Majority Statement

• Chairman John D. Rockefeller IV
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  Majority Statement

  Chairman John D. Rockefeller IV

  Today we are here to discuss the future of the video marketplace.  We are continuing a conversation this Committee began two years ago – an examination of the emergence of online video, and asking whether it has the ability to bring more quality content and more choice to consumers.

  The past two years have confirmed the ability of online video to resonate with consumers and generate critical acclaim. In fact, just last week, an online video provider garnered over 30 Emmy Nominations, and it  has produced two online-only TV shows that are generally recognized to be some of the best TV shows airing today.

  It remains an open question whether online video can become the driving force of a consumer-centric revolution in the video marketplace. 

  While it is true that at least one online video provider has more subscribers today than any one cable or satellite provider, no online video platform has emerged that can compete on equal footing with traditional cable or satellite service.  And it is important to remember that these online video providers are reliant on broadband providers to reach consumers.

  Last November, I introduced the Consumer Choice in Online Video Act.  That legislation is designed to start a real conversation about how to foster the growth of online video services. My bill provides them the breathing room necessary to compete on a level playing field with traditional pay TV services.

  I continue to believe that one of the core policy questions that Congress must grapple with – as it looks to reform video policy – is how to nurture new, competitive technologies and services, and make sure that incumbents cannot simply perpetuate the status quo of ever-increasing pay TV bills and limited programming choice. 

  This is particularly true when we have real-world examples of at least one former cable CEO announcing to the world that his company actively tried to prevent the growth of new competitive online video services.      

  Make no mistake:  the video marketplace is at a tipping point.  The two proposed mergers could fundamentally reshape the marketplace.  And as press reports today indicate, there could be significant media mergers on the horizon.

  More importantly, these mergers create even larger companies that combine high-speed broadband and extensive media holdings.  These proposed combinations of video, broadband and content have real implications for the future viability of competitive online video services. 

  As the current longest serving member of this Committee, I have had before me many CEOs and other company representatives touting the consumer benefits of ever-larger companies in various industries – media, telecommunications, railroads, and airlines to name a few.  Yet, in most cases, those benefits never came to pass.

  Of course, each of these mergers deserves to be judged on their merits.  But doing so cannot, and should not, ignore what they could mean for the future of video.  Regulators must be rigorous in their review of the impacts of these transactions on competition and consumers.

  Our video marketplace stands at a crossroads today. 

  One path could lead to a perpetuation of the status quo into the online world, and consumers left worse off than before.

  The other path – the brighter path – is one where broadband facilitates a new evolution in video services as it has done in other markets.  That evolution brings with it more consumer choice, more competitive alternatives, more high quality content, and lower rates. 

  Consumers clearly prefer the second path.  They have an appetite for the types of services and choice that online video can bring.  Policy makers must respond to that desire by making sure online video has the room needed to flourish and push toward a consumer-centric video marketplace.

  I want to thank our witnesses for being here today. I look forward to discussing these important issues.

Minority Statement

• Ranking Member John R. Thune
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  Minority Statement

  Ranking Member John R. Thune

  Thank you, Mr. Chairman, for holding today’s hearing. And, thank you to all our witnesses for testifying.

  Mr. Chairman, the title of this hearing suggests we’ve reached a tipping point in the video marketplace, and that we may have arrived at a foreboding precipice for the future of video. While the mergers proposed between Comcast and Time Warner Cable and between AT&T and DirecTV involve some of the largest American telecommunications firms and tens of millions of American households, I am not convinced they will necessarily change the market in a permanent, or negative, way.

  That said, there is no doubt that these transactions are quite significant, and we are rightly here to discuss them and their potential impact on the marketplace and, most importantly, on our constituents.

  The marketplace for video services is dynamic and appears increasingly robust. It was not long ago when meaningful competition to cable companies simply did not exist. Today, nearly all homes have three pay-TV providers competing for their business, and that number is unlikely to be reduced by the pending mergers. 

  In addition to the current facilities-based competition, there is a growing class of video services we call “over-the-top.” While this market is still nascent, it is also ascendant. Many of the companies driving it are household names that dwarf many traditional pay-TV providers. Google, Amazon, Microsoft, Apple, Yahoo, and Netflix all are investing tremendous resources in unique and previously impossible ways to capture a greater share of the video marketplace.   

  Consumer choice for video delivery and video content is greater today than ever before. The continued promise of increasing choice and consumer empowerment, however, will need an ever-more capable broadband infrastructure, both wired and wireless.  

  So, Mr. Chairman, I am eager to hear how these mergers may improve the broadband network infrastructure on which our digital economy and video services increasingly rely. I am particularly interested in what benefits these mergers would provide to people in rural areas, like in my home state of South Dakota. 

  It is also important for the committee to understand how competitors and other market participants may respond to these mergers, if they are approved. Smaller video providers and content creators fear they will get further squeezed as the big companies get bigger – are these fears legitimate? And if so, can they be assuaged?     

  Another aspect that should be discussed is the role of content creators and video programmers in shaping the future of the video market. As large as some pay-TV companies may grow, none will succeed in the marketplace without securing the rights to carry high-quality content created and owned by others. Bill Gates once said that “content is king,” and that is certainly true for video.   

  It is even more true for online video. While a broadband connection is essential, ultimately it is the content delivered by that connection that drives demand and competition in the online video marketplace. In future hearings and outreach to stakeholders, we should solicit the input of online video providers and major unaffiliated video programmers to provide perspectives and insights into the dynamic interplay between content, platform, and infrastructure.

  I know the promise of online video is a subject you deeply care about, Mr. Chairman, and I look forward to continuing to build the committee’s record and explore ways to work together to ensure consumers ultimately realize that promise.  

  I thank you again for holding today’s hearing, and look forward to our witnesses’ testimony.

Testimony

• Mr. David L. Cohen

  Executive Vice Presdient

  Comcast Corporation
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• Mr. John Stankey

  Senior Executive Vice President and Chief Strategy Officer

  AT&T Inc.
  Download Testimony (188.99 KB)

• Mr. Gene Kimmelman

  President & CEO

  Public Knowledge
  Download Testimony (139.20 KB)

• Mr. Shawn Ryan

  Member

  Writers Guild of America, West
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• Mr. Jeffrey Blum

  Senior Vice President and Deputy General Counsel

  Dish Network
  Download Testimony (103.73 KB)

• Mr. Justin (Gus) Hurwitz

  Assistant Professor of Law

  University of Nebraska College of Law
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