FCC Vote Nears On DBS Set-Asides

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Washington -- The Federal Communications Commission is
apparently planning to vote Oct. 22 on rules requiring direct-broadcast satellite carriers
to reserve channels for public-interest programming.

The issue is a controversial one, with many of the details
associated with regulatory parity between cable and DBS operators.

For example, the FCC could decide that DBS operators may
count carriage of the C-SPAN networks toward their public interest obligations, yet cable
operators could not use carriage of C-SPAN to offset the number of channels dedicated to
public access and commercial leased access.

Under the 1992 Cable Act, DBS operators are required to set
aside between 4 percent and 7 percent of their channels "exclusively for
noncommercial programming of an educational and informational nature."

The FCC rulemaking was held up for years because a federal
court ruled in 1993 that the set-aside was unconstitutional. The FCC launched the
rulemaking in 1996 when the lower court's decision was tossed out on appeal.

The FCC is reviewing an array of proposals. The cable
industry is insisting that DBS channels should be filled with original programming and no
credit should be given for distribution of C-SPAN, the Discovery Channel, and The Learning
Channel.

Some the issues to be resolved include:

* Channel capacity definition: This is a real
battleground because the statute is silent on the definition of a channel. FCC sources
said the agency has to be sure that the definition in the context of DBS does not clash
with the definition in the context of the digital must-carry rulemaking.

* Amount of channel capacity: Because the law provides
for a range, DBS companies are urging the FCC to mandate 4 percent, while public interest
organizations are clamoring for 7 percent.

The National Cable Television Association said it endorsed
a 7 percent requirement to the extent the FCC permitted established cable networks such as
C-SPAN to count toward the DBS quota.

* Timing: DBS companies have called on the FCC to
phase-in the requirements over a two-year period.

NCTA said that should be rejected because cable operators
have shouldered all kinds of regulatory burdens dating back to when cable systems had 1.3
million subscribers (compared with DBS's 7.7 million subscribers today).

* Local DBS: Cable operators, over the objections of
the DBS industry, are urging the FCC to apply cable regulations to DBS operators that
elect to serve local markets with their local TV signals.

Time Warner Cable said must-carry rules should apply and
DBS subscribers ought to be required to buy a broadcast basic tier as a prerequisite to
the purchase of any other video programming service.

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