Martin’s Dual-Carriage Plan Stirs Controversy Within FCC

Eighth floor talks may go down to the wire on whether commissioners will vote for the item, said another agency source. Martin told commissioners he will place what he terms a “viewability” order on the meeting agenda, along with two other media rulemakings. Commissioners also have the option of voting before the gathering, which will also focus on public safety issues because it’s on the sixth anniversary of the terrorist attacks. Commissioners are weighing an order to extend a cable program exclusivity ban for five more years, a rulemaking on a la carte and a terrestrial exclusivity exemption and an order extending video franchise deregulation to cable operators when existing deals expire.

Among the media items, the dual-carriage order is perhaps the most controversial one at the commission and in industry, said FCC and cable officials. NCTA and members including Comcast have agitated against it, contending it will violate their constitutional rights. Broadcasters support the item because it ensures cable customers can keep getting must-carry stations, generally those in smaller markets or with small audiences, after the DTV transition. NAB called the order “timely.” It would “prevent analog cable subscribers from losing access to some of the most diverse programming on TV, such as religious and Spanish- language programming,” said an NAB spokesman. “Cable gatekeepers ought not be permitted to discriminate against niche and minority television stations.”

The FCC is likely to find itself in court if the dual- carriage order passes, said several cable attorneys. “I think that’s a slam dunk certainty,” said Howard Barr, representing smaller operators. “They don’t like stuff being shoved down their throats.” Cable “absolutely” would sue over the order, said another attorney. Barr said U.S. Appeals Court, Washington, is the most likely venue for a lawsuit. NCTA said it’s too soon to handicap chances for a suit. “If it’s what we expect, we'll obviously be opposed to it,” said a spokesman. “Cable operators will continue to deliver broadcast signals to all customers after the transition,” including analog must-carry signals, he added. Broadcasters contend dual-carriage violates neither the First Amendment nor any other laws because cable operators have plenty of capacity to carry analog and digital must-carry signals.

As with dual-carriage, cable officials are frustrated by the franchise order, saying it will result in the industry facing higher costs than Bells. Martin’s draft order hews closely to a March 5 rulemaking notice in saying cable firms can escape certain municipal fees when they renew franchises but not before then, said FCC officials. Cable operators contended they should get such exemptions when a new entrant such as a phone company gets a franchise in their area. But several FCC officials said that could be disruptive to municipalities by forcing them to rework contracts in the middle of their terms. Upon contract renewal, cable operators will be able to apply certain public access channel payments and fees for operating municipal data networks to a 5 percent federal franchise fee cap, said two agency sources. They said local consumer protection laws won’t be preempted.

Another provision given to Bells but not cable operators in the order is a so-called shot clock limiting the amount of time cities can take to issue contracts to video providers, said an FCC official. There already are rules protecting cable operators during renewal talks, said the source. The order may make cable less competitive than Bell video because it doesn’t grant immediate fee relief. Small operators may be especially hurt by having to pay higher fees. “What’s a drop in the bucket to a top five MSO is real money to someone fifty or below,” said Barr. NCTA officials declined to comment.

Another draft rulemaking circulated by Martin stirring some controversy asks whether the FCC should eliminate the so-called terrestrial loophole letting cable operators withhold their own channels from other video providers when they're not distributed by satellite, said an FCC official. Comcast takes advantage of the exemption for Philadelphia sports programs. The notice stirred concern among at least one commissioner because it’s unclear whether the commission has authority to eliminate the loophole since it was enacted by Congress, said an agency official. But the rulemaking does not contain a preliminary conclusion that the exemption should be nixed.

The same rulemaking asks how cable operators can provide customers with more bundles of programming, said several FCC officials. They said the notice may be issued in conjunction with the program access order and will seek public input on ways cable operators sell channels individually, a high priority for Martin. NCTA remains opposed to a la carte mandates and the industry does not seem poised to sell networks individually on its own, said the spokesman. “The research regarding a la carte has shown that consumers will end up paying more and receiving less,” he said. He said digital cable, VoD and PVRs “allow consumers to essentially build their own programming schedule.”