FCC: Dual Carriage Will Last Three Years

9/14/2007 8:00 PM Eastern

The Federal Communications Commission voted unanimously last Tuesday to require cable systems nationwide to deliver hundreds of local TV stations in analog and digital formats to their customers for three years, after all full-power stations shut off their analog broadcasts.

The requirement to carry TV stations’ primary programming service in both formats starts in early 2009 and lasts until 2012.

Moments earlier, the agency voted, again unanimously, to mandate that all multichannel-video providers have access to many programming networks affiliated with cable providers until October 2012. The FCC said cable’s satellite and telephone TV rivals would suffer without marquee programmers such as HBO, CNN and E! Entertainment Television.

Under the FCC’s report and order, cable operators will be required from Feb. 18, 2009, to Feb. 17, 2012, to:
Carry a local broadcaster’s digital signal in analog and digital formats; or,
Carry the signal only in digital format, provided that all subscribers have the “necessary equipment” (digital set-top boxes) to view the broadcast content.
Carry the high-definition signal of broadcasters in high-definition format.

On TV-carriage, both the cable industry and FCC chairman Kevin Martin declared victory.

“Today, I think analog cable consumers were the big winner,” Martin said.

Martin’s stated goal was to protect millions of customers who used only analog TV sets to watch programs provided by their cable operators. The object was not to force them to lease digital set-top boxes in order to view local TV stations that rely on mandatory cable carriage rights, or must-carry, to get their programming to viewers. The FCC’s requirement takes effect when local stations are forced to broadcast all programming in digital form, starting at the end of Feb. 17, 2009.

Cable could claim victory because it forced Martin to dump a far more draconian digital-TV plan than the one adopted. Martin wanted perpetual dual carriage without the Feb. 17, 2012, sunset, which the FCC said it would reserve the right to extend.

Martin backed down because he didn’t have the votes. Cable also threatened a court fight, which could rupture the harmony needed between government and industry to shift all broadcasting to digital transmission in early 2009 without a massive consumer rebellion.

Cable systems that send out only digital signals to all customers are exempt from the FCC’s dual-carriage mandate.

The FCC essentially adopted an NCTA compromise floated a few weeks ago. Kyle McSlarrow, the trade group’s president, assured reporters that the FCC’s ruling does not include a backdoor triple-carriage requirement to accommodate analog, standard-definition digital and high-definition digital subscribers.

“It’s very clear the commitment is to carry the digital signal that is being sent to us, and then we will duplicate that signal in analog format. That’s [within the] terms of what the FCC did,” McSlarrow said, adding that cable operators can triplecast voluntarily.

The NCTA topped Martin on another issue. Martin wanted to require cable systems to transmit “all content bits” in a digital TV signal, thereby eliminating the use of signal compression and statistical multiplexing that husband bandwidth.

“We are pleased that the FCC dropped an ill-considered mandate that would have turned back the clock on decades of digital technology innovation,” McSlarrow said.

With a three-year cap on dual must-carry and the “all bits” requirement gone, McSlarrow said the NCTA would not launch a court battle “as a matter of good faith.”

Martin was upbeat even though his plan unraveled when he couldn’t find any takers during day-long backroom negotiations.

“I think it’s always important to reach a compromise with all of the commissioners,” Martin said.

Small operators, lacking the clout of big operators, came away disappointed as the FCC refused to grant a blanket dual-carriage waiver to small systems. Systems with 552 MHz of capacity or less may apply for FCC waivers, a bureaucratic obstacle that keeps Martin and his staff in firm control of the process, just as in the case of granting waivers from a requirement this year to deliver only set-top boxes without built-in access controls.

“It’s not fair to ask tiny rural systems to engage lawyers in Washington when a single exemption would have sufficed,” said FCC member Jonathan Adelstein, a Democrat, who dissented on forcing small operators to apply for waivers. Martin did not share this concern.

“I think we provided them an opportunity if they actually have constraints on their capacity to be able to demonstrate that, and we’ll take a look at it,” Martin said.

On the program-access issue, the ruling meant that cable operators that own programming networks that are delivered by satellite will be forced to sell them to pay-TV distribution rivals for five more years. Time Warner will need to sell CNN and Comcast the Golf Channel to satellite carriers, such as DirecTV and EchoStar.

The five-year extension wasn’t a surprise, since NCTA didn’t put up much resistance.

“It’s certainly no exaggeration to say that without these rules, we wouldn’t have had the [satellite-TV] industry as we know it. It just wouldn’t exist,” said FCC Democrat Michael Copps.

The FCC also voted to launch a notice of proposed rulemaking sought by the American Cable Association that will examine whether Viacom, Disney, Time Warner and other big cable programmers use their clout to force less powerful pay-TV distributors to license more channels than they want to offer their subscribers.

The FCC is proposing a rule that would require the a la carte sale of programming on the wholesale level.

The FCC is calling this a product-tying issue. But it didn’t appear the agency’s notice of proposed rule-making is going to affect the law that requires cable operators to cluster local TV signals in the basic tier and also requires subscribers to buy that basic tier before any cable programming service.

The FCC’s procedure will examine whether the program rules should cover cable-affiliated programming that isn’t satellite-delivered, known to some as the terrestrial loophole.

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