News

FCC Sets Its Sights On Fiber Exemption

12/20/2009 2:00 AM Eastern

The Federal Communications Commission’s Media Bureau has circulated an order that would narrow the so-called terrestrial loophole by applying the 1992 Cable Act’s prohibition on unfair or deceptive practices.

The Cable Act requires pay TV distributors to make “satellite cable programming,” such as networks, in which they hold a financial interest available to their competitors on a nondiscriminatory basis (section 628c for those keeping track). But current FCC rules allow providers to withhold such programming from competitors in instances where it isn’t distributed via satellite.

According to the sources, the order does not add “and terrestrial” to the exclusivity prohibition. Instead, it says the ban in that section can be extended to terrestrially delivered programming if a case can be made that an exclusive contract violates the rule against “unfair methods of competition or unfair or deceptive acts or practices.” (Section 628b, for those still keeping score.)

“Subsection c would still operate for all satellite-delivered programming, and subsection b might operate for terrestrially delivered if there were evidence to show that it was significantly hindering their ability to compete in the marketplace,” said one source, who also said that the FCC has never tried to get at terrestrially delivered programming through the broad authority of Section B before.

“The approach of this order is they kind of want to deal with these issues on a case-by-case basis,” another source said.

The FCC asserted the same 628b authority to declare that exclusive contracts between cable operators and multiple dwelling unit owners were unenforceable, a call that was upheld by the U.S. Court of Appeals for the D.C. Circuit.

Currently, three terrestrial exemption-related complaints are pending at the commission, one source said, adding that the order will give those filers an opportunity to supplement their complaints.

The FCC made no official comment on the order, which began to circulate among commissioners last week. No vote is expected until after the holidays.

The National Cable & Telecommunications Association argues exclusivity can be “pro-competitive.”

“Exclusivity allows competing providers to invest in new services that have dramatically changed the marketplace, as can be witnessed by DirecTV’s overwhelming success with the 'NFL Sunday Ticket’ package,” it said last week in a statement,

The NCTA’s largest member, Comcast, has cited the DirecTV-exclusive Sunday Ticket package of out-of-market National Football League games when the issue of access to cable programming is raised.

While sources see the order as a compromise, others argue that granting section b authority over terrestrial is as good as deep-sixing the exemption.

November