How Bad Will It Get At The FCC?
Cable Lawyers and Lobbyists Question FCC Chairman Kevin Martin’s Attempt to Force New Regulations on Cable TV Operators
By Ted Hearn -- Multichannel News, 11/12/2007 12:17:00 PM MT
Washington – Cable lawyers and lobbyists on Monday had one question on their minds: How bad is this thing at the Federal Communications Commission going to get?
The answer won’t be known for weeks or months as FCC chairman Kevin Martin will need that time to get the agency to process a host of new regulatory burdens he favors for cable operators and their program suppliers.
“We are in the middle of it. The s--t storm is not over,” a cable attorney said.
Craig Moffett, cable analyst at Sanford C. Bernstein & Co., summed it up in a client note Monday this way: “The FCC’s War on Cable.”
The uproar follows news that Martin wants to dust off a provision of a 1984 law, which would, if certain market conditions exist, give the FCC potentially enormous clout over cable operators. At the very extreme, it includes power to treat cable operators as common carriers, turning their largely closed networks into nondiscriminatory platforms for video programming providers and perhaps even for third-party Internet Service Providers.
“That’s a real stretch,” said Burt Braverman, a cable attorney with Davis Wright Tremaine, doubting the FCC could upset cable’s business model in such radical fashion. But another cable attorney said the 1984 law clearly contemplated common carrier-type regulation in case cable operators grew too dominant.
Based on published reports, Martin first wants the FCC to slash the fees that cable operators collect from leased access programmers. The FCC last revised leased access rules in 1997. Martin could bring it up for a vote on Nov. 27.
Martin is expected to justify the rate cut based on the so-called 70/70 test contained in a 23-year-old federal cable law that invests the agency with potentially sweeping regulatory authority once cable systems with 36 or more channels are available to 70% of U.S. households and 70% of households subscribe to systems with that minimum number of channels.
In the past, FCC regulation of cable content and rates has backfired in some unexpected ways. That prompted a D.C. cable lobbyist to note that if Martin cuts leased access rates to the bone, he might not like the type of programmer that seized the opportunity.
“Wouldn’t it be ironic if only soft-core porn was on leased access?” the cable lobbyist said. Martin has been a strong critic of indecent television programming since joining the FCC in 2001. Sexual material and home shopping services have been leased access staples for years.
An FCC official could not provide details explaining how Martin determined that the 70/70 test has been satisfied for the first time in 23 years. SBC Communications (now AT&T) provided the FCC with a statistical account in October 2005 showing the 70/70 test has been met and putting cable’s share at 77.2%. The National Cable & Telecommunications Association claimed that the phone company twisted the data.
The FCC’s mandate under the 70/70 test is broad in scope, according to an April 2006 FCC filing by AT&T, which d
ismissed cable industry claims that if the FCC invoked the 70/70 test, it was limited to just the drafting rules in the leased access arena.
The law permits -- but does not require -- the FCC to rely on the 70/70 test to “promulgate any additional rules necessary to provide diversity of information sources.”
That section of the law, AT&T said in an effort to rebut NCTA, “does not even mention leased access.”
AT&T did not suggest ways the FCC could use its 70/70 test authority.
AT&T also did not mention the potential for common carrier regulation of cable under the 70/70 test. That potential is there because the FCC’s authority to regulate cable under the 70/70 test would not be impaired by another provision in cable law that says no “cable system shall be subject to regulation as a common carrier or utility by reason of providing any cable service.”
One thing about Martin’s reliance on the 70/70 test with regard to leased access is that he doesn’t need it. The FCC already has clear authority to set leased access rates.
Evidently, Martin also intends to rely on the 70/70 test to justify new cable ownership rules and regulatory mechanisms to ensure that the Hallmark Channel and the NFL Network get the type of cable carriage they want and receive licenses fees higher than cable operators have been willing to pay. Again, the FCC has specific legal authority to deal with both issues.
So what could Martin really be up to?
It’s more likely that he wants to deploy the 70/70 test to impose a la carte mandates on cable. This would be a sharp departure for Martin, who has repeatedly said the agency lacks authority to ensure that consumers can buy their channels one at a time.
But Martin is a huge a la carte fan, even endorsing a private anti-trust suit against the cable industry filed in U.S. District Court in Los Angeles in September.
Nevertheless, Martin has the FCC poised to impose “wholesale” a la carte, forcing programming giants like Disney, Viacom, and News Corp. to allow pay-TV distributors to pick and choose only those channels they want to turn around and sell to their retail customers.
Public comments on that issue are not due at the FCC until Nov. 30. People have already questioned whether a wholesale a la carte regime can work if programming vendors are permitted to use pricing strategies to prevent their bundles from falling apart.
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Please, the NFL is not trying to stick it to the cable companies or their customers. Its the...
Tony R. - 2007-26-11 13:36:00 -
What is the NFL doing ?Don't bother promoting the game Thursday night (Green Bay - Dallas).Half...
John Bonano - 2007-26-11 07:59:00 -
I hate the FCC. Every time Kevin Martin comes up with another brillant plan,we cable customers...
Lloyd Pritchett - 2007-13-11 12:02:00
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