News

Seeking Parity

2/08/2008 7:00 PM Eastern

Satellite-TV providers and phone companies shouldn’t have an exclusive right to serve apartment buildings with video services now that the Federal Communications Commission bans cable operators from retaining or obtaining similar exclusivity, leading cable companies told the FCC last Wednesday.

“If the exclusive access agreement makes it impossible for a resident to obtain service from a competing cable provider, then the ownership of the company providing exclusive service and the technical means for delivering video service [do] not matter,” Charter Communications said.

Cox Communications drove home the same point.

“Continuing to permit non-cable [pay-TV providers] to enter into exclusive access, while prohibiting the same such agreements for cable operators, creates a fundamental and unnecessarily asymmetric regulatory regime for video services competition,” Cox said.

Comcast warned the FCC that letting anyone serve an apartment building on an exclusive basis made the cable-only ban illogical.

“The building resident who had one 'choice’ before still would have only one 'choice,’ ” Comcast said.

Last year, the FCC voted to void exclusive cable contracts in multiple dwelling units (MDUs), which include apartment buildings, cooperatives, condominiums and other centrally managed real estate developments. About 25% of the nation’s housing stock falls into the MDU category, according to the FCC.

FCC chairman Kevin Martin claimed exclusive cable contracts were a deterrent to video and broadband competition, reversing the FCC’s finding in 2003 not to intervene in the market.

The National Cable & Telecommunications Association has gone to court to invalidate the rule insofar as it applies to existing contracts because cable operators entered into those contracts in some cases in reliance upon the FCC’s 2003 decision.

The FCC’s ruling last October came with a commitment to study whether to extend its cable rule to other pay-TV providers, including direct-broadcast satellite providers DirecTV and Dish Network; telephone companies AT&T and Verizon Communications; and private cable operators.

Typically, Martin’s habit has been to examine the cable industry’s preference and then do the opposite unless AT&T’s position just happens to correspond with cable’s. On the MDU issue, AT&T agrees with cable companies.

“The [FCC] promptly should extend the prohibition against exclusivity clauses to all [pay-TV] providers, and not just those specifically named in [federal cable statutes],” said AT&T, evidently worried that satellite-TV providers might fill the void left by cable incumbents.

In its comments, Charter indicated that regulatory parity required the FCC to extend the ban beyond cable operators.

“If the [FCC] can creatively and expansively extend its jurisdiction as it has [against cable multiple-system operators], then it can and must do the same for these other exclusive providers. It should not exercise its creativity only to carve cable operators out of the MDU market,” Charter said.

DirecTV and Dish Network — likely targets of an expanded exclusivity ban — want to retain their freedom to cut deals with landlords, mainly because they do not believe Congress gave the agency the same power over them as it did over cable operators.

“Exclusive contracts between [satellite] operators and willing MDU owners raise very different legal and policy questions than those entered into (often years ago) by incumbent cable operators. The [FCC] should thus treat them differently,” DirecTV said.

March