Program Access Heats Up with Cable, Satellite FCC Lobbying
Debate on banning exclusive programming deals is heating up at the FCC (CD Aug 20 p12) as cable operators, satellite providers and other pay-TV companies pump up their lobbying. Small cable operators and EchoStar are meeting with Media Bureau officials and commissioners’ aides to argue for a minimum of a five-year extension of the ban, industry lawyers said. NCTA and members including Comcast and Time Warner Cable have asked the commission to let the rules die Oct. 5, when they sunset, with more visits from emissaries from large cable operators expected. Comcast calls exclusivity bans a relic because cable operators face growing competition from satellite and video Web streaming.
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FCC Chairman Kevin Martin seems likely to circulate within a month an order extending the ban five years, said agency and industry officials on both sides of the debate. No order is circulating because the bureau is reviewing the issue, they said. It’s unclear whether all commissioners back an extension, but at least one other than Martin seems sympathetic to arguments that cable operators shouldn’t be allowed to withhold affiliated networks’ programming from pay-TV rivals, an FCC official said. The rule is in the 1996 Communications Act.
Commissioners likely will consider whether to change complaint procedures for cases in which video providers allege that programming is being withheld, FCC and cable officials said. RCN is among small cable operators pressing the FCC to require programmers to enter binding arbitration when they can’t resolve carriage showdowns. EchoStar has made a similar request, and some commissioners believe the FCC should do more to investigate complaints. “We're hoping that we can add some teeth in making sure that the commission” aggressively pursues program access complaints, the FCC official said. “There is no need to make the situation much more complicated” by rewriting the rules, the official said.
The complaint process may spur a compromise among commissioners on a program access order, a regulatory lawyer said. Instead of restructuring the system, as some pay-TV providers want, commissioners may agree simply to extend the exclusivity ban. The FCC could “split the baby on this” by extending the exclusivity ban but leaving complaint rules as is, the lawyer said. Commission officials and regulatory lawyers agree it’s too early to say what the final order will look like. The “big question” commissioners face is whether to let the ban sunset, the lawyer said. Not so, said a cable lawyer, declaring the commission’s main question to be whether to change complaint procedures. “The big issue is to what extent can the FCC make bigger changes,” the cable attorney said. “That is certainly an issue they need to look at.”
EchoStar officials advocated such changes in meetings last week with aides to Commissioner Jonathan Adelstein and Chairman Martin. The company highlighted “the need for a more effective enforcement mechanism,” its ex parte filing said. “In particular, we advocated for the adoption of an arbitration procedure modeled on the News/Hughes and Adelphia/Comcast/Time Warner merger conditions.” Conditions imposed last year by the FCC on Adelphia’s $17.6 billion sale and on the 2004 sale of DirecTV’s parent allow arbitration in some situations. The Broadband Service Providers Association argued to apply Adelphia conditions to program access disputes in meetings last week with aides to Commissioners Michael Copps, Robert McDowell, Deborah Tate and Martin. “The goal is to foster commercial settlement,” an ex parte filing said. “An internal FCC resource would be more prone to politics and only have limited use.”
Comcast said mandatory arbitration would mean more time and money spent reviewing complaints. Section 628 of the Act makes the FCC the venue for “adjudicating program access disputes, and the law does not empower the Commission to outsource this responsibility,” said an Aug. 15 ex parte of Comcast’s meetings with aides to McDowell and Martin. The cable operator highlighted the increase in video competition since the Act, saying that customers benefit from exclusive content deals made by websites and satellite operators. Comcast said there is less need for a programming exclusivity ban because cable operators control 13.5 percent of networks, down from 57 percent in 1992.
Comcast touted exclusive deals in many other settings, saying they “foster investment, innovation and increased competition based on product differentiation.” Yahoo’s exclusives with newspapers help that company compete against Google, said Comcast. “There are myriad examples of exclusive contracts working this way.” Cable faces more competition from video streaming, mobile video, Internet downloads and other new technologies, Comcast said, adding that exclusives increase competition in satellite radio and TV. It added that deals with NFL, NCAA and NASCAR help DirecTV “differentiate their services” from those of EchoStar, which “licenses a substantial amount of international fare on an exclusive basis.”