Forum: Digital Carriage: Must Carry Round Four

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Digital television issues, particularly those involving
must-carry rights, are shaping up to be some of the most difficult problems that the
Federal Communications Commission has recently faced in the video-programming arena.

Technology, politics and policy will all clash head-on, as
powerful industries, including cable and broadcast companies, work to influence a
regulatory process that is sure to leave some disappointed. These industries generally
have worked out their differences concerning current must-carry and retransmission-consent
rules, but the issue of must-carry rights for digital channels will reawaken tensions.

The federal regulatory situation is fueled by conflicting
statutory mandate and legal precedent. The Telecommunications Act of 1996 specifically
states that 'ancillary or supplementary' digital television services should not
have must-carry rights. However, in March 1997, the U.S. Supreme Court, in Turner
Broadcasting System Inc. vs. FCC
, upheld the constitutionality of the must-carry
provisions of the Cable Consumer Protection and Competition Act of 1992. The Turner case,
decided after the 1996 Telecommunications Act, did not specifically address digital
must-carry rights, so the FCC has been left without clear instructions as to how to treat
the issue.

The FCC does not plan to release a notice of proposed
rulemaking until late February or March, but the predictions are already in: Cable
operators will be required to carry at least some of broadcast's digital offerings
because the regulators believe that without cable carriage, which reaches 65 percent of TV
households, HDTV (high-definition television) will not succeed.

How this carriage complement shakes itself out is open to
debate. It is likely that a single-channel, 'true' HDTV service offered by one
broadcaster will qualify for mandatory carriage. It also is likely that some of the
digital multiple channels of standard-definition television, which are
advertiser-supported or which offer home shopping services, will be eligible for carriage.
However, pay-per-view channels and other channels for which a broadcaster charges a fee
will likely not qualify for mandatory carriage because these services do not look like
traditional 'free' television services. If a broadcaster has six of these
channels, how many a cable operator has to carry is an open question.

Should a cable operator really be required to carry many
digital home shopping channels, even if adequate capacity exists? Would such a requirement
truly foster diverse programming, as envisioned by the 1992 Cable Act and the 1996
Telecommunications Act? The 1992 Cable Act and FCC rules currently require operators to
devote up to one-third of their channel capacity to must-carry channels. Will that
capacity be the same capacity set aside for digital offerings, or will operators be
required to set aside a separate one-third of their digital capacity to honor digital
must-carry requests? Even the basic question of what is a channel is the digital world
must be resolved.

Do we think in terms of 6 megahertz of bandwidth, or in
megabytes, which is more appropriate for the digital world. Consider the fact that
over-the-air digital television transmissions can only deliver 19 MB of information in a
6-MHz bandwidth channel, but a cable operator on the same 6-MHz channel can more
efficiently accommodate 27 MB to 38 MB of information. Should a broadcaster's
relative inefficiencies be considered in the requirements? What about small cable systems
that are channel-locked now, or that have no digital capabilities? Will they be required
to bump existing services or to upgrade their system? Could the broadcaster pay for
creating the digital capacity?

Complicating these issues even more is the question of
standards. There aren't many; at least, there are not many that have been agreed to
by both the cable and broadcast industries.

Congress has encouraged -- and, in some cases, required --
the FCC to refrain from setting standards and to look to affected industries for
solutions. Although the FCC may ultimately be forced into mandating standards, it most
likely will not do so before imposing digital musty-carry demands upon cable operators,
which raises another question: Should a cable operator be required somehow to accommodate
a digital signal that is incompatible with its own standards?

All of these questions will be answered, in part, by policy
objectives that the FCC has set out to achieve. The FCC has long been encouraging HDTV
into reality for some time. Its debut over the next several years will be greatly
diminished if the video-delivery system that reaches more than 65 percent of the
nation's homes is not required to assist in its success.

Stephen R. Ross is a senior partner at Ross & Hardies
in Washington, D.C., and former chief of cable television at the Federal Communications
Commission.

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