RCN, DBS Seek More Program Access

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Washington-The cable industry is resisting its competitors' efforts to extend and expand federal rules that ensure access to satellite-delivered cable networks owned by Comcast Corp., Time Warner Inc. and AT & T Corp's. Liberty Media Group.

DirecTV Inc. and RCN Corp. recently told the Federal Communications Commission, which enforces the 8-year-old rules, that it needs to be more aggressive in the program access arena to promote competition to cable.

"The time for monitoring has come and gone. It is time for action," RCN said in FCC comments filed Sept. 28.

In FCC comments filed the same day, DirecTV said the program-access rules contained cable-friendly "loopholes" that the FCC had the authority to close.

Under the rules, cable operators may not withhold the sale of the satellite-delivered networks they own to satellite or terrestrial competitors.

Those rules, however, do not apply to companies that don't own cable systems-such as Viacom Inc. or the Walt Disney Co.-or to services that aren't distributed via satellite.

The cable industry, led by the National Cable Television Association, is calling on the FCC to let the program access rules lapse, citing robust competition in the distribution and programming markets.

Comcast is also urging the FCC to ignore requests by RCN and DirecTV to expand the current rules to cover cable-owned networks that don't rely on satellites for distribution.

"Simply stated, the [FCC] lacks the legal authority to rewrite the program-access rules by expanding their scope to include terrestrially delivered cable programming," Comcast said.

Meanwhile, BellSouth Corp. and EchoStar Communications Corp. want the FCC to plug what they view as a loophole in the rules-the right of broadcast-affiliated cable networks to withhold their programming from cable competitors.

Viacom, owner of the CBS Television Network, United Paramount Network and several broadcast-TV stations, as well as a stable of cable networks, opposes any FCC attempt to apply program access rules to the company.

The commission has no legal basis to expand the rules and no specific evidence that independent programmers are acting in an anti-competitive manner toward cable's competitors, Viacom argued.

"Independent programmers have every economic incentive to seek the widest possible distribution for their program services," the company said.

Cable competitors are speaking out because the ban on exclusive contracts expires on Oct. 5, 2002-unless the FCC decides to extend it as a necessary step to protect competition.

RCN claims cable operators have gradually shifted programming-especially regional sports networks-from satellite to terrestrial distribution to evade the program-

access rules.

The overbuilder cited Comcast as one such rules evader. The MSO's Philadelphia-area regional sports network, Comcast SportsNet, is distributed via microwave. Oddly, Comcast sells that service to RCN.

But Comcast does not sell the sports channel to DirecTV or EchoStar Communications Corp., relying on a 1998 FCC decision that said the MSO could legally withhold the network from DBS.

DirecTV alleges that Comcast migrated CSN to microwave to avoid the program-access rules. On the other hand, Comcast called the evasion charge false, because CSN was a new network never distributed by satellite.

The MSO said it chose microwave distribution because satellite delivery was dramatically more expensive.

Comcast noted that the companies calling for broader program-access rules have ample funding to invest in their own networks. The MSO also said that current program-access rules have worked well, with the FCC deciding the bulk of complaints in favor of the challenged cable operators.

"This suggests a vastly more open and successful program-access environment than that described by BellSouth, RCN, and DirecTV," Comcast said.

Comcast vice chairman Julian Brodsky indirectly addressed cable's dislike for program-access rules at last month's East Coast Cable 2000 show in Baltimore, saying he regretted the fact that "cable networks" are no longer solely found on cable systems.

"The way our relationship with programmers developed, we spent a lot of money promoting these brands and creating these programs," he said during a general session at the conference. "The fact that we let them become non-exclusive to the cable industry, and off of our capital and our efforts these products were now sold to our competitors and then morphed into the congruous situation we have providing retransmission consent, was perhaps a strategic mistake and a result of our own naivete and exuberance in building this industry."Mike Farrell contributed to this report.

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