Key Powell Aide Backs DTV Multicast

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Kenneth Ferree, Federal Communications Commission chairman Michael Powell’s point man on the digital-TV transition, is on a mission.

The goal: To persuade Powell that cable operators should carry every free digital service transmitted by a local TV station.

In concert with his staff, Ferree, chief of the FCC’s Media Bureau, has concluded that federal law permits the FCC to impose multicast must-carry requirements on cable systems, and that doing so is good policy. That would reverse FCC policy established just a few months before Ferree arrived at the agency more than three years ago.

5 OR 6 FOR 1

Ferree’s staff is crafting a plan that would conclude broadcasters’ DTV transition by 2009. It is expected to include a codicil stating that after TV stations surrender their analog spectrum, their digital must-carry rights will include every free programming stream they can pack into their bandwidth.

Today, that’s about five or six channels.

“What we will suggest is that there will be a full digital-carriage requirement, which in common parlance is multicasting,” Ferree said in an interview last week.

Ferree said his decision reached in talks with staff was based on policy and practical considerations.

“All I was saying was that as a policy matter, it didn’t make sense to me to get into trying to parse through a broadcaster’s bits and figure out which ones should be carried and which one should not,” Ferree said.

Instead, Ferree and his staff kept it simple by deciding that if DTV services were offered free to the public, they were entitled to cable carriage. If they were subscription services, they were not.

NOV. 9 VOTE SEEN

Ferree insisted that FCC action on the DTV transition plan is not contingent upon resolution of the multicasting issue. But he said the current plan was to combine the two in a vote that industry sources and other FCC officials expect to occur at the agency’s open meeting on Nov. 9

“I think that’s the plan everybody has in mind,” Ferree said.

Ferree’s conclusions about multicasting will no doubt warm the hearts of many broadcasters, but bitterly disappoint the cable industry, which might have to visit federal court to vindicate its view that multicasting is contrary to federal law and violates the First Amendment.

“We think it is critically important that cable gatekeepers not deny the plethora of public-interest and other entertainment programming that broadcasters will provide through multicast digital channels,” National Association of Broadcasters spokesman Dennis Wharton said.

The National Cable & Telecommunications Association has said that TV stations electing must-carry were legally entitled to carriage of a single programming service.

As a policy matter, the NCTA has called multicasting wrongheaded because it would give TV stations unfair priority over networks that don’t have TV licenses to reach consumers, and because it would give DTV stations an incentive to clog cable systems with low-value infomercials and other transactional programming.

NCTA: NO COMMENT

The NCTA declined to respond to Ferree’s position on multicasting.

“NCTA has no comment, because we don’t speculate on reports that we have not seen,” said spokesman Brian Dietz.

Sanford C. Bernstein cable analyst Craig Moffett said multicasting mandates would require cable to carry broadcast programming that’s not “in strong demand” and would put pressure on cable-system channel capacity during the period before systems have reclaimed their analog bandwidth, affecting cable’s ability to provide video on demand, increase high-speed data rates and add HDTV channels.

“It makes it very likely that a multicast decision by the FCC would almost certainly result in other channels getting pushed off the air,” said Moffett, who added that he feels multicasting mandates have serious First Amendment problems.

Ferree’s views on multicasting collide with numerous public statements by Powell that multicasting is not consistent with federal law and may actually slow the DTV transition, rather than advance it.

Powell latest thoughts on multicasting came Sept. 8 at a Senate Commerce Committee hearing.

“I don’t know that I’ve ever completely been convinced or followed the argument that somehow multicast carriage on private cable systems is a dramatic advancement of the digital transition. Some would argue that it even retards,” Powell said.

Moments later, he said there was no consensus among the five FCC commissioners and that he would keep an “open mind.”

POWELL: 'SINGLE STREAM’

After his testimony, Powell went so far as to say that Ferree’s DTV transition plan did not include a multicast mandate.

“The plan would be that when the broadcaster has to elect must-carry, it would only have must-carry rights on its digital channel. A single stream would have to be provided by cable,” Powell told reporters.

Powell also sees the multicast debate as raising important First Amendment questions.

“The Supreme Court has been very, very clear about don’t overreach on compelling the carriage on one person’s private system of another person’s private product unless you can absolutely justify it on the most-compelling standard,” Powell told the Senate panel.

In 1997, the Supreme Court upheld the mandatory cable-carriage rights of TV stations, but its 5-4 decision did not address must-carry in a context that had each TV station offering more than a single programming service.

Ferree said the fact that he and Powell were offering seemingly contradictory positions on the DTV transition plan was explainable. He repeated that it was not necessary to resolve the multicasting issue in order to complete work on the DTV plan. He also said Powell’s opinions about multicasting didn’t deter him and his staff from arriving at different conclusions.

POWELL WANTS ADVICE

“This chairman is a little different. The one thing he said from the get-go was that he wanted our best advice on what the right answers were and what the right thing to do was. That doesn’t mean he will always follow or do what we suggest,” Ferree said.

Ferree, who became Media Bureau chief in May 2001, took charge of the DTV transition at Powell’s direction. His approach hasn’t been purely free-market, but rather a mix of bureaucratic arm-twisting and regulatory mandates. Given Ferree’s track record, his conclusions about multicasting shouldn’t come as a surprise. But a change in Powell’s position would be dramatic.

In January 2001, just days before he became chairman, Powell cast a vote in favor of cable on a critical statutory matter. Federal law requires cable to carry a TV station’s “primary video.” The FCC majority concluded that primary meant one programming service, thus ruling out multicast must-carry rights.

“I believe our decision is compelled by the language of the statute, leaving us little choice but to interpret it faithfully,” Powell wrote in 2001, adding that he hoped cable would bargain fairly with multicasters, especially public stations.

Powell also explained that if the FCC’s interpretation of primary video “should negatively impact the development of digital television, recourse to Congress for redress may be warranted, given that the statute clearly did not contemplate must-carry in a digital world.”

Broadcasters immediately sought reconsideration from the FCC.

PRIMARY, NOT SINGLE

Ferree and his staff have concluded that the 2001 decision regarding the definition of primary video as meaning just a single programming service was incorrect.

“I think the statute is more ambiguous than suggested and, therefore, there is room for the FCC to make the decision on policy grounds rather than on pure statutory construction grounds,” Ferree said.

If a federal court shares the FCC’s judgment that the law is ambiguous, it is required to affirm the agency’s interpretation if it is reasonable.

Ferree believes if he can convince Powell that the law is ambiguous on the meaning of primary video, he has a shot at gaining Powell’s support for a multicasting mandate.

“Once you get there, as the chairman said in his statement, he is open to it as a policy matter, that multicast carriage may be a good thing. I still think he believes that,” Ferree said.

ARE THERE THREE VOTES?

Ferree needs three votes to prevail. Multicasting “has been controversial for years, and I don’t know that it won’t be again,” he said. “So I can’t tell you today how that is going to come out when the votes start clicking in.”

Republican FCC commissioner Kevin Martin supports multicasting. Democratic commissioner Michael Copps is expected to vote with Martin, provided the FCC also adopts acceptable public-interest standards for digital-TV stations.

Although Republican FCC commissioner Kathleen Abernathy hasn’t ruled out that primary video can mean more than one programming service, she has expressed constitutional concerns about multicasting mandates.

Democrat Jonathan Adelstein is expected to side with Copps, again, if multicasting is coupled with public-interest mandates. But Adelstein may not figure in the debate, because he has to depart the FCC when Congress adjourns.

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