Washington – Federal Communications Commission chairman Kevin Martin on Tuesday said he would not use a new statistical finding of cable dominance to adopt rules that would allow consumers to buy cable networks on an individual or a la carte basis as an option to large programming tiers.
“I haven’t proposed anything for the commission to do anything on a la carte,” Martin said in a conference call with reporters on a largely unrelated topic. “I don’t have anything proposed in front of the commission. I don’t have any plan for ending up doing that.”
Martin has used the “no plans” formulation before, only to do something else.
In September 2006, he told the Senate Commerce Committee that he had no “current intention” of reviving multicast must carry mandates because no FCC majority supported it. Martin had to pull a multicast must carry vote from the June 2006 meeting agenda because he didn’t have the votes.
But just weeks after being confirmed for a second term in November 2006, Martin created a new version of multicast must carry designed to aid small business and minorities. Those designated entities, if they could lease channel capacity from digital TV stations, would be guaranteed cable carriage. In theory, Martin’s plan would have forced cable to carry many more broadcast programming services than required under current FCC rules.
Although Martin told reporters he hadn’t proposed any a la carte rules, he is seeking to ban Disney, Viacom and News Corp. from offering their programming services in a bundle, on a take-it-or-leave it basis, to their cable and satellite pay-TV distributors. Instead, they would need to sell their cable channels on an a la carte basis. Initial public comments on Martin’s “wholesale” a la carte plan are due on Nov. 30.
Under the 1984 Cable Act, the FCC may “promulgate any additional rules necessary to provide diversity of information sources” if it finds that cable systems with 36 or more channels are available to 70% of U.S. households and 70% of households subscribe to systems with that minimum number of channels.”
Martin reportedly wants to use the 70/70 test to slash cable leased access rates by 75%; cap Comcast at 30% of all pay-TV subscribers nationally; and force Comcast and Time Warner to accept the results of an arbitrator on the carriage of the Hallmark Channel and the NFL Network.
No dispute has emerged over whether large-capacity cable networks are available to 70% of U.S. households. The FCC has never found that the 70% household penetration test has been met until Martin last Friday confirmed a report by Stifel Nicolas analysts.
Martin told reporters Tuesday that cable was slightly over 70%.
“It’s just over 70,” Martin said. “I don’t recall off the top of my head, but it’s just over 70 …” In 2005, SBC (now AT&T) pegged cable at 77.2%.
Martin said the agency’s statistical work on the 70/70 test was performed by “outside independent firm,” which he did not name.
“It was not just a commission finding but it was based on one of the outside resources and data services that the commission relies upon,” Martin said.
In a letter sent Tuesday to Martin and the other four FCC members, National Cable & Telecommunications Association president Kyle McSlarrow argued that the 70/70 test has not been met and probably never will be met. To find otherwise, the FCC would be creating “a fictional world” of cable dominance when satellite providers have 30 million customers and AT&T and Verizon are now committed pay-video providers.
“Manipulating data to justify an unsupportable interpretation of regulatory authority does a serious disservice to consumers at a time when the FCC actually has many other important duties it is clearly bound to perform,” said McSlarrow. “Real damage is done to the administrative system, and unnecessary litigation is generated, when agency fact-finding and policymaking are conducted in this way.”