Cable Operators

Commissioners Weigh In On Access Ban Votes

10/06/2012 11:56 AM Eastern
FCC Commissioners weighed in Friday with statements on their unanimous vote to sunset the program access rules' ban on exclusive contracts between cable operators and their affiliated programming networks. Following are excerpts from those statements, except for the chairman's, which is presented in full.  The order had not yet been issued at press time.

FCC Chairman Julius Genachowski: "The FCC is focused on promoting competition and protecting consumers in the evolving video market. Today's unanimous decision enables the FCC to continue preventing anticompetitive video distribution arrangements through a legally sustainable, expeditious, case-by-case review."

Commissioner Robert McDowell: "The exclusivity ban served its purpose, but now the facts justifying its existence have changed in favor of consumers.  Accordingly, this creaky relic must be shown the door...  I do, however, have significant concerns that many of the positive steps we take today could be undermined by our inquiry into whether we should establish a series of rebuttable presumptions that would apply to certain exclusive contracts challenged under our remaining program access rules." The FCC released a separate notice of proposed rulemaking, to which McDowell concurred, a step short of a yes vote.

"Despite the Commission's finding that exclusive contracts can be procompetitive and should be reviewed on a case-by-case basis, the FCC seeks comment on whether there should be rebuttable presumptions that certain exclusive contracts should be considered, by their very nature, to be "unfair" regardless of the specific market conditions.  The Commission also inquires as to whether there should be a rebuttable presumption for obtaining a standstill arrangement while certain contracts are challenged.  Such a presumption does not appear to be consistent with Commission precedent finding that a standstill is an extraordinary remedy that may be awarded only upon a factual showing that the plaintiff is entitled to such relief.  If we proceed, these contradictions will undoubtedly result in legal challenges under the Administrative Procedure Act.   Also, is this the beginning of a back-handed attempt to resurrect the exclusivity ban for certain exclusive contracts using the remaining program access rules and rebuttable presumptions?"

Commissioner Ajit Pai: "It is indisputable that competition in the video distribution market has become substantially more vibrant over the past twenty years.  I therefore believe that the exclusivity ban has outlived its statutory purpose as well as its constitutional justification. The market has changed, and our rules must follow....In sum, it is time to replace our flat prohibition on exclusive programming contracts with a more pragmatic, fact-specific adjudicatory approach.  Our decision to eliminate the across-the-board ban on such contracts brings our regulations more in line with the competitive realities of the marketplace and has the potential to promote greater competition among cable and non-cable MVPDs.  I am therefore pleased to support the item."

Commissioner Jessica Rosenworcel: Without question, the video marketplace has evolved in the past two decades.  But technological change does not preclude the need to be concerned about anticompetitive behavior and the impact of vertical integration on consumers.  Exclusive arrangements for "must have" programming can still lead to less competition, denying consumers the benefits of lower prices and higher quality services.  This is especially true when such programming is withheld from unaffiliated distributors that are small, rural, or new entrants in the marketplace. Accordingly, Section 628 of the Communications Act provides a number of mechanisms apart from the blanket prohibition to challenge anticompetitive behavior on a case-by-case basis. 

To this end, the Order provides a shot clock to ensure timely resolution of complaints.  It also provides a presumption that an exclusive arrangement with respect to regional sports networks will significantly hinder a complaining distributor from providing satellite cable programming or satellite broadcast programming. Furthermore, the Order seeks comment on whether the Commission should establish a number of additional presumptions, including whether an exclusive contract for a cable-affiliated regional sports network should be presumed to be an "unfair act" under Section 628(b) and whether a complainant should be presumed to be entitled to a standstill for an existing agreement under certain circumstances.

Consequently, I support today's decision. However, the Commission must keep a watchful eye on the evolving marketplace and be ready to take action if the processes we adopt today do not provide consumers with the safeguards they need and deserve."

Commissioner Mignon Clyburn: "There is much debate over the level of competitiveness in the current video market, and I suspect that this will continue.  But our job -- to ensure that no matter the opinions and actions of industry on either side of a dispute, that consumers are not caught in the middle -- to me is quite clear.  While the Order released today reaches a conclusion with which I ultimately agree, I felt it necessary to include language that strengthens what already exists on our books.

"While the exclusive contract prohibition will indeed sunset, and the opportunity for discriminatory and exclusive dealing will still exist, the language of this rulemaking will seek to end the ability of a defendant in a program access dispute to prolong the FCC's adjudication timeline with time-consuming dilatory maneuvers.

"As the language states, we put forth a six-month deadline for the FCC's resolution of program access complaints on a case by case basis. This will help to resolve disputes quickly and efficiently, provide certainty to all parties to the complaint, and fulfill our statutory mandate to provide for expedited review of program access complaints."