Must-Carry Mandates Outdated: Verizon

Telco Says Policy Is No Longer Legally Sustainable As Cable's Power Has Eroded

By Ted Hearn -- Multichannel News, 9/2/2008 7:21:00 AM

Washington -- Cable's monopoly power has eroded so much that forcing cable systems to carry local TV stations is no longer a legally sustainable policy, according to Verizon Communications..

Verizon said in a Federal Communications Commission filing Friday that maybe at one time cable operators had market power that government needed to address. But that market power, it added, no longer exists to the extent it did in 1992 when Congress imposed so-called TV station must carry requirements on cable operators.

"The emergence of competition has removed the `bottleneck control' that provided a basis for previous speech regulation," Verizon said.

Verizon's comments came as the FCC considers whether to expand the must carry regime to include 556 Class A stations engaged low-power operations. Today, 1,759 full power TV stations and a very limited number of low-power stations enjoy mandatory cable carriage rights.

The telco said that when the U.S. Supreme Court upheld the must carry law in 1997, it did so believing that it was necessary to preserve free TV for those who didn't subscribe to cable. Cable operators at the time, Verizon added, were dominant pay-TV providers, "with the ability and incentive to refuse carriage" of local TV stations in an effort to protect cable networks they owned from competition.

"Must-carry obligations for Class A stations could not satisfy this demanding test," Verizon said.

In any case, Verizon said requiring it to carry Class A stations when it never had market power like cable incumbents of old wouldn't survive in court.

“Such regulation could not possibly be justified in the context of a new entrant like Verizon who never possessed the `bottleneck’ that has previously been required to sustain this type of regulation,” Verizon said. “Therefore, the [FCC] could not, consistent with the First Amendment, extend must carry rights to Class A stations.”