Tom larsen, what do you do for a living . I run Government Relations for media come communications corporation. Were the fifth biggest Cable Company in the america. Ot to be the eighth but because of the mergers anding acquisitis can he keep moving up. My team manages the relationships we have if the communities. We go to the board meetings, talk to the city councils, mayors, take calls from Council Members and dole with issues. We also run the immediate you relationships, so markets where weekly newspapers or daily newspapers, we talk to the press if there issues, announcements, and i also personally run or d. C. Office which mean is come down on the train a lot. Do you find in the cable been that its the state and local regulations or the federal regulations that you spend most of your time on . Guest i think in the last two or three years its been the federal regulations. States and there was a movement about six to eight moves going to move to state franchises 0, to allow competitors like at t and verizon to come into the business, and that had the effect of limiting interest interactions with local communities and streamlining the process for getting in those markets. So thats a lot of ways that has lessened the burden on the team but federally theres been a big push to regulate the internet and so we have spent a lot of time here talking about that. Host how would you describe the state of the cable business or media coms in particular. Guest i think were seeing tremendous growth on the broadband side of or business. Its an fabulous product for us and will continue to grow. On the video side, we have seen a steady deterioration of customers and theres a lot of recents, pricing, channels becoming expensive and theres a tremendous amount of over the top competition from Companies Like netflix, hulu, and youtube tv launched. So we have amazing amount of competition, and i think some of our customers good to those places, some of them say its too expensive. Well go find our entertainment questions. Al downing us is matt polka. Whom do you represent. We have 800 members across the United States of america and all 50 states. Were in a number of territories that serve about 7. 5 million customers, providing phone, cable, and broadband service. We have been around for 24 years. Just had the 24th annual summit here in washington, dc where 24 years ago, independent Cable Operators came together and said, we have to have a voice in washington. Since then we have been fighting for independent companies who primarily work in smaller markets and rural areas. Were not the Biggest Companies out to. But were out there delivering key services, Key Communication services to small markets, rural areas, competitive areas in the country, helping to solve the Digital Divide. Are the interests and concerns of your companies the say is a, say, comcast or charter . In many ways they are the issues or our members, the American Cable Association, focuses on the impact on regulation on smaller businesses. In our markets we have fewer customers per mile and the same regulation might have a higher cost of compliance per subscriber. That means a longer term on regaining investments and also means it is more difficult to have the available resources that we need to provide the services that our customers want. So the impact of regulation could be very, very important to determine in a small market or rural area whether or not a community is served or isnt. Mr. Hrar send mentioned theyve seen a deterioration in the video business. Is cordcutting a thing that will continue . I think its really the video issue of our time. As consumers learn they have choice. Using and consuming over the top video, whether its threw a netflix or hulu or amazon prime, which i was watching as i was coming down on the plane today. I actually love to use it. It gives consumers more choice, something theyve wanted for a long time, some more control from the bundle of cable linear programming. So, yes, that is an issue of our time. Our members, however, i think,er very aggressive in how theyre trying to provide consumers the save with more choice through ondemand, available of over the top services, making sure the broadband is fast enough to support a consumers video habits. Its happening today. Cordcutting, cordshaving, but as an industry our members are wellprimed to serve their custom erred with the broadband service. Tom larsen are you partnering with hulu or netflix. We sell tivo and they will place hulu or netflix or an amazon so the customers can seamlessly transition between the media subscription and over the top subi descriptions, and we do at lot of peering with Companies Like netflix and we build our network directly to them so it lessens the burden on the public internet and improves the quality of service for our customer. Why not skinny bundle. The programmer dont want that. They want to continue to reap the cash from the model or platform and grow outside of that platform with other newer over the top providers. So with offered a skinny platform we could drop channels and they dont want any channels dropped. They want the same number of channels carried and all the customers to pay. If we went with skinny bundles customers would have more choice and be able to drop programming and thats something they cant e dont want to let happen. Matt poke car why not a la carte. The same reason. The Companies Control the content and control the decision the disdistribution. If you go below a certain amount of subscribers required youre penalized for it from a rate perspective. So its very difficult from the point of an operator to create chooses. The couldnt consumers get theaa la carte through thank you ipadded and laptops and cell phones as they watch over the top service wes can deliver with our broadband networks. So we are part of the express we want to continue to be part of that as we give our customers more and more of the broadband speeds and capacity they want, which comes back to your earlier question about regulation, and why regulations need to be such that our members are insented to invent more into the broadband plan. From multichannel news, report ago then recent summit in washington, the erosion of video describers is one of the topics discussed as the American Cable Association and members of in the National Cable television cooperative ascended on washington for the policy summit. Indeed, some Cable Operators such at cable one, have abandoned the marketing of Video Services because of high costs and instead focus exclusively on broadband and phone. It is an important issue that many of our companies are looking at today and no doubt toms company is as well. We consider ourselves cable guys, to be hospital honest to be honest with you. With broadband we can provide phone service and now broadband highspied internet. The Cable Service is not whatted used to be, high cost, cable programming, sports programming, broadcast programming for retransmission consent and it is failing. Its very difficult for a cable operator to break even on the cable side of the business, which is why broadband is so important, giving consumers more of a choice that we cant give them on cable through the broadband pipe. So, i agree with the article. Agree with the statement that this is a very difficult thing, and many of our companies are looking at primarily focusing on maximizing broadcast, knowing that cable is something we tried to deal with, tried to provide choice, but we have little ability to do it because of those who control the content. Tom larsen, is video a losing proposition for Media Companies . Its certainly our worst product. Makes the least amount of money. But it is always been a big revenue driver. Paid in a lot of ways for the network that is able today to deliver broadband. Were not ready to abandon it yet. Its a challenging business and we wish i mean, we hope our Business Partners of the programming side some day realize its been a great ride for all of us for a lot of years. Thats not upend it now and make this thing work and that has to do with pricing. Need to be sensible be the surprising because consumers dont have unlimited pocketbook. How do you get to a better pricing model, then . I think you get to a better pricing model by getting rid of the networks that dont make sense. Theres a lot youre starting to see that today. Pivot and esquire and aljazeera and some of these networks have gone away and theres some more trimming of those networks that could happen, and the other thing i think is we need have a really serious look at what were spending on sports in this country. The amount of money that the broadcasters and espn and Regional Sports networks are shelling out for the rights to broadcast cames ising a seward and they just is absurd. They have no sort of concept of cost paying because they just pass it on. They dont understand the impact of their reckless spending. If they were more sensible how they spent it would be better for all people in the pay tv universe. Matt polka, when it comes to economies economies of start calmcast or charter can deliver cheaper. Yes. What happens to the smaller operators. Challenges have never been an issue for us. Always had them. Always had to deal with them. Ive been with the small cable Operator Industry since 1986, and running a Small Business has never been without challenges. But it does show the stick to ittiveness of our members who work every day in their communities where theyre committed and they live and work. But it does make it difficult. To deal with the price of content, the bundle of programming to deal with the heavy cost of regulation, particularly that we have had to sort through over the last eight years and tried our best to provide consumers the services they want has made it very difficult. Brand is certainly something that our members feel very passionate about. They see it also their future. One reason why we were so concerned over the last few years when we talked about title 2 and Net Neutrality regulation, not that we as isps, independent Internet Service providers were going to block or discriminate or engage in paid prioritization, we dent do it then and dont do it out in but when you reclassify and impose heavy onerous regulations on small beens it has a disproportionate impact, and thats what we want to discourage so that private networks, work with government and consumers to give consumers the protection and the services they want and that we have always tried to deliver to them. How was the mood at this years aca summit as opposed to last year . It was bit more upbeat. Ill say that. Why. Well, theres a disney philosophy, at least now when we look at the new administration, the new fcc, the new leaders in congress. Not, peter, that i think theres going to be all of these changes that somehow are going to benefit smaller businesses, independent service provider, where now we have a blank check. The regulatory process is hard and we have to work very, very hard as an association to win a better balance for the regulation that were imposed over the last eight years. Were very hopeful, working with the fcc, working with congress, with the administration, that we can provide a better balance and encourages companys investment into their plant rare that into the cost of regulatory compliance, we think we have the opportunity to achieve that over the next four years but its not going to be easy. Tom larsen, the fcc chair spoke at your summit. What did you hear that you agreed with and what made you concerned. I think clearly he is a deregulatoriy. There was a lot of mastminute regulation that occurred can he end of chairman wheelers regime, and i thing what i think i heard was, expect Less Government in your business. Now in some ways i think he is city not going to address issues that are really important. Retransmission consent. The cost of carrying broadcast signal is is the Fastest Growing cost of our business. I dont expect him to do anything about it short of some major event in the marketplace. How regulated are those or is that just an agreement between you and the broadcaster . Its just a negotiation between us and the broadcasters. They pretty much have the leverage bus because they can black out stations and there heave been 143 blackouts which the most ever in a year before was 2015, 192. A little ore three month in and already 143. Well smash that record bay long way this year, and so i think short of some major marketplace event, i dont see chairman pai doing anything about the issue. See him, i think, being letting the market work more in the internet stays. From our position the market has worked really well. Its really inspired a lot of innovation. I think 20 years ago everybody would have said the cable toy is a monopoly. In the video space. Today that argument cannot be made. Theres satellite competition, over the top competition, a new provider every day. And so that has all been done in an open, free marketplace that was created by networks we built. So i think he recognizes that you should let the market work if it can work. So, the fcc last year put title 2 into motion. Right. What did media com do in preparation for a potential title 2 . Well, its hard. Think we had to take a gamble last year on whether to invest or and not our chairman decided despite all the regulation he would take a gamble and invested a billion dollars over here to years to become the first Cable Company in america to good all docis3. 1 which means all gigabit. This year we are launching speeds in 1400 communities and done 500 already this year in the first three months and well do another 900 by the end of the year, and were going to be the leader in that space, and so from our perspective, we were very concerned about tight 28, but because were privately held we had a gentleman that could take a gamble and bet on common sense coming back and bet on customers customers and bet on the network so he made the investment. Does a charter, Time Warner Cable merger hurt media com . Not in the sense that we compete directly with them. Think what it does where it hurts us is the volume discounteds that get for programming get greater and the prices we pay are higher. What happens the video of market place the big guys get the prices and the programmers look to the littlest guys to make up the difference. Our price will get higher. The markets we serve, traditionally small, rural markets, i pay more for video programming than urban market. Its a different kind of Digital Divide. Its a pricing divide. How do you combat that . We have to continue to serve our customers they best way we can, which our Member Companies do, given theyre commitment to their marketplaces and where they live and work and provide service, and while at the same time we have a very active and engaged voice here in washington to try to win better regulatory treatment of smaller businesses. Thats a really important point. The companies in the market place to solve these Digital Divide issues are not the large companies. Its the small companies. We have to be committed to our communities and committed to investment and its agreed hear what media com has been able to achieve. Those would not happen without the ability to know you have hopefully a Bright Future and the ability to innovate, which i think there will be greater opportunities for our Member Companies. Right enough its just continuing to do what were doing in our marketplace, fight for our businesses and realize were here to be part of the solution and solving the Digital Divide. One of the conditions for the charterTime Warner Cable merger was lefted by the fcc, the buildout by charter. Do you agree with that . Absolutely. We were flabbergasted by the fact that the ff under chairman wheeler would actually impose as a condition to limit anticompetitive behavior of a merger to require the merger participants to overbuild other existing providers. Made no sense to us whatsoever. We were very pleased when the fcc under chairman pai reversed that condition took that condition away. Our members have fought this battle time and time again not only from the standpoint of dealing with large merger combinations and also in significant billions of dollars of government funding of broadband in areas, tax fair funds used to overbuild media com and other members where broadband already exist today, through the good novembers companies who wanted to do it. They werent told to do itdidnt ask for money. They did it. The shouldnt have to pace government funded overbuild. So fortunately that condition of the charter merger was removed and its the right decision. Recent Washington Post article by brian fung, seven in ten support option of cityled Internet Network, this is a pew study finding that said that it seven out of ten people believe that cities should be able to offer their own Internet Network do you agree with that . I dont. Ive seen it time and time again in our market and it doesnt work well. Theres a perfect example in minnesota. Lake county, minnesota, where where we have been overbuilt with a 70 million grant and loan combination from the 2008 stimulus package, and what was said to the citizens was well take that money and not spend taxpayer moyer and since then they have spent an able 30 million decide of taxpayer money, bringing the project to 100 million and all theyve gotten is four or five thousand homes that werent served before. So 100 million to serve 4,000 unservedhousehold. A terrible waites of money and taxpayers in the poor county of 15,000 people will be stuck paying this debt for their lives, their kids lives. Just no way to pay it back with the amount of people they have. Thats the problem with taxpayer money. Its easy to find by raising taxes and unliable your cable bill where you know what youre paying, the hidden costs of Government Networks are hidden in your water bill and electric bill and your property tax bill and dont know what the real cost. Who is your competition . We have a lot of competition. We have obviously Satellite Companies z. Dish and direct tv, and iowa in particular there are a lot of Government Owned Networks like cedar falls, utilities and startup companies, like one in sed are rapids, iowa. The phone companies provide a lot of competition, century link, winstream, frontier, at t, verizon, and now in the internet space the networks are Getting Better and the speeds are increasing and we seeing competition on the internet side. Matt polka, have the googles and the facebooks and the amazons been treated the same as ips . No. Should they be . Primary issue when we talk about privacy regulation and the regulations that were imposed on Internet Service providers under chairman wheeler, this perception that somehow Internet Service providers were the ones taking and abusing and monetizing consumer data. Were cable gaos guys. From the start of our industry we have been told by law we have to protect Consumer Information and have been doing it since the start of this industry. The goggles of the world, the amazons actually take the dat and use it and monetize it. We have had people from google come to our conferences and boldly say, at google we make money two ways. We sell ads and we sell the unsold inventory of ads and they do that by using consumer data. So all of this misinformation that we have seen about privacy, the vote by congress under the congressional review act, to restrict and move back the privacy regulations, it is misinformation about we as Internet Service providers. We protect the dat dark always protected it under the fcc regime of regulation, and going back back to the earliest days of or business so if there is regulation for privacy it must cover edge providers, google,a. Amazon and others. I bought a blotter at home and within an hour i clicked to buy on my Facebook Page there were other suggestions and other blotters i could buy. My isp, which i comcast, didnt sell that information and give it to facebook. It wasnt the isp. It was the edge provider, and that is where if there is going to be privacy regulation we need to focus on the companies that are using and monetizing that dat first. You brought up go ahead, mr. Larsen. I just say that i tend to look at things very simply. Follow the money. If you look at who makes the most money out of the internet its the edge providers. You take facebook, apple, google, microsoft, they have, last i checked, 325 billion of cash on their balance sheets. Look at the top four isps, comcast, charter, verizon, at, they have 350 billion in debt. So the numbers may be slightly off but the point is that the companies that are taking the risk, borrowing the money to build the networks are criticized and made out to be billions and the candidate making off the cash are being lauded for their wonderful innovation. Im not saying these are Bad Companies in the sense they havent done amides leg innovative things. Just say they make a top of money off the internet and for them to good scotfree with no regulation, suggests to me that maybe that is not the right approach. Maybe we should look at who is making all the money and why are they able to take so much out of the system . Its because theyre selling your information. How do you think the black hat white hat perception of these Different Companies came about . Well, think in particular under the obama administration, i think they used some very gooding a go rhythms and consumer dat algorithms and data to put president obama in office. Thats great. He used Technology Like nobody has ever used technology before him and any president ial rate. They endeared themselves to that administration and thats great. That is d. C. Thats politics. Thats hard work but at the same time lets not forget that they have theyre in business to make money and so we need to be cog any sent cog . I sent of the policy changes that allow them to make moyer you. You mentioned your chairman at media com, rocco. Who is mcamizo. One of a kind. Why do we all laugh . He is an italian immigrant that came to this country, 12yearold that didnt speak english and entered entry into a prestigious wows catholic and learned his way to colombia on a soccer scholarship and has never stopped working hitch is one of the guys that is a real underdog in life. He has taken his role as an underdog and relishes and it proved in the 1990 2000s and stake systems nobody wasnt it, considered junk, and turn them into systemed that people would be proud of and can make consumes on par with con consumers in small towns in iowa on par with chicago customers and new york city. He just both the new york cosmos, another franchise left for dead, soccer team that wasser in bankruptcy in december and he bought and is out to prove that he can fix american soccer. Thats his next passion. And back policy, matt polka, you mentioned the ftc as opposed to the fcc do you see a move over to the ftc to be more of the regulator . When we talk about privacy, thats who regulates privacy and the ftc has done a wonderful job. Hundreds of Enforcement Actions against web providers, against isps, et cetera, when there was cause for concern. So that regime of regulation has worked. I do not think that the fcc is going to shirk duties when it comes to ensuring there are proper regulations to protect the pock interest and recognize doing theirs is different from the last eight year recognizing that all of the good things we want to give to consumes and want to ensure that they have, will be provided by private networks, and we have to recognize that private networks are an important part of the circle to give the consumes the services they want. So i think there will be a much greater recognition of the Important Role that private networks, and in particular smaller private networks, have to be able to solve the greatest problems our country faces. Matt polka, president and ceo of the Cable Association and tom larsen