Policy

As Cable Cheers, Broadcasters See ‘Viewability Rule’ as Blow

6/11/2012 12:01 AM Eastern

Washington — The Federal Communications Commission
is taking steps to sunset its viewability rule and
extend small cable operators waivers’ from HDTV carriage
mandates for another three years.

Both moves would be victories for cable operators large
and small, and a blow to broadcasters who argue that the
sunset will cost them millions of viewers.

The FCC had not voted to approve the order by press
time, but was expected to do so, with some edits, by late
last Friday (June 8) or more likely today (June 11). Circulating
the order was, essentially, a “yes” vote by chairman Julius
Genachowski, and aides to two other commissioners
said they expected the order would be approved.

Once news of the order got out, broadcasters pushed
back hard. More than 200 stations — including the 60-station-
plus Ion Media Networks group — created the Independent
Voices for Local TV coalition. That group, with
the help of lobbying firm the Podesta Group, was working
Capitol Hill to try to get legislators to pressure the FCC not
to vote for the sunset.

The National Black Church Initiative also took to the
streets in Washington to protest the FCC move, saying it
would hurt church-based broadcasters.

According to the order, cable operators will no longer
be required to provide both analog and digital versions of
must-carry TV station signals as of December 2012, providing
a six-month transition period beyond the June 12
sunset date of the three-year mandate.

SET-TOPS WILL DO

Low-cost converter boxes are considered a sufficient vehicle
for allowing the diminishing number of analog customers
to continue to view TV-station signals.

It also requires cable operators to provide notice to their
analog customers of the sunset.

“We believe the viewability requirement is best read to give
the operator of a hybrid system [digital and analog] greater
flexibility in deciding how to comply with the viewability
mandate,” the order read. “[R]apid changes in the marketplace
and technology, in particular the widespread availability
of small digital set-top boxes [that] cable operators make
available at low or no cost to analog customers of hybrid systems,
provide alternative means by which must-carry television
signals can be made viewable to all analog customers.”

The FCC, in issuing its Notice of Proposed Rulemaking
in February, signaled “the available market evidence
seems to indicate that the viewability requirements remain
important to consumers,” suggesting that it might
renew the requirement.

In comments to the FCC in March, the National Cable
& Telecommunications Association argued that cable
operators need the bandwidth being taken up by continued
analog and digital carriage of must-carry stations for
more consumer-friendly uses, such as over-the-top video,
adding that digital-cable customers could view the mustcarry
stations and analog customers could,
too, with “readily available equipment.”

The FCC agreed. The order concludes that
viewability remains important, but can be
achieved through low-cost set-top boxes currently
being offered, rather than a dual-carriage
mandate. The order also stresses the
benefits of using the analog capacity for new
digital channels and increased broadband, a
major FCC focus.

RULE REINTERPRETED

“The low-cost set-top box offers reflected in our
record will satisfy our new interpretation of the
viewability requirement,” the order said, according
to a source reading from the document,
“permitting the cable operator to make
the must-carry signal available by offering analog
customers the necessary digital equipment
at an affordable cost.”

For example, the FCC said, “we note that
Comcast, for a period of time after migrating a system to
all-digital, typically offers two or three free DTAs [digital
boxes] to customers, and charges less than two dollars for
additional boxes.” It also points to Bright House Networks’
offer of boxes for $1 a month.

While the order does not require cable to continue to
offer low-cost boxes — and the FCC cannot rate-regulate box
rental prices — it “strongly urges all operators not to raise those
prices,” the source said.

The order, if approved, will be a dual victory for cable operators
since it will extend for three years a waiver for smaller
cable operators from the mandate that cable operators
deliver broadcasters’ HDTV signals in high-definition to all of
their customers. The American Cable Association had pushed
for the waiver.

At press time, the other commissioners had not voted on the
item, though they must do so by June 12 or the HD waiver and
the viewability rule would both sunset immediately.

September