The cable industry wants the Federal Communications Commission to suspend new rules that slashed the rates third-party programmers pay cable companies to lease time on their systems.
The stay request came from the National Cable & Telecommunications Association, which urged the FCC to keep the old rules in place while NCTA’s legal action against the new ones was being heard in a federal court of appeals.
“By purposely encouraging a flood of new commercial leased-access users, the new rules — and, in particular, the new rate formula — will irreparably harm both cable operators and cable program networks,” the NCTA said in a March 28 filing.
NCTA asked the FCC to act on its stay motion no later than April 11, 2008. If the agency denies the request or fails to act on it, the cable trade group plans to seek a stay in federal court, an NCTA official said last week.
Last November, the FCC cut leased-access rates by 75% and effectively imposed a ceiling that cable could not charge more than 10 cents per month, per subscriber. With leased-access rates so cheap, NCTA is worried that cable companies will be forced to air programming “that many subscribers may find offensive.”
In a statement accompanying the NCTA’s request, Comcast deputy general counsel Thomas Nathan warned that the FCC might not like the fruits of its new leased access policies.
“Historically, leased-access programming has been poorly produced, low quality and of minimal interest to subscribers. Some leased-access programming is also adult-oriented and offensive to viewers. Short of pornography, Comcast has virtually no ability to block or exercise editorial control over the quality or content of leased-access programming.”
Diane Burstein, NCTA vice president and deputy general counsel, said the FCC’s rate formula in some instances fails to compensate cable systems at all, contrary to the legal requirement that leased access rules “not adversely affect” the “operation, financial condition, or market development” of cable systems.
“In many instances, the formula the FCC adopted yields a zero rate,” Burstein told the Association of Cable Communicators Forum here last Tuesday. “There was no opportunity for [public] comment whatsoever on the formula.”
Under federal law, large-capacity cable operators must set aside up to 15% of their channels for commercial lease by third party programmers. The FCC did not allow home shopping channels or infomercial sponsors to rely on the new rate structure.
Leased-access advocate Andrew Jay Schwartzman, president of the Media Access Project, suggested that cable wanted to discredit the FCC’s rules by claiming the formula is a rip-off.
“That’s their interpretation of the rules. I don’t think it does [produce no revenue],” Schwartzman said.
Cable, he added, could ask the FCC to adjust the formula to produce greater revenue. “They would be entitled to relief by the commission,” Schwartzman said.