WASHINGTON, DC -- Senate Commerce Committee Chairman Ted Stevens today gave the keynote address at the American Cable Association’s Annual Members’ Meeting. Following is a transcript of his remarks:

Thank you very much Matthew. In that same office you can find my surfing board from the period before World War II that my wife found in my family’s home and had refinished and put up in that room. It’s got a sign on it, it says, “this proves a surfing bum can find a job if he tries.”

I do know that you represent a tremendous number of cable companies. You represent cable companies in Alaska, including the one that serves my home in Girdwood that has about 1,800 people in that town. All of us are customers of course. And, we’re approaching the time now where we’re going to have very serious review of our communications policies. Some people think it’s too soon – after all, we had a 1934 Act that lived until 1996. But, the difference is the development of technology since ’96 to today has been even greater than the period that occurred between ’34 and ’96. We have a lot to learn, really. And, as we approach this, I’ve been on the Commerce Committee for a long time, but I haven’t been Chairman before, realizing the scope of some of these issues, we’ve started what we call learning sessions – to learn from people that are on the front lines of all of these various portions of the industry, with the hope that we could really learn from them before we attempt to either redo or replace this law of 1996. And, we’re going to look at these cable issues that affect your business in the process, without any question.

Now, my staff here – Christine Kurth, Lisa Sutherland, and Melanie Alvord are with me. They’ve told me they met with your leadership and we’re going to invite each of the Commerce Committee Members’ staff to continue the conversations they’ve had to take advantage of the meetings you are having here in Washington over this period.

I know that you have over eight million subscribers. You offer very innovative services. And, they run from all of the services available in the marketplace, to high-speed Internet, cable telephony, to video on demand. You’re really on the cutting edge of communications now. And, while you’re moving ahead on this 21st century, there’s no question about it, I commend you because you’re basically family-owned companies dedicated to traditional American values. There was a time when almost every form of communication in my state was owned in Alaska. Today, I only know of one newspaper and one television station, as a matter fact, owned by our own people. So, I think you’re more closely connected with our people in most of the portions of our industry and we intend to do our best to listen to you and listen to your problems as we move forward.

My staff tells me that many of you support the comments I’ve already made to the industry about the necessity for decent family viewing on cable. I do believe that the concepts of must-carry and carrying television programming onto cable has brought about some change, but there’s no question that the prohibitions on the over-the-air broadcasters ought to be met equally by anyone who is providing the services to the American family home, at least that’s my feeling. And, I do continue to advocate a family tier of programming. I’m learning more and more about that, that it may not be economically possible, but I think we ought to come as close to it as we can. And, we can talk about that later in the questions if you like.

I’ve just learned that you can’t really exercise the option of presenting really totally decent programming because you may be forced to carry channels that contain such material because of the transmission consent process. Now, that process was developed as we all know as an alternative to must-carry, so that the networks would have a better way, really, to deal with that process and they really worked out a system so that they could realize more of their economic value by offering programming in blocks and they didn’t ask that the must-carry concepts be carried for free under those blocks. I do think that though none of the big four networks are carried by cable through must-carry, instead now they’re carried I guess through almost all of your systems through this retransmission consent process. It bothers me a little bit to realize that the negotiation process that brought retransmission consent into being has led to something Congress did not contemplate at the time and that is back in the time when cable did not have a majority of the viewers, nor did the networks own 45 percent of the most popular cable channels. Now, when the negotiations take place with the networks to carry their basic systems of over-the-air programs, I’m informed that your group is quite often required to buy the other 45 cable channels they offer also. And, the net result, I’m told, if you buy and carry network programming, you may be required to pay for channels that they own too, whether or not your viewers or you actually want to carry them. Now, I don’t know how prevalent that is, there is no question that there ought to be a level playing field there too. We didn’t bring about the retransmission concept in order to give a group more power over those who they deal with in the process of carrying out must-carry. I do think that while you’re digital subscribers could block individual channels or programs, the majority of your customers are not able to do that and as you carry them over the air you really have to deal with the question of the moral and religious values of yourself and your viewers. I think Congress is becoming more sensitive to this. I hope they are and we’re going to try to work that out in the bill that we’re going to work on to try and either, as I said, either change the ’96 Act or replace it.

I just met with the Chairman of the House Subcommittee just before we came here and I think we’re on the same page on some of these things as we move forward this year. But, clearly we don’t want you to lose viewers because of offensive content that you face in terms of must-carry or the concept of the basic reprocessing process.

I do think what we want to do is to find a way to discuss with you the issues that you face and this is one of the ways we do that, is by me making a few remarks to start with and we’ll see what happens after that. There are some other issues that we want to deal with regard to these issues beyond retransmission consent and the basic concepts of decency or indecency, however you want to talk about it – that is the cost of programming. Just five content producers – the four networks plus AOL/Time Warner – own or control 57 channels now, including the most highly rated programs on the air today. The same channel bought by a large national cable company if its offered to your members I am told, it is offered at a cost that is higher than, and as a matter of fact, I’m told it’s an average of 30 to 50 percent higher, than the cost to other larger systems. And, you’re not able to pass those high costs on to your customers because you must also compete with satellite that receives volume discounts that small entities like those that serve us in Alaska do not. Perhaps some of this makes good sense to some of the producers of cable channels and others, but it does seem it to me it disadvantages rural America, which relies on smaller companies like many of yours and I think this is another area that we’re going to have to explore very carefully as we move forward.

The FCC is looking at some of these issues. We hope that they will watch these issues that I mentioned to you closely in the weeks ahead. We intend to continue the listening sessions and discuss reforms or replacement of this law. I can’t tell you exactly today where we’re coming on those issues. Senator Inouye and I are working together and I must comment to you on that – the two of us have been together now for over 36 years and we’ve worked on the same committees basically. We are of different parties. We’ve never had an argument. We have not exactly voted together, but we don’t argue. We try to work things out to the maximum extent possible through a bipartisan process and that’s what we intend to do with this Committee of ours. Senator Inouye is Co-Chairman of our Committee. That rankles some of my Republican colleagues, but that’s just the way it is. We’ve worked together too long to call each other anything other than brother or Co-Chairman, so I think it will really bring about a relationship on our Committee that’s long been missing and I hope we can find a way to deal with it.

Now, I’ve got a lot more things here that I could talk about, but I’m reminded of a story that was told to me about a young boy who was running down the stairs on Sunday morning with a baseball hat in one hand and a glove in the other and his mother grabbed him, of course, by the shirttail and said, “Where do you think you’re going?” And he said, “Well, I’m going out to play baseball with the rest of the guys.” She said, “No, you’re going to go to Sunday school and when you come back, I want you to tell me exactly what you’ve learned.” So, about and hour and a half later, he was running down the stair again, she grabbed him again, and said, “Johnny, what did you learn in Sunday school?” And he said, “Well, Mom, I got to tell it to you straight. Here’s what happened. They told me about this group of people, they’re good people. They were captured by a bunch of bandits, taken out on a desert and they built a coral around them and kept them there for years, but they finally selected one guy who turned out to be a pretty good leader and he got them out of that coral. They were going across the desert, they came to a river and he knew he’d have to have some help to get across that river, so he called on the Corps of Engineers to build a bridge across that river. And, then, realizing they weren’t getting across fast enough, he decided he ought to deny them the right to use that river. So, he called the Strategic Air Commander and said I want you to bomb away that bridge behind us, and they did. They bombed it away and this leader and all of his followers went to the promised land. His mother said, “Johnny, you could not have learned that in Sunday school.” He said, “Mom, I got to tell it to you, if you don’t believe the way I told it to you, you’ll never believe it the way they told it to me.”

Now, what I’ve got to do is find a way to make you believe what I’m telling you. I think we’re going to have a good year for communications in the Congress, but it’s going to take a lot of hard work to try and understand the intricacies of the change brought about by this tumbling technology that affects your industry’s vastly and I think it’s a very immense problem. But, the House and the Senate Committees are both committed to work on revisions that will ease the burdens of the industry, protect the consumers, bring about more decent programming, and, hopefully, lead us into a period of fairly quiet activity as far as the FCC process, so we’ll all know what really the basic rules are. The basic aim is a level playing field for everybody involved in communication.