Rockefeller: Customers should get refunds for channel blackouts

By Brendan Sasso - 07/24/12 05:32 PM ET

Sen. Jay Rockefeller (D-W.Va.) argued on Tuesday that customers should get refunds if programming disputes cause them to lose access to some television channels.

"Overheated rhetoric alleging greed and bad faith is of little comfort to someone paying for services they are not getting," Rockefeller said during a hearing of the Senate Commerce, Science and Transportation Committee, which he chairs. "When consumers lose channels in these corporate disputes, they should get a refund. It is only fair."

Gordon Smith, a former Republican senator and current head of the National Association of Broadcasters, agreed that cable and satellite providers should reimburse their customers for channels they lose during blackouts. He also said the video providers should notify their customers before blackouts, and there should be no financial penalties for a customer to switch to a competing service.

A dispute between Viacom and DirecTV recently caused a nine-day blackout of 17 channels, including Comedy Central, MTV and Nickelodeon, for 20 million customers. A dispute between Time Warner Cable and Hearst broadcasters also left millions without their local programming.

The hearing examined whether Congress should rewrite the Cable Act, a 1992 law governing the distribution of video services.

Sen. Jim DeMint (R-S.C.) pushed for his bill, the Next Generation Television Marketplace Act, which would scrap most regulations for the carriage of television channels.

"The best protection for consumers is competition and choice," DeMint said, arguing that Congress should begin by "withdrawing government meddling."

"I do not believe local broadcasters need government intervention to be viable," he said.

Witnesses representing the cable industry sided with DeMint, arguing that broadcasters hold too much power in negotiations for video providers to carry their signals.

But Smith argued that government rules are necessary to protect broadcasters, who provide important local programming.

Martin Frank, a vice president for CBS, admitted there might be some problems with the current system, but he said "we prefer the devil we know."

"Consumers don't," retorted Colleen Abdoulah, incoming chairwoman of the American Cable Association.

Sen. John Kerry (D-Mass.) said he supports changes to the Cable Act to better protect consumers from disruptive blackouts, but he worried that DeMint's bill goes too far.

"As I listened to Sen. DeMint, boy, there's a real divide here," Kerry said. "[DeMint's bill] would result in probably very few broadcasters being around, I suspect."