FCC Eases Broadcast-Basic Requirement

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Cable operators facing increasing competition have gained new freedom from
federal regulations regarding the placement of broadcast signals in their
channel lineups.

As part of the recent digital must-carry order, the Federal Communications
Commission ruled that cable operators deemed subject to effective competition do
not have to provide TV signals on the basic tier.

Rate-regulated cable operators are required to provide local TV signals on
the basic tier, and their subscribers are required to buy that tier before they
may purchase higher tiers, premium networks or pay-per-view events.

The FCC's decision might be useful for deregulated operators planning to
create digital-broadcast tiers or high-definition-TV tiers unbundled from analog
broadcast and cable channels.

'It is helpful to have more flexibility on the carriage of digital signals
because it means we can respond . and we can put it where we think we can most
viably provide it,' said Daniel Brenner, senior vice president of law and
regulatory policy at the National Cable Television Association.

In March 1999, the FCC lost its authority to regulate upper-tier cable rates.
Local governments retain the authority to regulate basic rates for operators not
subject to effective competition.

Under FCC rules, a cable operator is subject to effective competition if the
subscriber penetration of all cable competitors exceeds 15 percent of area
households or if the competitor is a video-providing phone company, regardless
of subscriber penetration.

The agency's ruling will likely affect cable systems owned by Time Warner
Cable and Comcast Corp. in Florida, Michigan and Ohio due to the entry of
Ameritech Corp. (before being purchased by SBC Communications Inc.) and GTE
Corp. (before being purchased by Verizon Communications).

Nationally, the impact won't be that big. According to the FCC's
cable-competition report, released in January, the agency has granted
cable-filed petitions for effective competition in 330 individual communities
based on the entry of a wireline competitor.

In the order, the FCC referred to 'digital' TV signals in connection with the
movement of local TV signals off the basic tier. But a commission source said
the agency intended for its action to include both analog and digital signals
for operators subject to effective competition.

Separately, the FCC also delivered a setback to TV stations that thought they
had a right to purchase cable networks under the FCC's program-access rules.

The rules apply to satellite-delivered cable programming owned in whole or in
part by cable operators. TV stations planning multicast services for fees might
be considering turning to cable programming to occupy channels.

But the FCC said digital-TV stations offering programming for a fee did not
qualify under the program-access rules as multichannel-video-programming
distributors with rights to cable operator-affiliated
programming.

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