Interview Date: Thursday, October 06, 2005
Interviewer: Kristin Van Ormer
Susan Bitter-Smith describes being hired by the Arizona Cable Television Association (ACTA) directly out of law school. She explains the organization’s mission at the time to advance political grassroots outreach and expand membership. She talks about cable television’s customer base, mostly rural rather than urban. Bitter-Smith delineates the franchise licensing battles in the cities, what controls cities could impose on the industry as well as dealing with regulations on the state level. She describes working with Senator Barry Goldwater of the Senate Commerce Committee on issues related to the upcoming Cable Act of 1984. She comments briefly on the difference between Goldwater and his successor, John McCain. Bitter-Smith explains ACTA’s position on the critical issue of pole attachment rates, and a related lawsuit. She discusses how cable has become much more high-profile, and the advantages and disadvantages of that status. She talks about the consolidation of companies, the role of Cox Communications in Arizona, and changes in the structure of the ACTA board. She concludes with comments about Bruce Merrill as well as thoughts about the effects of the 1984 and 1992 Cable Acts.
SUSAN BITTER-SMITH: I’m Susan Bitter-Smith. I have been the executive director of the Arizona Cable, now Telecommunications, Association for almost 25 years. I was hired by the ACTA board in 1980 for then the Arizona Cable Television Association as the executive secretary, and one of the first things they needed to do was change the title because people kept thinking I was the clerical person as opposed to the CEO. Our trade association is much like the other cable television associations across the country. We are governed by a board of directors. They are general managers and corporate execs from their respective cable operators throughout the state of Arizona, and over time that has certainly changed in the last almost 25 years of who those players are and the size of those companies, and as mergers and acquisitions have grown we have reconfigured the number of board members and how the company structures work, put some limits on how many directors any one company can control. I got hired by the association right out of law school, it was my first job out of college to go to work for the cable association. I had done some contract lobbying for them as a law student, and when my predecessor, who now runs Sky TV in New Zealand, decided he didn’t like the political side of the association work, he liked the operational side, decided to leave he actually called me husband and suggested he apply for the job because both of us had been doing some lobbying and my husband was otherwise employed. I was sort of in the throes of do I practice law? I really didn’t want to do that. What do I do with this newfound career? So I went to interview with the board, and we’ve had a longstanding joke now for almost 25 years that they had to hire me because they asked me all kinds of questions that were highly illegal under EEO rules, like will your husband let you travel, are you going to get pregnant anytime soon, but the gist of it was I think they were interested in taking the association to a new level in terms of very advanced political grassroots outreach and were looking to expand membership in publications and meetings. So it’s been where I’ve stayed ever since then. It wasn’t really my initial intent to do that. When I first went to work for ACTA, there were no cable subscribers in Phoenix or Tucson. The only cable customers were in the rural parts of the state. I didn’t know what cable TV really was; I never had cable TV because I lived in an urban part of the state, and we were just in the midst of the franchising licenses in Arizona, but the battles between many of the larger companies trying to get authorization to build systems in the Phoenix and Phoenix suburb area, and in Tucson. So that was what we spent most of my early years at ACTA doing is working with all those different franchising licensing battles, trying to make sure that the things that cities were asking for were not unreasonable, and accommodating state legislation to deal with this new world of cable TV because there were no state statutes that really dealt with cable television. As a result, the statutory framework is pretty limited because obviously the industry has never been crazy about having governmental regulation, and we were very careful, and I think successful, with great effort from my board, a lot of grassroots lobbying, to convince the legislature that this was not something the state should regulate, that it was better left in the hands of local municipalities and there should be a few controls such as cities can’t own cable companies and that there ought to be some controls on what cities can ask for, and we were successful in getting some of those laws in place, and they still stand today. The other interesting thing that I thought was unusual and exciting for me as a relatively new entry into the workforce is even though Arizona was very small, we walked into a federal regulatory scenario where our senior senator, Barry Goldwater, was chairman of the Senate Commerce Committee, which was at that point the de facto place that all cable regulation was happening on a federal level. So as an association in the mid-80s, we spent a lot of time in Washington D.C. working with Senator Goldwater on the forthcoming cable act, a very significant piece of legislation that set the framework for cable TV. We prepared testimony, in fact many members of my board testified in front of the Senate Commerce Committee. I wrote their testimony and they gave it very well, they did a great job, but there were about 18 months where we were in Washington almost once a month. Clearly with NCTA’s help, but as a state association, Senator Goldwater was much more interested in having constituents involved in the process than he was paid federal lobbyists. So that was, I think, an unusual role for a state association to play, particularly a very small state association that had a reasonably limited budget. We got a chance to replay that role again in the mid-90s because by a fluke, as Senator Goldwater moved on and out of the Senate, the junior senator from Arizona, John McCain, ended up being the chairman of the Senate Commerce Committee also, one of the threshold policy makers on telecommunications. He has not been as friendly to our point of view as Senator Goldwater was, but certainly receptive to seeing us, and in a similar vein, very interested in getting input from Arizona operators on how that policy moved forward. A couple of the big policy issues that we were involved with dealt with pole attachment regulation, we successfully, as the association, sued the state public utility commission, which is called the Corporation Commission in Arizona, to preclude them from regulating pole attachment rates, and then that being successful then took several public utilities to the FCC under a complaint process to make sure that we had appropriate and equivalent pole attachment rates, again, which still stand today, which I think has been very, very helpful in deployment of new services and expanded services within the state of Arizona. The cable industry in Arizona has had, as has across the country, a lot of impact from mergers and certainly changes in the products and services as our operators move more into the telecommunications industry deploying telephony and broadband internet service. We’ve become a much higher profile industry, which is both good and bad. It’s good from the standpoint that we’ve become major community players and there’s a lot more attention to what our corporate leaders think and the general political philosophy, but it also means that we’ve become a huge target for potential tax revenues and regulatory schemes. So a lot of the things that we were talking about in the early ’80s have recycled back. Again, it’s like déjà vous, dealing with how do we set up this framework of state legislation because there are a large set of bodies now thinking, gee, now we ought to go back and regulate VOIP, perhaps we should regulate telephony by cable television operators. We have been dealing with pole attachment rate issues again. So it’s kind of on a 25 year cycle, things go and come back around again. So we’re back doing many of those issues as part of a group, and fortunately all of the cable operators in Arizona are still members of the association, and they are very engaged and very involved and great volunteers, and do lots of grassroots efforts with our direction and have been successful.
KRISTIN VAN ORMER: How has that evolved as there has been so much convergence and consolidation of companies? How is that reflected in the face of the association now?
BITTER-SMITH: Well, it has changed just a little bit. We are a tad bit unique, I think, in Arizona than in other states because even though we have consolidation, we have a very significant Cox presence. Over 50% of the subscribers in Arizona are Cox customers, but the other 50% are people who are customers of Comcast, Adelphia, News Post Gazette, NPG Cable out of St. Joe, Missouri, Cable One, and then we still have a handful of small, independent operators. So even though we have a huge Cox presence, we also have a lot of other operators, so we still actually have a lot of people who can be members as opposed to having a state where we only really have one operator or two, and all of those companies, Cox certainly being the premier of those, have understood the value of cooperative legislative and educational activity, and they have not attempted to do it in-house. They have understood they’re much more successful if they’ve got an issue where it’s the big Cox corporate person or the big Comcast corporate person, if there is also a small, independent person that says this is going to impact my business, as well. And I’ve been grateful for them all understanding that. The Cox corporate folks have supported issues that have more importance to small operators, and the small operators have supported issues that have more importance to the large corporate players, and so far so good. We haven’t had any major impasse. It has, again, changed how we’ve set up our board structure. We’ve had to create some governance issues limiting the number of board members of any one company that can be on the board, making sure that we do at least capture some of the different kinds of operators on the executive committee, on the nominating committee so we create a balance. So we’ve accommodated that and we’ve readjusted our dues structure a little bit so that although we have a huge presence of one company they have not thrown their total budget out of whack by what their dues numbers are to us, but it’s still been enough to run the association in a reasonable fashion.
VAN ORMER: Can you speak at all about the implications of both the ’84 and ’92 Cable Acts specifically in Arizona on the operators there?
BITTER-SMITH: In ’84, the major issue there was the role of the municipal government and what they could demand and extract, and I would use that word again, extract is a strong word, but that’s what was happening, in return for getting a license or a franchise to operate. I think the bottom line is that it really probably protected many of the smaller operators in the more rural areas by having some limitations on what could be asked from small operators. Senator Goldwater was very sympathetic and a big champion of creating the two-tiered approach in the ’84 Act where there was a small operator threshold and a large operator threshold on many of the things that you had to do as a cable operator, including access to channels. The limitation on license fees and franchise fees, although some would second-guess that today, also made a big difference because there was a sliding scale. Many systems in Arizona never got to the 5% level until very recently because of the understandable difference between urban systems and small rural systems. In the ’90s, I think certainly there were some things that my Arizona members would have liked to have seen addressed – pole attachments were certainly an issue that could have been potentially dealt with in the ’94 Act – weren’t really, and there’s a number of reasons why that are very tough to deal with, particularly the electric co-op poled attachment issues that popped up, that came out of the bill, as the co-op lobby became more and more aggressive. But the implications again in Arizona, particularly as we moved into the Act in the ’90s, provided an opportunity for deployment of newer broadband services. The issue that the extraneous, the other services, such as high-speed data and ultimately telephony would not be regulated in the same fashion as cable allowed them the freedom to actually provide those services, and again, because of that companies in northern Arizona, such as Lake Havasu City or Bullhead City, which are not huge population bases, have as advanced a team of services as customers in Phoenix because of how those bills ended up being shaped.
VAN ORMER: Great. You have a couple of quite legendary characters that are from Arizona state involved in cable, including Bruce Merrill. Do you have any stories or anecdotes that you can tell?
BITTER-SMITH: Obviously Bruce Merrill is historic in every way and shape in Arizona. He was sort of the father of cable TV in Arizona. There is a little disagreement about who had the first system in Arizona between he and a former member of the NCTA board, a guy named Bryan Blow, who has been a long time cable operator and still resides in Ajo, but I think in fairness we can say that Bruce is probably the guy that really deployed cable throughout the state of Arizona, and you run into almost anybody who’s had any history in cable and they’ve all at one point worked for Bruce. Fascinatingly enough, his relatives are still part of the management team in Arizona. Steve Rizley, who is his nephew, now runs all the Cox systems throughout the state of Arizona, so it’s a great family legacy. I think the best story I have about Bruce is when I was hired by the association in 1980, they were having a little bit of a struggle, and one of the things they didn’t tell me when I took the job was, oh, by the way, the then American Cable run by Bruce Merrill has just withdrawn from the association because they’ve been unhappy with how… not with the staffing, but with some of the board decisions and what was happening with the board. So there was a little financial issue that they had not addressed with me. So my first assignment was to go get Bruce Merrill and have him rejoin the association, and not only is he legendary in what he has done in Arizona, he is a physically big person, very large man. Everybody in the company called him Mr. Merrill. Well, nobody told me that. So I picked up the phone – all of 24, I think, 23, 24 – not knowing any better and called, and amazingly enough he made an appointment, I went to see him, and he had at that point a desk that was sitting on a podium, a pedestal to actually make him look bigger than he really was. I don’t think that was his intention, it’s just the way it was set up. And so I walked in and said, “Mr. Merrill, I’m Susan Bitter-Smith. May I call you Bruce?” And he said, “Sure!” I’m still hearing from board members who’ve worked for him they never get to call him Bruce, but for whatever reason I think we clicked, probably because he and I are both alums from the College of Business at Arizona State University. I am eternally grateful – when I said we really need to have you come back in the association, he said, “Well, tell me what you’re going to do.” I walked through with him, “Okay, fine, no problem,” and what had been portrayed by people on the board to what should have been a horrific conversation actually was a great conversation. He’s been a personal mentor since then, very helpful to me, has helped me in some outside political careers. He’s very pleased that the university that he and I are both alums of honored him not too long ago, and inducted him into the College of Business hall of fame, which he rightfully belongs to, and I had the great pleasure of introducing him. He is very, very infamous, and has moved on from cable TV operations now. He is running a high-speed data company. At age 84, 85, he drives from Phoenix to Prescott, Arizona, which is about a two hour drive, two times a week to run his company. I hope I have as much energy and togetherness as he does at his age. He is truly a great mentor and has mentored a lot of people in the industry.
VAN ORMER: Kind of a two-part question – what do you think cable’s strength going forward through this time of great transition is to carry it through, and what do you think cable’s legacy is?
BITTER-SMITH: Well, I have certainly always been involved in the policy side and the association side, never on the operations side, but one of the things that’s always impressed me is quite frankly I think part of the reason I’m still working for the association almost 25 years later is there is no timidness in the industry, there is great strength of conviction, and no lack of courage. People are ready to roll and move with technology and new innovation and new product quickly. We have a lot of corporate bureaucracy, there’s no question, but in comparison to other industries, the bureaucracy and the decision time is much faster. And so I think that is a strength that we are going to be ahead of the curve on technology and product and innovativeness because we’ve always had to move fast, we’ve always been a rapid-fire, rapid-moving kind of entity. I think the other strength that we have, and our legacy is that we have been fighting regulation from almost day one. It predates me, but I continue to hear the stories from the middle ’70s about the FCC attempting to eliminate us off the face of the earth, and that didn’t stop anybody. The leaders in the this industry who have now mentored others who are leaders in the industry have just always not been afraid to go to the regulating entity and say, “Look, we’re going to persevere, we’re going to do this, and this is how it works,” and there is an in your face approach that I think… the brashness may be again part of our legacy, but also part of our strength in that we will continue to look at new technology and move around regulatory schemes, and we’re facing some great demands now from DBS and other potential competitors, and that’s terrific for consumers and nothing that we complain hugely about. We just try to figure out a way to come up with the next better, and brighter, and more exciting product and move forward.
VAN ORMER: Wonderful. Is there anything else you wanted to add today?
BITTER-SMITH: I was simply going to add that one of the great things that our association has sort of learned from many of the leaders of The Cable Center is we now have our own pioneer hall of fame in Arizona, and it is headed into its almost 20th year of inducting people, starting with the legendary Bruce Merrill in the first class, and now people like me in the last couple of classes, but I’m very excited about our state honoring its pioneers, many of whom are also national pioneers, and their histories and legacies will hopefully be part of The Cable Center’s legacy in evolving state-by-state what’s happened in technology and public policy.
VAN ORMER: Susan, thanks so much for sharing your experience in the cable industry with us.
BITTER-SMITH: Thank you.