At a time when broadcasters are looking to expand mandatory access to cable systems, Comcast Corp. says the legal rationale behind current mandatory carriage rules is fast eroding.
Comcast recently told Federal Communications Commission officials that the U.S. Supreme Court, after examining today's market conditions, would "very possibly not" uphold, as it did in 1997, the 1992 law that allows TV stations to demand cable carriage.
"The circumstances of 2003 are dramatically different, and intervening factual developments that weaken the majority's [or plurality's] rationale make it questionable whether five Justices would still vote to support any must-carry requirement," Comcast said in an Oct. 16 letter to the FCC.
Comcast — the No.1 MSO, with 21.3 million subscribers — is fighting, along with the rest of the industry, possible FCC rules requiring cable carriage of broadcasters' analog and digital signals during the transition to all-digital broadcasting and, later on, carriage of multiple digital-programming streams.
The FCC is expected to rule by year-end.
Broadcasters claim the 1992 Cable Act supports both dual must-carry and multicasting mandates and both are needed to speed the DTV transition.
In the case of multicasting, broadcasters insist that the carriage mandate would not place additional burdens on cable channel capacity.
Comcast said that when the high court upheld analog must-carry 5-4 in the Turner Broadcasting System Inc. case, cable was perceived as a vertically integrated monopoly that posed a threat to local TV stations that were exclusively serving 40% of U.S. households with vital news and information.
"Central to the court decision … was the 1992 finding by Congress, which the court accepted, that cable was a monopoly," Comcast said. Today, nearly every U.S. household has access to two or three pay TV providers, including satellite giants DirecTV Inc. and EchoStar Communications Corp.'s Dish Network.
"No court today could ignore that competition and the more than 20 million households that now subscribe to direct-broadcast satellite service," Comcast said.
Cable MSOs' grip on programming is not what it once was. Vertical integration has declined from 64% in 1997 to 20% (if Liberty Media Corp. is not considered a cable operator; it owns a system in Puerto Rico).
Comcast also said the argument that must-carry was needed to preserve off-air TV for a substantial portion of U.S. households — 40% — was no longer true because today more than 85% of households are currently pay TV customers.
The MSO concluded that with arguments buttressing analog must-carry rules clearly in doubt, calls for expanding the rules for digital TV signals would have a tough time in court.
"The fact that broadcasters' existing must-carry rights are of dubious constitutional legitimacy is relevant only because it helps to underscore that expanded digital must-carry would be difficult to sustain in a constitutional review," Comcast said.