News

FCC Tees Up Access Alternatives

3/19/2012 12:01 AM Eastern

Washington — Don’t look for the Federal Communications
Commission to free cable operators from restrictions
on exclusive contracts with programmers, even if it
eventually concludes that
the outright ban is no longer
sustainable in a competitive
marketplace.

The FCC has teed up a
vote on the periodic review
of the prohibition on exclusive
contracts in its program-
access rules, and is
expected to propose two alternatives
to continued regulation
of that space. The program-access
rules generally require cable
operators to sell their
satellite-delivered networks
to satellite-TV firms, telco
providers and other competing
pay TV services.

The vote is scheduled
for Wednesday (March 21),
but chairman Julius Genachowski
has already circulated
a pair of alternatives,
which means such a vote
could occur before that
date. Since the vote would
essentially tee up the review,
rather than come to
any hard conclusions, it is
considered noncontroversial at this stage.

Not surprising to anyone who has followed the FCC’s
interest in access to regional sports networks, one option
would be to scrap the exclusivity prohibition for everything
but satellite-delivered RSNs or other “nonreplicable” programming.
The commission would need to define that term.

Even if the prohibition on exclusive contracts were to
be scrapped, terrestrially delivered RSNs would still likely
have to be made available anyway. In voting to end the
so-called “terrestrial exemption”— which allowed cable
firms to deny competitors access to networks not delivered
via satellite — from access rules, the agency concluded
that cable operators who do not share terrestrially-delivered
RSNs with their competitors would be presumed to be in violation
of FCC rules against unfair acts or practices, a separate
portion of the rules that
does not sunset.

The other option would
be essentially a market-bymarket
waiver approach, in
which cable operators could
seek to lift the prohibition
by making a case for competition
in individual markets.
That is similar to the
FCC’s approach to the ban
on newspaper-broadcast
cross-ownership, where it
allows for case-by-case consideration
in some markets.

The item also proposes extending
the deadline for replying
to complaints from 20
days to 45 days.

One commissioner’s aide
called the item a bit of a laundry
list, and suggested that
Genachowski doesn’t seem
ready to get rid of the rules
in October. But the source
also said there are no “smoking
gun” presumptions and
that cable operators haven’t
raised any concerns about
that point.

“I think the commission has to take some care to reconcile
what it wants to continue to try to regulate with what
was a clear intention of congress o sunset exclusive program
regulation,” said Dan Brenner, a partner at Hogan
Lovells and former top attorney at the National Cable &
Telecommunications Association.

Also at least teed up for comment in the item, according
to another commission source, is how and whether program-
access rules in general should apply to volume discounts
and price increases.

ACCESS FINESSE: TWO ALTERNATIVES

The key provision in the Program Access notice offers these alternatives
to preserving access to programming in the event the commission
decides not to simply renew the requirement that cable operators
make their co-owned program networks available to competitors on
reasonable terms and conditions. “To the extent that the data do not
support retaining the exclusive contract prohibition as it exists today,
the NPRM seeks comment on whether the commission can preserve
and protect competition in the video distribution market by either:

1) “Sunsetting the exclusive contract prohibition in its entirety and
instead relying solely on existing protections by the program access
rules that will not sunset. The case-by-case consideration of exclusive
contracts pursuant to 628B. 2. The prohibition on discrimination in
628c2b. 3. The prohibition on undue or improper influence in 628c2a.

2) “Relaxing the exclusive contract prohibition by: 1. Establishing
a process whereby a cable operator or satellite-delivered cable
affi liated programmer can seek to remove the prohibition on a
market-by-market basis based on the extent of competition in the
market; 2. Retaining the prohibition only for satellite-delivered
cable-affiliated RSNs or any other satellite delivered cable-affiliated
programming that the record establishes as being important to
competition and nonreplicable and having no good substitutes
and/or; 3. Other ways commenters have proposed.”

Want to read more stories like this?
Get our Free Newsletter Here!
October