News

Carriage Item Off FCC Agenda

7/08/2005 8:00 PM Eastern

Washington— Federal Communications Commission chairman Kevin Martin last week dropped a plan to vote on a controversial cable carriage proposal at the agency’s July 14 public meeting.

The National Cable & Telecommunications Association, Comcast Corp. and Time Warner Inc. and some programmers slammed the proposal as approaching de facto dual must-carry. The FCC rejected dual must-carry in 2001 and again in February.

Defenders of Martin’s plan said dual carriage issues would be decided by the cable operators responding to market forces, not to government mandates.

Martin’s plan could return in August or September. One cable source indicated September was the more likely timeframe.

According to the FCC and industry sources, Martin wanted to give TV stations authority to elect mandatory carriage for their digital signals and retransmission consent for their analog signals. This is called the “either/or” approach.

Current FCC rules allow must-carry just for analog signals, requiring stations to bargain for digital carriage. So far, about 500 stations, or 30% of all commercial and public TV stations, have secured digital carriage, according to the NCTA.

From cable’s perspective, Martin’s proposal was tantamount to dual carriage because it would give many TV stations leverage they do not have under current FCC rules.

For example, MSOs and networks indicated in recent meetings with FCC officials that many TV stations would opt for must-carry of the digital signal. Because that signal would be viewable in about 40% of cable homes with at least one digital-cable box, operators would need to downconvert the signal to analog to satisfy its majority non-digital customers.

“The end result is that broadcasters would be able to secure dual carriage of both the cable system’s digital and analog tiers,” Anne Atkinson, senior vice president and general counsel of A&E Television Networks, said in a July 7 letter to the FCC.

Atkinson continued that the 1992 Cable Act established must-carry rights for stations considered too weak to secure cable carriage in their local markets.

She added that Martin’s proposal would not help those stations because if any of them opted for digital must-carry, they would likely lose access to more than half their cable audience. As a result, she said Martin’s plan would boost the affiliates of ABC, CBS, NBC and Fox, which were not the intended beneficiaries of must-carry.

“Conferring additional benefits on stronger stations while at the same time putting weaker stations at an additional disadvantage is precisely the opposite of what the [Cable Act’s] must-carry provisions intended to accomplish and, consequently, renders the 'either/or’ an improper statutory interpretation,” Atkinson explained.

In a July 7 letter, Time Warner lawyers called Martin’s proposal “back door” dual carriage. They added that by conferring digital must carry before the return of analog spectrum, Martin’s plan would only encourage TV stations to keep their analog spectrum.

Direct-broadcast satellite carriers also had problems with Martin’s plan. EchoStar Communications Corp., for example, wanted assurance that it will be able to downconvert local TV signals from high-definition to standard-definition.

EchoStar is concerned that an HD mandate would place a huge burden on its bandwidth and force it to discontinue local signal service in many markets. DirecTV Inc. expressed similar concern.

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