Bcasters Want Digital Must-Buy, As Well

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Washington -- As expected, broadcasters not only want
digital must-carry, but also digital must-buy. And by must-buy, they mean that cable
subscribers have to purchase digital-TV signals before any cable-programming service,
including premium and pay-per-view channels.

That's the way that the current law is set up for
analog signals, and the National Association of Broadcasters, in comments filed two weeks
ago, told the Federal Communications Commission that the same rules should apply to
digital signals.

"DTV signals must be available to cable subscribers on
a [basic] tier of programming, consistent with terms of the law and with treatment of
[analog] signals," the NAB's comments said.

Mandatory must-buy provisions seemed to anger cable
executives nearly as much as rate regulation.

Charles Dolan, chairman of Cablevision Systems Corp.,
slammed must-buy in his Walter Kaitz Foundation Fund-Raising Dinner speech in September,
saying, "No programmer should have a priority in the living room because he holds a
government license and his rival does not."

At the National Show in Atlanta earlier this year,
Tele-Communications Inc. chairman and CEO John Malone said he would fight must-buy as an
unconstitutional taking of private property, and he would hire the best constitutional
lawyer that he could find to vindicate his view.

Two weeks ago, the National Cable Television Association
announced that it had retained the service of renowned Harvard Law School professor
Laurence Tribe to assist on constitutional issues associated with digital must-carry,
including Malone's Fifth Amendment takings issue.

Tribe's "worth what we pay for him," NCTA
president Decker Anstrom said. "He has a good record on these Fifth Amendment cases,
you may have noticed."

From a business perspective, a digital must-buy requirement
could exact a financial toll on cable subscribers, because they would need to buy a
duplicative set of digital signals at least until May 2002 -- the date when all commercial
TV stations are required to be offering digital signals.

And logic dictates that a cable subscriber who has to spend
more on the broadcast-basic tier will have less to spend on cable-programming services,
including high-definition TV programming provided by cable networks in competition with
the major broadcast networks.

But the redundancy could last many more years -- even well
beyond the 2006 deadline for TV stations to surrender their analog licenses. Last year,
Congress said both licenses could be retained if 85 percent or more households in a market
did not have digital receivers.

"I don't think that anybody believes that 2006 is
a good date," said Dan Brenner, the NCTA's vice president of law and regulatory
policy.

Under the NAB's proposal, basic subscribers would have
to buy both analog and digital signals, whether or not they had the equipment to see the
digital signals.

To the extent that the cable operator is providing digital
signals under must-carry rules, a cable-industry attorney said the law would require the
operator to ensure that the signals were "viewable via cable on all television
receivers." Translation: The subscriber would need to buy or lease a
digital-to-analog converter.

"It could impose equipment costs on basic subscribers
that weren't there before," the cable attorney said. "What happened to the
goal of low-cost basic?"

In its FCC comments, the NCTA said complying with digital
must-carry under the "viewable via cable" mandate would impose $53 billion to
$93 billion in set-top equipment costs on subscribers.

"I think that we all recognize the absurdity of
that," said Steve Effros, president of the Cable Telecommunications Association
(CATA).

Cable operators collected $31 billion in subscription
revenue in 1997.

Cable operators and TV networks have been negotiating
digital-carriage issues for months. News stories confirmed by Malone and others have
reported that digital-TV signals and digital-cable networks would be bundled in separate
tiers and marketed as an optional purchase.

A broadcasting source said last week that the placement of
local-TV signals into some kind of expanded-basic tier would be illegal, even if
broadcasters agreed to it. The source added that nothing would prevent a cable subscriber
from filing a complaint at the FCC.

But one cable attorney disagreed in part. He said a
non-must-carry, expanded-basic digital-TV signal, provided by a cable operator subject to
effective competition, would probably be legal.

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