FCC May Sever Digital Must-Carry Issues

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Washington -- The Federal Communications Commission is
considering breaking the digital must-carry proceeding into two parts, separating the
underlying mandatory-carriage issue from various policy questions related to cable
carriage of digital-TV signals.

FCC officials floated the idea at last at month's National
Show in Chicago as a way for the agency to make progress on parts of the rulemaking that
are being closely watched by the cable and broadcast industries.

The idea to bifurcate the rulemaking originated with the
head of the Association for Maximum Service Television (MSTV), Margita White, who felt
that the FCC process was dragging on for too long.

In an interview last week, White said she and MSTV
officials broached the idea with the FCC to see "what we could to do to move this
process forward."

If it were up to the cable industry, the FCC would keep the
digital must-carry rulemaking as a single item.

Officials from the National Cable Television Association
were scheduled to meet last week with Deborah Lathen, chief of the FCC's Cable Services
Bureau, to discuss their opposition to MSTV's plan.

Lathen said she has heard that not all segments of the
broadcasting industry were backing MSTV.

"The broadcast community is not in unison on it. Some
of them want bifurcation, and some of them don't," Lathen added.

She said the FCC expects to make a decision in a few weeks.

"We're listening to all sides to now to see if it is
something we should do," she added.

The FCC laid out several options last July, including one
that would require cable operators to immediately carry the digital signals of local TV
stations while continuing to carry the analog signals until the time came for stations to
surrender their analog spectrum.

The cable industry is opposed to carriage of both signals
during the transition, claiming that a "double dose" of must-carry would violate
the industry's First Amendment free-speech rights and the Fifth Amendment's prohibition on
taking private property without just compensation.

NCTA vice president of law and regulatory affairs Dan
Brenner said the association opposed bifurcation mainly because the retransmission-consent
process between TV networks and cable operators is moving forward.

Brenner was referring to CBS' digital-carriage deal with
Time Warner Cable and NBC's deal with AT&T Broadband & Internet Services.

"The last thing we need is for the government to draw
specific rules," Brenner said.

Among the key issues to be resolved by the FCC unrelated to
the question of mandatory carriage are:

• Retransmission consent: May a broadcaster choose
retransmission consent for the analog channel but must-carry for the digital channel, and
vice versa?

• Definition of channel capacity: Should each
programming service within a 6-megahertz channel count as one channel, or should the whole
6-MHz block count as one channel? Another option: measuring capacity based on bits per
second of digital data.

• Tier placement: May a cable operator create a
digital-broadcast basic tier that would be available only to cable subscribers with the
equipment to view such programming?

The National Association of Broadcasters, which is urging
the FCC to require carriage of both signals, has several concerns about splitting the
rulemaking.

"We have not taken a formal position, but I don't
think we are crazy about it," a source at the NAB said.

The NAB source said some issues, in fact, could not be
split off from the underlying must-carry ruling -- citing as an example the proposal of
allowing retransmission consent for analog but must-carry for digital.

"You don't even have to make that decision if there is
no must-carry," the NAB source said.

Another NAB concern is that the FCC might postpone the
digital must-carry decision indefinitely after first issuing an order crammed with a lot
of peripheral issues.

Lathen said the agency remained hopeful that cable and
broadcasting could figure out carriage issues on their own. She said bifurcation was not
an attempt to put off the hard, controversial digital must-carry decision.

"I think the theory is that the carriage issue in and
of itself is a particularly complex question presenting a lot of constitutional and legal
issues," she added.

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