FCC Aims ITV Inquiry At Cable Operators
By TED HEARN -- Multichannel News, 1/22/2001
WASHINGTON-The Federal Communications Commission last week launched a notice of inquiry-not a rulemaking-on whether cable operators can use their networks to discriminate against competing interactive-television providers.
The cable industry opposed a plan for the FCC to launch a rulemaking, claiming the ITV market was too new to justify the government intervention that a notice of rulemaking often betokens.
The idea of an FCC probe of the ITV marketplace was pressed by The Walt Disney Co., amid its lobbying on the America Online Inc.-Time Warner Inc. merger. A Disney spokesman declined to comment on the FCC's action.
An FCC source said the ITV issue involved so many technological and regulatory issues that the agency felt that it needed to examine the technology in a separate proceeding.
The fact that the FCC decided to conduct an inquiry rather than a rulemaking was victory for the cable industry.
"We're pleased that the [FCC] has decided to conduct a fact-finding inquiry rather than a rulemaking, which presumes a regulatory outcome," National Cable Television Association president Robert Sachs said.
In the FCC notice, the agency asked a blizzard of questions about ITV as a technology and its legal status within communications law. Contrary to the cable industry's view, the FCC said ITV was "evolving rapidly," though the agency acknowledged that definitions were tough to pinpoint.
"But asking dozens of hypothetical questions about regulating a business which has yet to take form still puts the cart before the horse, in regulatory terms," Sachs said.
The FCC described ITV as a service contained within video signals, electronic program guides, and perhaps even personal video recorders that allow cable subscribers to change camera angles, purchase merchandise or gather supplementary program information.
In a nutshell, the FCC is seeking comment on whether cable operators have the incentive to discriminate and if they do, whether the agency should impose nondiscrimination rules to protect competitors that do not own cable facilities. The FCC said it wanted to evaluate whether to regulate both hostile actions by cable against competitors and discriminatory pricing policies.
The agency speculated that cable, which accounts for 80 percent of the pay-TV market, would likely be in the best position to devote the bandwidth to ITV services and capture a large share of the market.
The FCC asked whether ITV regulations should apply to all cable operators or just those that are vertically integrated with ITV service providers. It also suggested the possibility of exemptions for small cable operators.
FCC chairman William Kennard said he feared cable would have the power to launch ITV services and protect them by discriminating against competitors.
"Although ITV services are in the early stages of development, the [FCC] would do well to get ahead of the curve," Kennard said one day before he left office.
Republican FCC member Harold Furchtgott-Roth voted against the inquiry, saying he doubted the FCC had legal authority to regulate cable ITV. He also feared that the FCC's proposal would "raise the specter of government regulation" on a market still in gestation.
"Cable interactive services, like all new innovative, technologies, should be allowed to mature free from unnecessary government involvement," Furchtgott-Roth said in a prepared statement.
Democratic FCC member Gloria Tristani said she supported a rulemaking, claiming the FCC "must move promptly to ascertain the public interest in nascent industries to ensure appropriate measures are timely vetted and resolved."
The fate of the FCC's ITV inquiry is uncertain. An agency under Republican control might not share Democrat Kennard's enthusiasm for the subject.
