NCTA: FCC Terrestrial Exemption Decision Was Arbitrary, Capricious

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The cable industry -- notably the Cablevision and National Cable & Telecommunications Association -- continues to fight  the FCC's order closing the terrestrial exemption for competitor's access to an operator's co-owned programming.

That is according to NCTA's reply brief -- dated Friday Dec. 17 -- in Cablevision's court challenge in the U.S. Court of Appeals for the D.C. Circuit. That is the same one that ruled the FCC had not established the authority for regulating
Comcast's blocking of peer-to-peer file uploads in the BitTorrent case.

The exemption had excluded terrestrially delivered cable networks, like many regional sports nets, from the FCC's
rule mandating access to competing distributors of networks in which a distributor has a financial interest.
The FCC ruled back in January that cable operators that do not share their owned terrestrially delivered RSNs with their competitors will be presumed to be in violation of FCC rules against unfair acts or practices.

They get to rebut the presumption, but the FCC majority made clear that it was taking action against what it saw as a
loophole for multichannel video providers to withhold must-have programming from competitors.

NCTA argued that the FCC does not have the authority to regulate the video programming marketplace in general. It
said the Communications Act "targeted anticompetitive acts directly connected with the distribution of satellite
programming, and then only when those acts prevent or significantly hinder competing multichannel video programming distributors ("MVPDs") from delivering that satellite programming to willing purchasers."
For its part, the FCC contends that the decision only sets up a mechanism for deciding on a case-by-case basis whether an action is unfair or deceptive, while cable operators say it set a standard for conduct by presuming that withholding terrestrial programming from satellite operators was unfair.
NCTA countered that the RSN presumption is irrational and unconstitutional. "Its sole evidence - involving two RSNs
each carrying professional sports teams - cannot rationally support a presumption that would apply to terrestrial
networks carrying as few as two college football games or three college basketball games a year."
One of the high-profile examples of the exemption was Comcast's decision not to make its regional sports network in Philadelphia available to DirecTV, citing DirecTV's exclusive NFL Sunday Ticket package of sports programming that was not available to Comcast or other's cable subs. Comcast did make it available to its cable competition in the marketplace.

But Comcast could be bound by access regs whether or not the court rules in cable operators' favor. That is because, as is widely expected, the FCC could apply RSN access conditions to Comcast's proposed purchase of NBCU. Comcast did not individually join the court challenge, though it is the biggest member of NCTA, which did support the challenge through intervenor briefs -- Cablevision was the petitioner.

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