FCC Gets to Work Defining Good Faith

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Washington -- Responding to congressional pressure, the
Federal Communications Commission is planning to adopt rules as quickly as possible to
give life to new satellite-competition legislation.

The Satellite Home Viewer Improvement Act, enacted Nov. 29
with President Clinton's signature, allows direct-broadcast satellite carriers to
provide local TV signals within the stations' markets.

But the law requires the DBS firms to obtain permission
from the stations under a process -- familiar to cable operators -- called retransmission
consent.

Congress provided the DBS industry with a degree of
protection against broadcaster price-gouging by requiring TV stations to bargain in
"good faith." However, Congress left it up to the FCC to define the meaning of
"negotiate in good faith."

Congressional leaders -- including Senate Commerce
Committee chairman John McCain (R-Ariz.) -- urged the FCC to complete work on its rules
quickly because DBS carriers need retransmission-consent agreements by the end of May.

DirecTV Inc. said last month that it had signed
retransmission-consent agreements with both ABC and NBC owned-and-operated stations.
DirecTV and EchoStar Communications Corp. both got retransmission consent from Fox for its
owned-and-operated stations even before the act was signed.

However, both DBS companies must continue talks not only
with the remaining networks, but also with other station groups and individual network
affiliates in the markets where they plan to offer local-to-local service.

In some cases, the DBS providers have chosen to go to
market with local feeds from just three of the four top network affiliates, pending
successful negotiations.

The FCC began the process Dec. 22 in a notice of proposed
rulemaking. It asked for comment on how to define "negotiate in good faith"
after noting that the law permits TV stations to sign deals with different terms and
conditions so long as they are based on "competitive marketplace
considerations."

Although the 16-page document pointed to several legal
ambiguities in the new law, it put the TV-station industry on notice that Congress
intended for DBS companies to be treated fairly.

"Strict adherence by broadcasters to the good-faith
requirement is crucial if the statutory objectives are to be fulfilled," the
commission said, adding that it might hold DBS carriers to the same "good-faith"
standard.

The FCC indicated that it had a few models to follow,
including the Taft-Hartley Act, which guides wage talks between industry and labor unions.
The labor law, the agency said, relies either on objective criteria to establish
violations of good faith or on the "totality of the circumstances" to evaluate
the bargaining behavior of the parties.

Another model to follow, the FCC said, was Section 251 of
the Telecommunications Act of 1996, which required incumbent local phone carriers to
negotiate in good faith with carriers seeking to interconnect networks. In those rules,
the FCC adopted an eight-part test that, among other things, bars "coercing another
party into reaching an agreement it would not have otherwise made."

The FCC also asked for comment on applying the law's
"competitive-marketplace-considerations" standard. "We seek to define the
term as specifically as possible in this rulemaking, rather than adopting a general
standard to be fleshed out in subsequent adjudication," the agency said.

The FCC said it might look to its cable program-access and
open-video-system rules, where certain nondiscrimination restrictions apply, for guidance.

Now that FCC rules allow common ownership of two TV
stations in a market, the FCC said it wanted comment on whether it should allow a
two-station owner to negotiate DBS carriage for both stations jointly or require the owner
to seek a separate deal for each station.

In the final major section of the rulemaking, the FCC said
the law prohibits exclusive retransmission-consent contracts, whether between TV stations
and DBS carriers or TV stations and cable operators, until Jan. 1, 2006.

The commission said it already had on the books a rule
banning exclusive retransmission-consent deals between TV stations and cable operators. It
asked for comment on whether Congress intended to "abrogate" the cable rule with
the Jan. 1, 2006, sunset.

Monica Hogan contributed to this report.

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