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tv   The Communicators Matt Polka Dave Heimbach  CSPAN  May 6, 2019 8:01am-8:34am EDT

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let viewers decide all on their own what was important to them. c-span open the doors to washington policymaking for all to see. bring you unfiltered content from congress and beyond. in the age of power to the people this was true people power. in the 40 years since the landscape has clearly changed. there is no monolithic media. broadcasting has given way to narrowcasting. youtube stars are a thing but c-span's big ideas more relevant today than ever. no government by supports c-span. it's nonpartisan coverage of washington is funded as a public service by her cable or satellite provider. on television and online c-span is you unfiltered view of the government so you can make up your own mind. >> this week on "the communicators" we're going to be looking at some of the issues facing smaller telecom companies. joining us is david heimbach of a a shentel communication, he's
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executive vice president and coo. and matt polka is also with this. use president and ceo of an organization which for a long time was known as the american cable association. now it is america's communication association. why the name change? >> guest: i was here are your company are that question about cable, why is cable still in the name of so many changes taking place in our marketplace? we have reflected that. we spent a lot of time thinking about what our members are doing. at the end of the day we decided it was time for a change but it was time for a change based on what our members to each and everyday in their communities, small towns and rural areas, and that's connect and communicate. they use technology to do it. used to be cable, phone, and now broadband but who knows what the next technology will be, which if you note our name, aca connects america's communication association does not refer to a
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specific technology. who knows what the future holds but we do know companies like shentel communication will connect and communicate. >> host: is cable a dirty word? >> guest: know it is not. i've seen stories to that effect since we changed our name. we are very, very proud of our cable heritage that not only the smaller providers but in her industry in general. very proud. it's that idea cable-television going to the top of the mountain, building a tower, running a wire after receiving a signal and taking it down into a valley that created natalie cable-television, but when you think about it, the whole idea for broadband internet today. that's what we have developed and now we're taking to new levels cable, phone, broadband. who knows with the next technology is. we are very, very proud of her history and heritage and would build off of that each and every day as our members serve their communities. >> host: you mentioned your members. who are your members? >> guest: 800 small
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independent companies across the country, 50 states, smaller towns, real areas that serve approximately 8 million subscribers. these are in very, very small sparsely populated areas. typical density we serve could be 20 pounds per mile or less, and even less nowadays as our members are driving broadband deeper and deeper into the service areas. these are not the urban centers we think of, new york, los angeles, chicago, but small towns that are important where our members live and work and where it's so important for them to provide broadband to these committees that desperately need it. >> host: david heimbach, give a snapshot of shentel communication. >> guest: chinchillas 150 note company based in edinburg virginia in the western part of the state of virginia. we operate across seven states in the mid-atlantic region. we have three segments lines of business, wireless is our largest, about two-thirds of our
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revenue and earnings and then we have a cable segment and wireline segment. we have just over 1000 employees at shentel and we do a little over $600 hundred dollars a year in revenue. >> host: you say your wireless business is two-thirds. how do you operate that? >> guest: query sprint affiliate and we been a sprint affiliate for a couple of decades now. it's been a very mutually beneficial arrangement for both companies. we do put our own capital and operate roughly 2000 towers or base stations of equipment. we are all things spread in the mid-atlantic region. we operate between pre-and post made brands brands roughly 350 stores. it's our employees that interact with you as consumer. if you come in to a sprint or boost mobile store and we have engineers that design, construct and operate the network. >> host: i know the antitrust
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person at the department of justice was such a recent conference. what are your views of the sprint/t-mobile merger? >> guest: we publicly are supportive of the merger and we believe that a stronger, combined company of sprint/t-mobile is better for the industry and ultimately better for the consumer long-term than a four player market with a distant third and fourth player. as i think you are probably well aware, the wireless business in particular, telecom and general but the wireless business in general is a very capital intensive proposition. with 5g emerging technology, in order to support a rapidly growing and evolving subscriber base consuming more and more data, becoming more and more difficult for companies like
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sprint to go expand alone. >> host: you talk about cable. how many cable subscribers do you have and are using cord cutting? >> guest: we passed roughly 200,000 households across three states in her our cable busined with roughly 70,000 customers or so. we do see cord cutting. we last year lost roughly seven, 8% of her her biggest subscriber base. it's becoming more and more difficult for an operator of our size to compete effectively in the video business, given the ever increasing content costs, and the pressure that that is putting on small operators like ourselves to profitably deliver the service. >> host: i would like you both to respond to the economy's of scale which you brought up. how do you provide video services to that area of the country without charging an arm
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and a leg? or don't you? >> guest: it's very difficult and it is becoming more and more difficult everyday to provide video services profitably. and thankfully, broadband has really been the savior for companies like ours and companies like the membership of the aca connects, our organization. we actually can achieve some scale, some economies of scale in that business, providing access to the internet because we were able to defray the cost of capital to construct and operate those networks across multiple surfaces. as you know consumer voice service has largely gone the way of cellular or voice over ip these days, and so that's been a declining category as well. and now video is following suit
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for different reasons. of course, but broadband has become an absolutely vital part of the american households. i would argue it's up there with the utility, together with things like electricity and one could even argue -- as a result the demand and the ever increasing consumption of over-the-top video has really supported our ability to still get a decent return on investing capital providing those networks. >> guest: it's one of the reasons why we fight so hard in washington at aca connects for the building of our members to invest in and deployment of broadband in the markets because of what they've talked about. the overwhelming consumer demand for more broadband comps become capacity to consumer video because now through broadband consumers have choice they never had before. that old in over-the-top provider, , they can choose to
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watch but also shows they can watch on the device to want to watch, they want to use whenever you want to use. it's important to continue to fight for that but also to give our members and the customers more options when it comes to video. it used to be the big old bundle which we still have to deal with because of the companies that own but 90% of all program that we do use a cable and how the program is sold and bundled. one particular popular channel is bundled with a dozen preps of the channels which actually creates this bloating effect. it's important for us to try to give consumers more choices to fight for that broadband ability to do so, but then to also take time in washington when opportunities present themselves to change existing rules. one of the things we're working on this year is a reauthorization of a bill with a long acronym, satellite television reauthorization which every fighters has to be
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reauthorized but allows congress to reconsider old and outdated regulations like retransmission consent which is imposing significant costs on companies like shentel and all of our members for the right receive what broadcasters today call free tv. >> host: a couple of questions from what you just said. number one, david refer to broadband as you utility is ate official position? >> guest: i think that remains to be seen yet as technology develops, but the truth is that's what we provide. we provide the building for consumers to be able to use our the internet for whatever services that they so deem necessary. what is essential here is, regardless of how you classify it, is the ability for smaller companies to be able to continue to invest and then build more. that's why when you think about
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issues in washington such as open internet for net neutrality, that debate is important to smaller companies because it has a dramatic impact on the ability of our members to obtain financing to be able to provide more broadband in smaller communities. that's essential. >> host: do you see yourself getting out of the video business? >> guest: i don't necessarily see that because it is truly a need for many of our customers, particularly our elder customers, who are not necessarily adopting what would be in over-the-top strategy or are used to the kind of thing but there used to watching television. we have to have some video that is available. i think our members will continue to try to provide that service for as long as they can. but by the same token, we see many companies that are deemphasizing video per se, passing along all of the video
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because of increasing cause a see as part of one year after year. we have to find a way as smaller providers that are committed to our markets to ensure we can provide those essential services to our customers that are not necessarily adopting over-the-top behavior. but by the same token we have to give the lion's share of our customers more choice to broadband. >> host: what's the average cost to provide video or a package of services to a customer? >> guest: the average cost is probably in the zip code of 50, $60 a a month in content cost. when you consider the fact that, on average, our video customers are paying us something in the mid to high $70 zip code, there's not a lot of gross margin to play with.
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that's really at the crux of the issue with respect to be able to design, construct and operate these networks just for the sole purpose of delivering video to the consumer. the rising content cost issue hurts trancelike ours, quite frankly, because where to try to explain to the consumer will come this visit us doing this to you. these of the programmers that are doing this. that's a difficult conversation because i don't think the average consumer understands that, and they may look at that relationship that they have with us for that service and may impact their decision or buying behavior with respect to the broadband product that we deliver to them. and so it puts companies like ourselves that our subscale in terms of content purchasing power in a tough spot. >> host: so if i came to you and complained about the cost and said, why don't i just spent
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$9.99 at netflix a month or amazon, et cetera, et cetera, et cetera, what is your argument back? >> guest: i would say go with god and do that. the reason for that is we would love to still be a broadband provider of choice and we believe strongly in the product that we provide. we don't make a lot of money selling video, and for some subscribers we don't make any at all, depending on what year you subscribe to. -- what cheer -- that would be fine with us if you want stream video. >> host: do you see shentel getting out of the video business at some point? >> guest: i think it is entirely possible at some point in time in the future will have to make the tough decision. i can't specify an exact timeframe for you right now. it's still a cash flow positive business for us, but there are peers of hours who have already
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made that decision, and i understand the conundrum they are in. >> host: c-span as a member of aca, i want to say that out loud, as we are cable sponsored company. what specific or unique problems do you face in a rural environment? >> guest: i think one of the most critical issues we face as a more rural or smaller market operator is that the relative density of households and businesses in more rural parts of the country is much lower than it is in a place like washington, d.c., any major metropolitan area. when you consider your cost to construct network, the fiber or collapse of cable, of the meeting is that you're constructing and the relative density is lower, your average
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cost per passing is obviously been higher. that means the overall investment you're making on a per household or per subscriber basis is higher and that means all things being equal, if you're trying to compete and we have to compete, then you have to find a way of making that customer more satisfied and dick with the products and services through providing so the more loyal to you so you have a longer time to cupric your investment because candidly, relative to our major metropolitan peers, it takes us longer to recoup our costs of capital and investment than our peers that operate in the metropolitan areas. >> guest: we have fought so hard for the opportunity for companies like shentel and all of our aca connects members to finally have a choice they can
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give to their customers. but also for washington to recognize how important our members are in this ecosystem of providing services. these are smaller markets. these are very sparsely populated, the remote in many ways where sometimes there are no roads to get to the inns where we serve our customers. it is challenging to do so but these companies are the companies that are providing the broadband lifeline in their communities. it is so vital for us to do so. we are proud of the work our members do. it speaks a lot to who they are and what they are from, which is living and working in their communities which is an enormous, a positive for the because they truly understand the markets that you live in. but there are challenges. each and every day as dave was talking about recording program expenses, our members generally pay higher because we are smaller so that's more cost the imposed on a company like dave and his customers, which then in
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turn he cannot necessarily use by way of the money they spent for programming to put back into broadband. there are many challenges they face, but it still doesn't take when anything from her their commitment to make sure the smaller communities are just as connected as new york, new york, los angeles, chicago. >> host: what do you want from congress, what do you want from the administration? >> guest: from congress first what i would say is let's work together on a bipartisan solution to solve this open internet net neutrality debate. we think it is vital in our country interest not only for consumers but also for those of us that provide service to ensure that we find a bipartisan solution that protects the interests of consumers, that allows isps to invest, innovate and deploy. that's why we've been very supportive of policy from fcc that it promoted more investment in deployment. we want to see the continue, but
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that does not mean by any stretch that we are not mindful of nor protective of the interest of her customers. we are very protective of them in terms of our commitment to them of no blocking, no throttling, no discrimination, no paid prioritization, allowing consumers to use the internet wherever they lawfully want to go. it is in our business interest to help facilitate that but we have to find a bipartisan solution. and i remain hopeful. i remain hopeful we can find it. it we can then think that will open up new phases of development with technology, broadband and other things to come that we can't even imagine yet. >> host: the net neutrality, number one. >> guest: net neutrality is very important. i mention the stellar reauthorization before because that is timely. it has to be reauthorized by the end of this year. >> host: steve scalise has made a proposal. >> guest: he has. congressman mr. scalise has
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recognized that existing broadcast schedules that include consent must carry some of her copyright rules are old and outdated and basically need to go because they were created at a time that no longer existed a when you talk about 21st century broadcast carriage and of the competition. use unity let's get rid of it all and create more marketplace negotiations. we support the idea of taking these outdated regulations and looking for alternatives. so we're committed to finding more solutions that protect consumers, that encourage competition whether it is his idea. there been other ideas introduced by anna eshoo that would provide for what she calls a bigger choice bill that would allow for certain high-cost broadcast channels to be carried on a tear but also to take consumers out of the middle of the retransmission consent, hostage negotiation between
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broadcasters and cable operators that the consumers in the middle. we're working together to find solutions there. lastly, what i would say is let's take a look at some of the other issues that are in play today, one in particular deals with broadband deployment. it also deals with an aspect of 5g deployment, and that's use spectrum and what's called the sea band to encourage more 5g deployment for broadband. but frankly there's an issue there. our members, for instance, receive sea band signal via satellite using sea band spectra for a portion of the spectrum could be set aside for 5g deployment. but there's a catch. if some of the spectrum is used it could create interference with our members the ability to receive c-span signal via satellite and other cable signals that we received today. who's going to be in charge of the still of the spectrum?
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will be the satellite companies or is it going to be the fcc that would have an ability to use public auction and to enjoy company like shentel, if it suffers damages as result of interference with use of the spectrum could be made whole recs we think the fcc should be part of that solution. >> host: net neutrality,, stella, 5g, spectrum, how do those issues affect you on a daily basis, on a local level, or do they translate sure they do. there's a nice menu of options that he has provided there, i guess i will start with net neutrality. he is right when he says it's not in our interest as an internet service provider to interfere with, monitor, throttle our customer base. far from it. >> host: so is it in your interest to have a set policy? does it matter to you? >> guest: does it matter to us that there is a policy to govern
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whether or not we can't but we cannot? we believe that the industry has largely self govern around this out of the fact we have to compete. it's our position that if we took a proactive posture in the marketplace and said look, we're trying to monetize your data, we're try to monetize your behavior, we are trying to affect or impact your ability to conduct your business, your affairs on the internet, that the consumer would vote with their feet. they we choose to buy service from someone who would not do those things. i believe the marketplace is very efficient and i believe the marketplace, it has govern this issue and will continue to govern this issue on a go forward basis. there's also a practical matter about that as well, which is we
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have a lot of things to take care of running a big company across a multistate region. and while we're a relatively small company, relative to our peers, , we still aplenty to do. getting in and turning dials and flipping switches on the interference of someone's consumption of the chosen content on the internet is just not something that is either in or interest or something we even have time to do. that's the net neutrality issue. this event issue matt spoke about an spectrum issue more broadly -- sea band issue -- we were interested in how the spectrum auction to go in mid band unfold so the upcoming
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spectrum auction whatever ends up happening, though spectrum blocks are contiguous in nature and are well-positioned for 5g but candidly 5g is not going to make a big impact in rural america. that's a technology that is largely going to be deployed in dense urban centers. it's designed more for capacity, network capacity relief to augment the ability of consumers a whatever internet of things, applications in the future that may put demands on wireless networks in dense locations and environments will . and so i think one of the things that i would like to see as an
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operator from a policy perspective is why we support the fcc's position on spectrum and certainly echo max, extensions of how to handle c band, we would like some more focused on making it easier to deploy broadband, particularly leveraging wireless and fixed wireless technology by assisting making it more easy, easier to gain access to rights of way and to gain access to tower sites and actually the point the equipment, and to do so cost-effectively without having to pay under lease expense or have to go through the red tape of bureaucracy. because that is the very time-consuming and burdensome cost in the delivery of broadband internet in rural
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america. >> host: microsoft recently said there is a much higher level of a digital divide in this country than the fcc is saying there is. do you witness a digital divide? >> guest: we do, but i think the -- and i would, our perspective as an operator is that we will provide services that you might expect to be able to get in dense urban centers to our subscriber base in rural america. that's just a commitment our company has made to the markets that we serve and to our consumers, albeit more costly to do so. and so certainly hope we're helping to solve the digital divide in markets that we serve, and we believe that we are.
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but interestingly, the are a subset of consumers that for whatever set of reasons don't want to be digital consumers of internet access either. there are the haves and have-nots but there are also those that choose not to. i think what we activate together is we leverage stimulus in funding to deploy internet access first of all where it's needed most, in unserved areas, and there's a number of initiatives underway from a mapping perspective to get that right. there's a lot of false positives in the current data that governs what people do and don't have access to broadband, and we also want to avoid that stimulus being used to overbuild networks that are already there. that's another issue we worry about in the markets that we
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serve and something that we talk a lot about. >> host: that stimulus, , does that come from the fcc? >> guest: it could come from things like the connect america fund that the fcc governs. it could come from the states. it could come from other state level or even municipal funding sources. >> host: and finally, you mentioned competitors a couple of times. who are your competitors? >> guest: that's a different answer depending on which segment of business. we compete as sprint in the wireless business, so we compete with verizon and at&t and t-mobile. certainly before any merger might take place, and u.s. cellular in our stead of the markets on the prepaid site. with a smattering of competitors as well as the go to market as boost mobile. in the cable business we largely
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compete with sync center link d frontier and verizon. and then in the wireline space, and the fiber space is a long list of competitors that i won't take time to enumerate you but it could be cable copies, long-haul fiber providers. it could be municipal or co-op based electrocuted was as well. >> host: matthew poca, final comments. >> guest: we've been at this for 26 years of focusing the important need to serve smaller markets in rural areas. it was our first chairman from a small company name son country cable going to headline which is on my desk i look at everyday and that headline is the geek is not on the agenda. we'll continue to work tirelessly our members but more so for the citizens come for the customers, for their communities because of the vital service at our members provide a small towns in rural america.
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>> host: matt polka is president and ceo of americans can vacation association. david heimbach out oh and executive vice president of shentel communication. this communicators and all other communicators are available as podcasts. >> once, tv was simply three giant networks and a government supported service called pbs. then in 1979 a small network with an unusual name rolled out a big idea. let viewers decide all on their own what was important to them. c-span open the doors washington policymaking for all to see, bringing unfiltered content from congress and beyond. in the age of power to the people this was true people power. in the for you since, the landscape has clearly changed. there is no monolithic media. broadcasting is given way to narrowcasting. youtube stars are a thing, but
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c-span's big ideas more relevant today than ever. no government money support c-span. it's nonpartisan coverage of washington is cited as a public service by your cable or satellite provider. on television and online, , c-sn is your unfiltered view of the government so you can make up your own mind. >> now the supreme court oral argument for united states versus davis, a case challenging a section of criminal law used to prosecute gun crimes, specifically the


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