ACA Criticizes Influential Wall Street Analyst for Encouraging Web Giants to Pursue Internet Business Models That Drive up Broadband Costs and Reduce Consumer Choice

Pali Research's Richard Greenfield Supports Media Conglomerates Like Disney That
Want To Hide Their Costs In The Retail Price Of Broadband
PITTSBURGH--(Business Wire)--
All broadband users should be extremely troubled that a noted Wall Street media
analyst like Richard Greenfield of Pali Research is encouraging (report
available by request) Internet content owners to seek aggressive monthly fees
from broadband access providers for their content and services, like the Walt
Disney Co.'s ESPN360, full well knowing that these costs would be passed along
to all consumers. If the publicly traded media conglomerates and Web giants know
they can curry Wall Street`s favor by pursuing these "closed Internet" business
models, then you can guarantee that we`ll see other groups following Disney`s
lead.

In fact, just one week ago, Paramount, Lionsgate and MGM launched a Web-based
premium movie site called Epix, whose business model is similar to that of
ESPN360 in that it requires bundling the service directly into basic broadband
packages. Broadband access subscribers, who have no choice but to pay for the
service, will never see a separate charge appear on their bill.

"Mr. Greenfield believes that charging all customers for Web content rather than
just those who demand it is the wave of the future. But who benefits? Not the
consumer," said American Cable Association president and CEO Matthew M. Polka.
"ACA and its small cable members believe Mr. Greenfield couldn't be more
irresponsibly anti-consumer in urging Web-based content and service providers to
follow in the footsteps of ESPN360, which is demanding cash from broadband
access providers in order to generate a reliable gusher of revenue from all
Internet consumers. Following Greenfield's advice would cause retail broadband
prices to soar and force many consumers to pay for content they don't want."

Disney`s ESPN is coercing broadband providers who also provide video services
into accepting ESPN360`s broadband subscription-fee business model by bundling
it with its dominant ESPN cable networks in its programming deals. ESPN is
leveraging its enormous market power in the pay-television programming market to
push its ESPN360 onto all broadband consumers. Broadband providers, particularly
those who are small and medium-sized, cannot afford to say no to ESPN360 when
the consequence is that they would no longer be able to offer some or all of the
ESPN family of cable channels to their customers.

"These concerns are real and can be substantiated. This issue is not about small
cable operators receiving Web-based content or services for free. Rather, it`s
about preventing media conglomerates and Web giants from driving up broadband
rates and taking away consumer choices," Polka said. "ESPN360's position is that
it won't make its video services available to consumers whose broadband access
providers have refused to pay fees to corporate parent Disney. Denying access to
content desired by consumers simply because broadband access providers rejected
commercial extortion conflicts with the Net Neutrality ideal, and the Federal
Communications Commission needs to address this growing problem."

The idea of blocking access to content has been threatened in the past. For
instance, Viacom in December 2008 threatened to deny Time Warner Cable
subscribers access to Viacom`s Web sites because Time Warner refused to sign a
programming deal with the owner of BET, MTV, and Nickelodeon.

"Immediate attention should be given to this matter by the FCC and others that
support open networks, like Public Knowledge, to prevent Web content providers
from hijacking the Internet. The Obama Administration, Congress and the FCC must
take notice now before these high-cost `closed Internet` business models become
the norm of the industry and damage the prospect of universal and affordable
broadband access," Polka said. "ESPN360's intent is to take Disney's cable
industry business model and graft it onto the Internet."

Access to ESPN360 requires the payment of fees based on an access provider's
total subscriber base, not on the precise number of sports fans that sign up for
the service.

"That's exactly what Disney demands of cable operators that want to distribute
ESPN. In both cases, Disney wants to deny consumers the ability to control their
media environment. In both cases, Disney wants to remain out of sight and use
its muscle to force cable operators to play bill collector and absorb the
political heat as rates rise and choices decline," Polka said.

Polka urged regulators to examine whether Web content providers pose a risk to
the competitive health of the internet by demanding fees from broadband access
providers.

"As Greenfield knows from years of covering the industry, rising prices and the
lack of choice are the cable industry`s Achilles' heel, mainly because Disney
and other media conglomerates exercise undue market power. Migration of those
problems to the Internet would be great for Disney, bad for broadband access
providers, and horrible for consumers. It's time for regulators to put Disney on
ice," Polka said.

About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization
representing more than 900 smaller and medium-sized, independent cable companies
who provide broadband services for more than 7 million cable subscribers
primarily located in rural and smaller suburban markets across America. Through
active participation in the regulatory and legislative process in Washington,
D.C., ACA's members work together to advance the interests of their customers
and ensure the future competitiveness and viability of their business. For more
information, visit http://www.americancable.org/

American Cable Association
Ted Hearn, 202-986-1980
thearn@americancable.org

Copyright Business Wire 2009