Policy Battles Trail Cable to Bay Area

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Heading into its San Francisco convention, the cable industry is embroiled in a number of policy disputes in Washington, D.C., that could alter the way cable systems offer voice, video and data services, according to a report Friday from Medley Global Advisors.

One of cable’s biggest worries is coping with an effort by Senate Commerce Committee chairman Ted Stevens (R-Alaska) to slap program indecency regulations on cable networks.

Stevens has talked about breaking up expanded basic and applying movie-industry ratings to each tier, with consumers entitled to rebates for channels they do not want to purchase based on racy content concerns.

Stevens, who is expected to attend the convention, has also voiced support for cable carriage of multiple DTV services provided by each TV station, assuming the services have a public service orientation, such as news and weather. In February, the Federal Communications Commission rejected so-called multicast must carry.

Meanwhile, new FCC chairman Kevin Martin, who is to address the convention Tuesday, has called on the cable industry voluntarily to create “family-friendly” programming tiers that parents and children can watch together without worrying about sex and profanity. Martin would also like to see the industry embrace the a la carte sale of cable networks.

“The indecency debate is feeding the drive to force cable to provide a la carte programming, specifically a family friendly tier. Could cable find itself on a slow march toward a la carte?” the Medley report said.

Martin, by the way, was the lone FCC commissioner to support multicast must-carry in the February vote. Last week, he declined comment after FCC commissioner Michael Copps said he would like to see the FCC revisit the vote if the issue were tied to new public interest requirements for digital TV stations.

Cable, the Medley report said, also faces uncertainty over whether it will need to contribute Voice over Internet Protocol service revenue to the universal service program, which keeps dial-tone service affordable in rural America. Stevens would like to see cable contribute to universal service based on its broadband revenue, not just on its VoIP revenue.

Baby Bell entry into cable also poses a challenge for cable, as the phone companies either don’t want to obtain local franchise to offer video or want to enter the cable market facing few, if any, regulatory barriers.

The Medley report noted that the FCC had yet to craft new cable ownership rules after a federal court tossed out old rules that capped cable ownership at 30% of all pay-TV subscribers nationally. The report raised cable ownership rules in the context of a potential sale of Adelphia Communications Corp. to other cable companies, including Comcast Corp. Under still-valid FCC rules, Comcast serves 28.5% of all pay-TV subscribers.

Another worry for cable is the Supreme Court ruling expected in June or July in the Brand X case regarding the FCC’s deregulatory approach to cable modem service, a policy embraced by Martin.

Medley cautioned that if EarthLink Inc. lawyer and former Stevens aide Earl Comstock is appointed to the FCC, Martin might not have the votes to shield cable modem service from open access requirements favorable to competing Internet Access providers, in the event the Supreme Court rules against the agency.

“Comstock’s appointment to the FCC could make it difficult, if not impossible, for Martin to push through a cable modem forbearance proceeding if cable loses the Brand X case at the Supreme Court,” Medley said.

Cable opponents in Washington, D.C., have been spreading word that cable is trying to block Comstock’s appointment. In an interview in the April 4 issue of Multichannel News, new National Cable & Telecommunications Association president Kyle McSlarrow said Comstock was a friend and would make a “fine” FCC member.

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