Disputes between providers and broadcasters are becoming more commonplace, now that consumers have multiple outlets from which to purchase their cable packages.
Cable providers, in general, are less monopolistic in this setting, but they also possess far less market power, explained Sen. John Kerry (D-Mass.) in a letter to the Federal Communications Commission earlier this month.
Consequently, broadcasters can threaten to cut access to their channels if providers refuse to pay more for every customer that tunes in. That puts the cable company in the precarious position of denying the rate increases and losing access to those channels, or accepting the hikes and subsequently raising consumers' monthly bills -- two options that drive viewers to other cable providers, Kerry said.
"The result of these flawed incentives is consumer uncertainty, higher prices, and broadcasters using special events as leverage in negotiations," Kerry wrote, petitioning FCC Chairman Julius Genachowski to change federal rules and prevent broadcasters from cutting their feeds during negotiations.
But many insiders expect the problem to worsen without substantive reform. "We expect these guys to keep coming at cable operators with outrageous
demands," a source close to the process told The Hill on Tuesday.
The American Cable Association even issued a statement this weekend decrying the federal retransmission program as "a badly broken system" that was financially harming smaller cable companies and consumers.
However, Time Warner declined to comment on Tuesday whether it had launched any official push against broadcasters.