Hearing of the Senate Commerce, Science, and Transportation Committee - At a Tipping Point: Consumer Choice, Consolidation and the Future Video Marketplace

Hearing

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.

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