New Fights Await Cable Ops at FCC

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Washington-Over the next few weeks, the Federal Communications Commission willstart to look at some issues that haven't preoccupied cable lobbyists here in recent years.

The cable industry's focus has been on the open-access debate here and around the country and on the digital must-carry fight with broadcasters at the FCC. But the industry could be on the verge of entering into new disputes on two fronts.

The first issue involves an obscure provision of the 1992 Cable Act that includes broad, although discretionary, language for the FCC to promote information diversity- presumably over cable systems, although the law does not single out the industry by name.

The second issue, again taken from the 1992 Cable Act, deals with the right of cable competitors to buy satellite-delivered programming owned by cable operators. The exclusivity ban is due to sunset in October unless the FCC decides to extend it.

The FCC teed up both issues in an Aug. 1 notice of inquiry, which sought public comment for the cable-competition report it prepares for Congress each year. The FCC expects to receive the first batch of comments at the end of this week (Sept. 8).

Viewing cable as the dominant provider of video programming in 1992 and probably for many years beyond, Congress apparently decided to give the FCC power to curb cable's market power when household penetration reached certain levels.

Congress wrote a provision that said the commission could act when 70 percent of U.S. households have access to systems with at least 36 activated channels and 70 percent of those households subscribed to such systems.

Cable systems pass 96.6 million of 100 million U.S. households, and 68 million households subscribe.

A couple of questions obviously need to be answered. Do 70 percent of U.S. homes have access to 36 cable channels? The National Cable Television Association said the answer is yes, putting the total in the 90 percent range.

Do 70 percent of the households in question subscribe? The NCTA said that answer is no, and it intends to file comments with the FCC explaining why.

Assuming that the FCC disagrees with the NCTA and decides to adopt rules, what kind of rules could it write? Under the law, the agency may "promulgate any additional rules necessary to provide diversity of information sources."

Although the law does not specify that the rules automatically apply to cable, the provision was included in the 1992 Cable Act, and the authority to draft rules is tied to a cable-penetration test. It seems unlikely that Congress intended for the FCC's rules not to apply to cable operators.

The Precursor Group CEO Scott Cleland said the law provided an open-ended mandate for the FCC to adopt an assortment of rules for cable.

"If the [70/70] test is met, it would give them very broad cable-regulatory authority -tons more," Cleland said. "That's pretty strong language. Language like that is among the broadest you can write."

Cleland suggested that the FCC could use its authority to order "open access to the network" for Internet-service providers that compete against MSO-affiliated ISPs. But the FCC has declined to impose open access on cable operators so far.

On June 30, FCC chairman William Kennard announced that the agency would undertake a proceeding to study the regulatory treatment of Internet over cable, but aides are still at work on a proposal that would form the basis of the commission's review.

In giving the FCC broad authority to promote information diversity, Congress did not spell out exactly what it had in mind for the agency. In addition to open access, as suggested by Cleland, the possibilities would seem to include digital must-carry, cable-ownership restrictions and network-ownership limitations.

Regarding program access, the cable industry can expect the satellite industry to pull out all of the stops for extension of the exclusivity ban, mainly because the industry leaders-DirecTV Inc. and EchoStar Communications Corp.-rely heavily on the availability of vertically integrated cable networks for their 12 million subscribers.

"Continued access to programming is essential to our core business," EchoStar director of government relations Karen Watson said.

When the 1992 Cable Act was debated, program access was one of the most controversial provisions. But the law has not produced a tidal wave of complaints from satellite or other cable competitors about access to programming or discriminatory prices.

Cable seems ready for a fight. NCTA president Robert Sachs said last December that the cable industry would oppose program-access extension, suggesting that hundreds of cable networks would gladly seek satellite carriage today.

Meanwhile, the sponsor of the program-access law-Rep. Billy Tauzin (R-La.), chairman of the House Telecommunications Subcommittee-backs DirecTV and EchoStar on extending the provisions.

DirecTV also wants the law broadened to include cable networks that are unaffiliated with cable operators and cable-owned networks that are not satellite-delivered, especially regional sports networks.

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