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Spectrum Sale Triggers Must-Carry Move

7/09/2000 8:00 PM Eastern

Washington-Hoping to free up broadcaster-occupied spectrum for use by advanced wireless-service providers, the Federal Communications Commission is promising mandatory cable carriage of broadcasters' digital signals as an incentive to terminate analog service expeditiously.

The FCC plans to auction a block of spectrum in the 700-megahertz band Sept. 6 for next-generation mobile-wireless providers. But about 100 analog-TV stations currently occupy the space in channels 60 through 69, and they can remain there at least until the end of 2006, if not longer.

Because the spectrum could be worth billions of dollars, the FCC wants to clear out the 700-MHz band to maximize auction revenue and to promote rapid deployment without having to referee interference disputes.

As an incentive to stop analog-TV service, the FCC is allowing incumbent analog-TV stations in channels 60 through 69 to negotiate compensation deals with would-be spectrum bidders.

Along those same lines, the agency is also promising cable carriage of their digital-TV signals.

In an order released June 30, the commission provided few specifics other than to say, "Cable systems are ultimately obligated to accord 'must-carry' rights to local broadcasters'digital signals."

The FCC did not say if cable operators would be required to carry just a single free, over-the-air digital-TV service or potential multiple digital-TV video services or data services that some TV-station groups plan to deploy.

Nor did the agency say whether cable operators would have to carry the digital-TV signals on their basic tiers and comply with a law that requires cable subscribers to buy the broadcast-basic tier as a prerequisite to buying any other cable service.

A basic-tier buy-through would necessitate that all cable subscribers obtain digital set-top boxes or digital-TV receivers to view a broadcaster's digital signal. Today, only 7 million of 67 million cable subscribers have digital set-tops.

In the order, the FCC said it would deal with these thorny issues "in a forthcoming digital must-carry order" pending for two years.

Cable representatives and segments of the broadcast industry are fighting over whether cable operators need to carry both the analog and digital signals during the transition, and FCC chairman William Kennard has been unwilling to settle the issue.

The commission also said it would allow broadcasters in channels 60 through 69 that had ceased analog service to enter into voluntary deals with cable operators for carriage of their digital signals in analog.

This would ensure that about two-thirds of a market's viewers would continue to receive the stations' service without buying the digital tier and leasing digital set-tops.

"Nothing prohibits the cable system from providing such signals in analog format to subscribers in addition to or in the place of the broadcast-digital signal, pursuant to an agreement with the broadcaster," the FCC said.

In a June 6 letter, the National Cable Television Association told the FCC it would be receptive to analog carriage of the digital service.

"It may not be objectionable for the cable operator to continue to carry that programming in analog format on the same channel on which it had been carrying the analog signal-provided that the television station presents an analog feed of its television signal to the cable operator at the headend," NCTA senior vice president of law and regulatory policy Daniel Brenner wrote.

The FCC's proposal for cable carriage of digital-TV signals in analog for the 60-through-69 group would mean noncable subscribers that did not have digital TVs would lose access to analog-TV stations.

The National Association of Broadcasters-which objected to FCC efforts to clear out the 700-MHz band through early termination of analog service-said Congress intended for TV stations to transmit in both analog and digital until 85 percent of households in a market could receive digital-TV signals.

"The speed of the transition must be measured not in terms of when television stations begin transmitting in a digital format.but instead by the level of consumer acceptance of digital receivers," the NAB said in a May 25 letter to the FCC signed by senior vice president and general counsel of legal and regulatory affairs Jack Goodman.

The FCC said it would not rubber-stamp a deal submitted by a TV station for early termination of analog service. For example, the agency indicated that it would not approve the early termination of an analog station that was one of the four most widely viewed stations in a market.

The commission added that it might back off from that position if the digital-TV station could demonstrate not only cable carriage in analog, but also carriage by a direct-broadcast satellite provider, because the penetration of both would reduce the number of TV households that would lose over-the-air analog-TV stations.

FCC commissioner Gloria Tristani objected to the commission's plan, and said that Congress, in ordering the spectrum auction, did not intend for the early termination of some analog-TV stations.

"In fact, Congress did not speak at all about early recovery of this spectrum. To the contrary, it provided that licensees may make a showing to continue their analog broadcasting well beyond Dec. 31, 2006," Tristani said.

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