NCTA Urges New Sub-Cap Policies

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Federal regulators must undertake a broad review of cable ownership policies
with a new emphasis on the actual management control of cable systems, National
Cable & Telecommunications Association president Robert Sachs said
Tuesday.

The Federal Communications Commission is reviewing whether to limit the size
of cable companies by placing a cap -- also called a horizontal-ownership
restriction -- on the number of pay-TV subscribers a single company may
serve.

But Sachs said the FCC has refrained from taking a broad look at its
attribution rules, which determine whether minority investments in cable systems
should count toward the overall subscriber cap on ownership.

'It's very difficult for the commission to come up with a rational set of
horizontal rules in the absence of taking a fresh look at the attribution
rules,' Sachs said. 'There is a very close relationship between attribution
rules and horizontal rules.'

AT&T Broadband clashed with FCC officials over the company's 25-percent
stake in Time Warner Entertainment, a limited partnership with about 10 million
cable subscribers.

The FCC insisted that the TWE stake was attributable to AT&T, until a
federal court overturned the agency's attribution rule with respect to limited
partnerships. That had pushed AT&T over the FCC's former cap, which was 30
percent of all pay-TV subscribers. The court also struck down the 30-percent
cap.

AT&T insisted that the TWE interest should not count because TWE was
under the control of the company's general partner, Time Warner Inc., which
later merged with America Online Inc.

In January, the NCTA plans to file comments with the FCC, urging the agency
to examine attribution rules not only with respect to cable but also with
broadcasters and newspapers, Sachs said.

In the cable context, NCTA will ask the FCC to reexamine its federal
court-endorsed policy that triggers attribution when one cable company has at
least a 5-percent voting stock interest in another operator.

'What we want are attribution rules that establish that a company is credited
with ownership where it actually controls an entity,' Sachs said. 'This is a
complicated subject and we don't expect it will be resolved quickly.'

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