Martin’s Must-Carry Plan

2/16/2007 7:00 PM Eastern

Washington— In a new must-carry proposal from Federal Communications Commission chairman Kevin Martin, cable operators would be forced to carry the programming of certain “eligible entities” that had leased excess spectrum from local digital-TV stations, FCC and industry officials confirmed last week.

“The chairman wants to do all that he can to facilitate entry by small business and other eligible entities in an already-crowded field of broadcasting,” an FCC official said last Tuesday, one week after Martin and his aides began reaching out for support.

The Martin Plan
Key points in Federal Communications Commission chairman Kevin Martin’s new must-carry proposition:
Sources: FCC, Multichannel News research
On a voluntary basis, digital-TV stations could lease spectrum to government-defined entities, such as new entrants and small businesses but not groups with racial identities.
On a compulsory basis, operators would need to carry the programming of the entities that had leased spectrum in a manner consistent with FCC rules.
Under current FCC rules, TV stations would likely need to pay 5% of lease revenue to U.S. Treasury as a fee.

At one meeting not attended by Martin, National Cable & Telecommunications Association president Kyle McSlarrow discussed the proposal with Catherine Bohigian, a Martin confidante who is chief of the Office of Strategic Planning and Policy Analysis. Also in attendance were an official from the National Association of Broadcasters and attorney David Honig, executive director of the Minority Media & Telecommunications Council. Honig also met with Martin separately.

“This is an idea that he’s been openly discussing with a variety of parties, including David Honig, broadcasters, and cable,” an FCC official said.

Honig said he wanted “to give Martin credit” for trying to “split the difference between broadcasting and cable” on carriage of digital-TV signals, a debate which has been raging for nearly a decade.

FCC rules require operators to carry just one programming stream from each local digital-TV station that has elected mandatory carriage, or must-carry.

Over Martin’s opposition, the FCC has three times rejected rules that would require cable to carry multiple programming streams transmitted by digital-TV stations. Operators need to carry a TV station’s primary video. In an analog world, that’s one programming stream; in a digital world, that can be five or six. To date, the FCC hasn’t order cable to carry more than one.

Digital TV stations can’t elect cable must-carry until they have surrendered their analog TV licenses, which is now mandated to occur no later than Feb. 17, 2009, under a law signed by President Bush a year ago.

Under Martin’s new plan, the leasing of spectrum by qualified entities would be voluntary for TV stations, but operators would be compelled to carry the programming, an FCC official said.

“We are not commenting right now,” NCTA vice president of communications Brian Dietz said.

Martin’s goal is for the FCC to issue a notice of proposed rulemaking to select entities that would be allowed to lease the spectrum and obtain cable-carriage privileges. Depending on the intensity of the battle, it typically takes about a year for the FCC to process NPRMs.

Martin’s preference is to limit spectrum leasing eligibility to “new entrants” and “small businesses” to keep the program race neutral yet helpful to minorities, Honig said.

“I think this is about getting more channels for religious broadcasters while looking like [Martin] supports diversity but not really giving anything real for diversity. It is must-carry clothed in a diversity spin,” according a communication industry source, who asked to not be named.

Broadcasters apparently need time to evaluate Martin’s proposal. “We look forward to exploring the proposal and discussing it with the NAB TV Board,” said Dennis Wharton, executive vice president of communications for the NAB. “We appreciate the creativity chairman Martin is showing in developing DTV multicasting.”

But Martin’s plan would seem to shift the cable-carriage benefits to third-party lessees of digital-TV spectrum.

Another possible downside: TV stations might need to surrender 5% of their lease revenue to the U.S. Treasury under FCC rules today.

“This is not about multicast must-carry for broadcasters,” an FCC official insisted. “This is about providing opportunities for new voices and diverse voices to be heard by any viewers.”