CenturyLink (NYSE: CTL) may be scaling its IPTV video business with over 2.6 million addressable households as of the end of the second quarter, but the telco has asked the FCC to eliminate non-duplication and syndicated exclusivity rules in order to get more competitive content rates.
In an FCC filing, CenturyLink said that the current rules give local broadcasters a monopoly on national syndicated and network programming, driving up costs for newer video service entrants like itself.
"The direct result of these rules is extraordinarily high fees that are passed on to consumers and are particularly harmful to new entrants that are seeking to enhance competition in the MVPD market," said CenturyLink in an FCC filing. "Although sky-rocketing programming costs are an issue for all MVPDs, the exclusivity rules disproportionately harm smaller MVPDs."
Unlike traditional large multichannel video providers (MVPDs) such as Comcast (NASDAQ: CMCSA), which have been delivering video services for decades and have more leverage in the negotiation process, CenturyLink does not have the same luxury.
"As a new entrant, CenturyLink pays retransmission consent fees that are much more than the amount other MVPDs pay for the same content," CenturyLink said. "Larger and more established MVPDs have greater leverage against broadcasters because, with their large existing customer base, they can more credibly threaten service disruptions that would significantly affect the broadcasters' revenue."
One of CenturyLink's proposals to the FCC is to suspend exclusivity rules agreements related to network programming.
CenturyLink said that "Eliminating the exclusivity rules is an important and necessary first step in helping to curb the market power of local broadcasters that is raising the costs of programming to consumers."
Despite the ongoing content fee issue, CenturyLink continues to make progress in rolling out its Prism IPTV service.
During the second quarter, the telco added about 8,400 Prism TV customers and launched service in three new markets. It also passed added 175,000 homes in the second quarter with Prism TV, ending the period with over 2.6 million Prism TV addressable households.
By the end of the year, the company plans to increase IPTV penetration to approximately 250,000 additional homes to reach more than 2.8 million total Prism TV addressable homes.
- see this FCC filing (PDF)
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