Martin Sets Agenda

11/25/2007 7:00 PM Eastern

If Federal Communications Commission chairman Kevin Martin is the hammer, then the cable industry is the nail.

Despite heavy criticism from fellow Republicans, Martin is moving forward with plans to flatten the cable industry with an array of new regulations at the agency’s Nov. 27 public meeting here. On the agenda:

  • Rules to force cable operators to charge no more than 10 cents per month, per subscriber to leased access programmers, representing a 75% reduction in current rates.

  • Rules that would effectively force Comcast and Time Warner to carry the Hallmark Channel and the NFL Network (see story, page 7) and pay the networks handsome license fees, instituting an unprecedented 'must-carry/must-pay’ regime with potentially huge aftershocks.

  • A finding that cable penetration exceeds 70% of households, triggering a legal provision enacted in 1984 that gives the FCC potentially massive new regulatory powers over cable operators and, derivatively, cable programmers.

  • A notice as the first step toward rules that would allow minority, religious and small-business entities to lease spectrum from digital TV stations and in turn demand carriage from local cable operators, multiplying the number of broadcast TV-sourced programming services cable operators would need to carry.

Some of these could fall by the wayside because Martin has a tendency to call for votes before having a majority at the five-member agency. But it’s hard to see where FCC Democrats Michael Copps and Jonathan Adelstein would find fault with any Martin’s proposals, except that they are too timid.

Martin’s decision to advance his anti-cable agency came despite strong pressure from nearly two-dozen House Republicans on the Energy and Commerce Committee that he give up his quest to string the hands of cable with red tape.

“Such actions are unsupported by the record of significant competition in the video programming marketplace, and would be harmful to innovation and consumers,” the lawmakers said in a letter sent Nov. 20.

Rep. Joe Barton (R-Texas), the most senior Republican on the Energy and Commerce Committee, signed the letter along with 22 other Republicans on the panel. Although House Republicans can complain about the FCC under Martin, their actual leverage is minimal because Democrats control the flow of legislative action on Capitol Hill.

In their letter, the House GOP members were especially tough on the leased-access proposal.

“Onerous rate regulation of leased access makes little sense when the [FCC] is appropriately deregulating other cable rates as required by statute because of effective competition, and when YouTube and other Internet services provide a similar outlet on an even wider scale,” the lawmakers said.

The lawmakers also got after Martin’s conviction that cable had become too dominant.

To that end, Martin wants the FCC to find that 70% of households subscribe to cable, a penetration threshold found in a 1984 cable law that could give the FCC authority to regulate cable operators as common carriers and set the price of many of their retail programming services.

Martin is calling on the FCC to invoke what is known as the 70/70 test, defined by law as the point when 70% of households are passed by cable systems with at least 36 channels and 70% of such households actually subscribe. Martin has been strongly criticized that he is relying on inaccurate data.

“The new proposal to invoke the 70/70 provision is inappropriate at best and contradicts the statute at worst,” the GOP lawmakers said. “The 70/70 rule is meant as a tool to respond to a decrease in program diversity. Consumers now have at their finger tips an unprecedented amount of content from a large number of sources.”

A rupture within the ranks of the FCC’s GOP majority could be at hand as Robert McDowell, a Republican Bush appointee like Martin, said on Nov. 19 that he would not support Martin’s finding that the 70/70 test has been met because of the controversy surrounding the credibility of Martin’s data.

Martin’s one and only source is data culled from the Television & Cable Factbook, published annually by Warren Communications News. Warren’s top official insisted the data could not be used to verify Martin’s 70/70 test finding because not all cable operators submitted their subscriber and homes-passed totals.

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