third point: I would like to comment about the impact of retransmission consent on our business. Re-transmission consent appears to be in the unintended consequence of relaxed media ownership rules. In our market, some local broadcast stations select “must carry” status in order to be carried on our network. That means, as a cable company, we must carry them. Other broadcasters choose re-transmission consent status; which means they can negotiate their carriage terms. Some of the broadcasters own multiple channels. For instance, KING-TV owns KONG. KOMO is an ABC affiliate and is owned by Disney. In the re-transmission consent scheme, media giants have disproportionate power and can force carriage of channels our customers do not even want. If we don’t carry the demanded channels, network affiliates could threaten to pull their primary channel which would be political suicide for us. In conclusion, please consider strengthening the media ownership rules rather than relaxing them. Power in the hands of four or five media conglomerates is not healthy for a democratic society. Thank you for your time.

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The media's job is to interest the public in the public interest. -John Dewey