Experts: Little Appetite for Digital Must-Carry

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Las Vegas -- Federal regulators showed no enthusiasm for
imposing digital must-carry rules on cable, experts speaking here at the National
Association of Broadcasters Convention said last week.

As a result, broadcasters -- already facing an Oct. 1
deadline for choosing must-carry or retransmission consent on their analog signals -- will
have no leverage in trying to negotiate private digital-TV carriage agreements.

"[Federal Communications Commission commissioners]
just don't seem to be embracing it," said Thomas Hutton, a partner with
Washington, D.C.-based law firm Holland & Knight.

Others said the FCC has accepted cable as the "great
hope" for introducing competition into the local phone and Internet-access markets.

"These are services that the FCC wants to
enhance," said Thomas Van Wazer, an attorney with Sidney & Allen. "And
they're concerned -- right or not -- that DTV will use up much of the bandwidth on
television, and not on these other services."

That reasoning was repeated during the NAB Convention by
AT&T Broadband & Internet Services president Leo J. Hindery Jr., who argued that
digital must-carry would come at "a price."

"There's a lot of broadband capacity,"
Hindery said, "but it's not unlimited. Full digital must-carry will come at the
expense of channels, data transmission and telephony."

FCC official William H. Johnson objected to the idea that
the commission is lukewarm to the broadcasters' plight, insisting,
"Commissioners are very enthusiastic about digital communications, digital
broadcasting, digital everything. Carriage is critical to them."

However, any FCC decision isn't expected until after
broadcasters have made their analog must-carry or retransmission-consent elections,
reinforcing the idea that the commission wants operators and broadcasters to cut private

But without a federal mandate, broadcasters worry that
cable operators will not bargain in good faith.

"It's going to be like the Wild West, because I
don't think that there's going to be a mandated solution for anyone in the near
future," Van Wazer said.

He added that broadcasters could withhold their analog
signals if an operator balks at digital carriage.

"The problem with this is that it's hard to take
your cash cow off cable when you don't have a guarantee of any business from your DTV
business," Van Wazer said.

About the only thing pressuring cable to negotiate
digital-TV carriage will be if the broadcaster has a popular analog channel that the
operator's subscribers wouldn't want to lose.

"That's the only leverage that the broadcasters
have at this point," Hutton said.

Ultimately, the fight over digital-TV must-carry is a
candidate to land in court.

"That's a reasonable proposition," NAB
general counsel Jack Goodman said.

The cable industry has indicated that it will fight any
digital must-carry rules as unconstitutional, while comments filed with the FCC by
broadcasters argued that the 1992 Cable Act obligates the FCC to issue digital-TV
must-carry rules.

But a court fight plays into cable's hands by further
delaying the entire process, Goodman said.

"So even if the commission had done something today,
we would still have some degree of uncertainty because we would be in court," he