S ince the implementation of the FCC Closed Captioning mandated benchmarks for closed captioning in January, 2000, much has occurred in our industry, and this is an appropriate moment to take stock of where we are, and what the future portends. On January 1, 2002, the second benchmark level for closed captioning became effective, requiring video programmers to provide 3,600 hours per year of closed captioned programming. For the most part, most video programmers have made provision to be in compliance with these benchmarks.

      One of the main concerns of industry participants has been the availability of sufficient realtime talent, i.e., captioners or individuals with the desire and/or talent to provide the captioning to meet these federal benchmarks. In 1997, the FCC, in response to several commentators to its Notice of Inquiry who expressed concern over the numbers of captioners available in our industry, stated that as demand rose for captioners so, too, would the supply.

In 1997, the FCC, in response to several commentators to its Notice of Inquiry who expressed concern over the numbers of captioners available in our industry, stated that as demand rose for captioners so, too, would the supply. In reality, this has not been the case due to structural deficiencies within the court-reporting industry.

In reality, this has not been the case because of structural deficiencies within the court-reporting industry. Specifically, over the past 10 years, numerous court-reporting schools, suffering declining enrollment, have closed in the U.S. In the early 1990s, consolidation in the court-reporting industry, prompted by the practice of "contracting," severely limited employment opportunities for freelance deposition reporters. Naturally, there are no incentives for regulatory agencies such as the Federal Trade Commission, or the Department of Justice, to enforce antitrust provisions if high-profile names are not involved. If a major software company can't be subject to penalties, who can be?

      Over the past 10 years, as a result of the practice of contracting, many individuals in court-reporting schools and, arguably, due to the high cost of schooling, left the profession. In addition, many schools were not properly preparing their students for professional state certification exams. The resultant low pass rates also contributed to declining enrollment.

      In response to these realities, the NCRA (National Court Reporters Association) has vigorously sought funding for the training of captioners over the past year, for the training of current court-reporting students, and for retraining of reporters in the profession in selected court-reporting schools, for the purpose of acquiring realtime writing skills. In fact, over $100 million in federal funding is being sought for this purpose. While we strongly applaud these efforts, the reality and truth of the matter is that it may be too much money, too late. In order for students and current court reporters to undergo retraining, there must be economic opportunities for them to pursue realtime training and/or skills. And so, we will delve deeper into the "reality dynamics" of the closed captioned industry.

      Two deeply disturbing trends are emerging in our industry which pose a serious threat, ultimately, for consumers, captioners and would- be captioners, and network providers. The genesis of the problem is a flaw in the FCC Report and Order, re: closed captioning. Specifically, the FCC spent a great deal of analytical time in determining the criteria for video programmers, i.e., gross revenues, subscriber size, to determine who would be required to conform to the captioning benchmarks.

While the FCC stipulated which broadcast and cable entities would be required, the specific levels for closed captioning, and when they would have to comply with the benchmarks, it did not specifically require that a network or cable company "pay" or incur the cost of closed captioning.

While the FCC stipulated which broadcast and cable entities would be required, the specific levels for closed captioning, and when they would have to comply with the benchmarks, it did not specifically require that a network or cable company "pay" or incur the cost of closed captioning. This is significant, because a key reason for implementing mandates for closed captioning (pursuant to directives given the FCC under the 1996 Telecommunications Act) was that many broadcast and cable companies were reluctant to maximize video accessibility to closed captioning, considering it a variable cost, and therefore limiting accessibility to deaf and hard-of-hearing viewers. By mandating closed captioning, it was anticipated broadcast and cable companies would now consider closed captioning a fixed cost to be factored into the cost of video programming.

      MCS applauds those networks, broadcast and cable, who for several years, even before the FCC requirements, have closed captioned their programming, in fact, in excess of the FCC benchmarks. They have done so, paying for closed captioning because they recognized the importance of serving all their viewers, because it is the right thing to do, and not because they were required to do so.

      Most recently, the severe economic strains exacerbated by the 9/11 terrorist attacks have impacted negatively on corporate earnings. One major programmer has taken a distinctly different approach to meeting the FCC closed captioning requirements. Now, the approach in question has been used by many local stations over the past four years, with varying degrees of success. This approach, now being implemented in the national arena by a major national programmer, is as follows: the closed captioning company is expected to provide the advertising support and fund the costs of closed captioning in exchange for the right or privilege of captioning the programmer's air. Essentially, this is equivalent to a network saying, for example, to an equipment provider, (Sony, Panasonic, etc.) "we will use your product if you can find someone to pay for it."

The message that is conveyed is that closed captioning is not a cost that should be paid for, that accessibility for the deaf is not as important as it is for hearing individuals. If programmers pay for the audio portion of their video broadcasts, should they not pay for closed captioning, or is it unimportant that equitable accommodation be made for deaf and hard-of-hearing viewers, to provide video accessibility consistent with the law?

The message that is conveyed is that closed captioning is not a cost that should be paid for, that accessibility for the deaf is not as important as it is for hearing individuals. If programmers pay for the audio portion of their video broadcasts, should they not pay for closed captioning? Or, is it unimportant that equitable accommodation be made for deaf and hard-of-hearing viewers, to provide video accessibility consistent with the law? While we admire the creativity of the barter approach, it defies reality and, perhaps, the spirit of the law. Specifically, in the case of cable companies, their gross revenues accrete from cable subscriptions and advertising. Cable companies cannot command through advertising rates alone (because of the number of households served) the spot advertising rates that a network can. The best-run cable companies cover in excess of 80% of their operating expenses from subscription revenues alone, with advertising revenues providing the profit to their holding company and/or parent. Also, broadcast networks which depend substantially on advertising revenues have substantially higher per-spot revenues, and do not have large inventory of short 10-second billboard/promotional spots to sell specifically in support of closed captioning. As a result, while the jury is out with respect to the efficacy of this approach to support closed captioning, one or two captioning companies which have a substantial "barter" business have used this tactic to substantially expand market share.

      Essentially, the tactic being implemented is a variation of old predation schemes used to achieve market share. By charging no cost to a network, the caption company incurs the risk of finding advertisers directly (or through an exclusive agent) to expand market share with one or more "marque" name clients.

      Perhaps the reader, at this point, may be wondering (whether they are a broadcast/cable video programmer, prospective captioner, court reporter, or industry participant) what the significance of the above may be for them. As Reed Hundt, former FCC commissioner, noted in a farewell speech, re: monopolies, at the turn of the century the major railroads lowered their prices to the point where smaller companies could not compete. Smaller companies which could not lower their prices were purchased by the few remaining monopolies, who then proceeded to raise their prices dramatically to consumers.

      The barter approach (captioning for ad time), which is being proffered by one or two companies, represents a form of predatory pricing mechanism which most smaller companies and/or independent captioners are not equipped to match.

If one or more major broadcast or cable companies adopt this approach, too, as a means of meeting their legal responsibilities for closed captioning, while not making a fixed-cost provision in the budget (this is equivalent or akin to an "off balance sheet" financing method used by companies such as Enron), we anticipate a significant consolidation in the closed captioning industry.

If one or more major broadcast or cable companies adopt this approach, too, as a means of meeting their legal responsibilities for closed captioning, while not making a fixed-cost provision in the budget (this is equivalent or akin to an "off balance sheet" financing method used by companies such as Enron), we anticipate a significant consolidation in the closed captioning industry. Two or three years from now, individuals seeking positions in the closed captioning industry (for broadcast captioning) may be confronted with few employment choices, as major broadcast and cable companies are serviced by two or three monopoly companies.

      These captioning companies, faced with substantial operational/revenue risk they are incurring by being dependent on barter/advertising revenue, will move at some future point to lower the cost per hour paid to independents, contractor captioners, and salaries to staff. The anticipated increased supply of captioners (trained with $100 million in federal funds being sought over the next five years) will create a pool of individuals in the next two to three years, for a limited number of companies who will be in the position of controlling the labor market, by controlling a substantial inventory of product to be captioned on broadcast and cable networks. Is this in the best interests of consumers?

Is it an appropriate expenditure by the federal government -- $100 million in federal funds -- to train captioners without incentives to encourage them to work for smaller companies? Are deaf and hard-of-hearing consumers expected to solely depend on advertiser revenues, using billboards and acknowledging support for closed captioning, to fund their access?

Is it an appropriate expenditure by the federal government -- $100 million in federal funds -- to train captioners without incentives to encourage them to work for smaller companies? Are deaf and hard-of-hearing consumers expected to solely depend on advertiser revenues, using billboards and acknowledging support for closed captioning, to fund their access? While we believe all corporations should derive good public relations for their sponsorship of closed captioning, this revenue stream should supplement advertising and subscription revenues, which incorporate or include as part of the cost of the video production the cost of closed captioning. Deaf and hard-of-hearing viewers have every right to expect equity in accessibility to the video programming. To differentiate between the audio provided to hearing viewers, and the closed captioning provided to deaf and hard-of-hearing viewers with specifically targeted closed captioning advertisements, and to use such advertising as the main revenue source to provide closed captioning, is repugnant to our company. Not only is closed captioning an assistive technology to provide video accessibility, it is fundamentally a part of the overall video programming, and should not be treated as a cost which is funded differently from audio costs provided for hearing viewers.

      In summary, the major crosscurrents noted above raise our concerns about the prospects for the industry to evolve into a healthy, competitive industry, where broadcast and cable companies with substantial programming properties support multiple vendors to caption by their programming, and make their choice of vendors on the basis of the best value (highest quality at the lowest reasonable cost) for closed captioning services, with outreach to smaller firms playing a part in their selection process.

      We have presented several "truisms" to depict the state of our industry. The principals of MCS incorporated the company 15 years ago with the intent of creating a first-class realtime captioning company. We believe our mission is to provide closed captioning, and not necessarily be in the advertising business. Broadcast and cable companies should be concerned over whether they are perceived by consumers and, perhaps, regulators to be complying with the law, in fact and in spirit.

Broadcast and cable companies should be concerned over whether they are perceived by consumers and, perhaps, regulators to be complying with the law, in fact and in spirit.

Both deaf and hard-of-hearing consumers and broadcast and cable companies should be concerned that renewed efforts and financial expenditures being made by Congress to train realtime writers capable of providing closed captioning services will be received in a marketplace affording these individuals varied employment opportunities and incentives to stay in this profession, so that the accessibility guidelines -- achieving 100% closed captioning of nonexempt programming -- can be met by 2006 without undue burden on all involved.

      While it is true there are many emerging applications of the realtime writing skill to different industries, i.e., webcasting, legislative meetings, there are relatively few companies and/or individuals with the requisite marketing, technical skills to develop and maintain profitable business and/or income streams in these emerging realtime applications.

It is essential that broadcasters and cable companies make outreach efforts to utilize the services and skills of smaller captioning companies that can provide high-quality captioning at reasonable prices, and that companies in the media business who receive their license to broadcast be reviewed by regulatory authorities to assess whether they are promoting and/or utilizing such companies.

Broadcast captioning will therefore be the first entry point for many individuals with the realtime training and focus to become captioners. It is essential for the continued growth of the court-reporting industry that new students and seasoned reporters acquiring essential realtime skills have a number of viable employment choices that meet their personal goals and desires. It is essential that broadcasters and cable companies make outreach efforts to utilize the services and skills of smaller captioning companies that can provide high-quality captioning at reasonable prices, and that companies in the media business who receive their license to broadcast be reviewed by regulatory authorities to assess whether they are promoting and/or utilizing such companies.

      Recent analytical evidence points to rapid growth of two closed captioning companies, portending consolidation in our industry. If the needs of the deaf and hard-of-hearing viewers are to be met with respect to meeting the FCC benchmarks between 2002 and 2004, then broadcast and cable providers must do a great deal more to strengthen our industry by extending opportunities to small closed captioning companies offering high-quality captioning at reasonable price levels. Otherwise, the admonitions of Reed Hundt about the actions of monopolistic railroad companies at the turn of the century will come to pass in our industry.

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