Policy

Cable Launches Fall Must-Carry Offensive

9/09/2005 8:00 PM Eastern

Washington— In the weeks ahead, Congress is expected to put a formal end to analog TV, forcing broadcasters to rely solely on digital transmission, starting as soon as 2009.

While simple-sounding in the abstract, the effort to complete a digital transition, now in its eighth year, has triggered the most acrimonious policy dispute between cable and broadcasting since the run-up to passage of the 1992 Cable Act.

The two camps are at odds over carriage of DTV signals. When a TV station today elects mandatory cable carriage, the cable system is required to carry just one programming service per station. Over cable’s objections, broadcasters want the carriage requirement expanded to include as many free digital programming streams that can technologically fit within a 6-MHz channel.

“Our position has been that as a policy matter, forced carriage of multicasting signals is bad policy,” National Cable & Telecommunications Association president Kyle McSlarrow told reporters last week. “The marketplace is the best place to decide those issues.”

ALL-OUT BATTLE

The NCTA and the National Association of Broadcasters are going all out to win. Pointed ads have been running in Capitol Hill newspapers, tough-sounding e-mails have been flooding inboxes and executives from both sides have been buzzing congressional offices to ply influential lawmakers with their latest economic studies and legal analyses.

Last week, the NCTA released a report by the law firm Cooper & Kirk, alleging that multicast must-carry would not only violate First Amendment free speech protections, but also Fifth Amendment protections against the taking of private property without just compensation.

In 1997, the U.S. Supreme Court affirmed the constitutionality of analog must-carry under the First Amendment. Fifth Amendment issues were not featured in the 5-to-4 ruling.

How much might Congress have to pay cable for a multicast must-carry mandates found to violate the 5th Amendment? According to another NCTA-funded study, the high-end number is an astronomical $116 billion.

As the fight advances this fall, cable isn’t going to hold back, McSlarrow said, because broadcasters have made it abundantly clear that they are intent on substituting government for free-market negotiations.

“The NAB is one of the most powerful trade associations in this town,” McSlarrow said. “They are throwing everything they have at this issue.”

Digital technology has prompted broadcasters to press for new must-carry rules. Unlike an analog signal, a digital feed can be subdivided several times. Today, five or six digital services fit in the amount of space taken by a single analog signal.

That advancement gives local TV stations a chance to experiment in the multichannel world. Powerful TV stations, like the affiliates of ABC, NBC, CBS and Fox, have the clout to gain multicast cable carriage. The NAB’s lobbying effort is geared toward weak stations that rely on must-carry and have no hope of gaining cable carriage of more than one programming service. Small stations, the NAB has said, won’t roll out multicasting services unless they can reach the vast cable audience.

The NAB is urging Congress not to let cable’s sophisticated constitutional arguments cloud what’s really going on — namely, if cable can limit competition from local stations, it’s going to do just that.

“NCTA’s monopolistic plea for less competition and reduced program choice for consumers rings hollow. We’re optimistic that Congress will reject the call of the monopolist and embrace more choice for local television viewers,” said NAB spokesman Dennis Wharton.

Actually, cable says it has a fairness message that one doesn’t need to be Oliver Wendell Holmes to understand: Every TV station in the country has access to viewers through over-the-air transmission. Cable networks, by contrast, need to access viewers over pay-TV networks. Congress, the NCTA has said, should not allow TV stations to hog dozens of cable channels that could be used by cable networks to offer programming that subscribers actually want to buy.

“It is unfair to them to give the broadcasters more than what they have today, which is must carry of the primary stream,” McSlarrow said. “They can occupy 6 MHz of our spectrum. They can keep other competitive networks off that space. That’s what’s going on.”

McSlarrow also said that NCTA’s reliance on market forces wasn’t just rhetoric. Cable systems, he said, voluntarily carry more than 500 digital TV stations and more than 200 multicast streams supplied by 136 stations, 40% of which are public stations. The U.S. has 1,747 full-power commercial and public-TV stations.

DOWNCONVERSION CONCERNS

Multicasting isn’t cable’s only concern. McSlarrow wants to steer Congress away from banning the headend downconversion of digital signals to analog after the transition. Without downconversion, 60% of cable subscribers would need set-top boxes to view local TV signals on analog TVs.

Downconversion costs would be about $100 million. The set-top box solution carries a $10 billion price tag.

“We’re not for that,” McSlarrow said.

October