Commissioners Eye Changes to Controversial DTV Carriage Order

The other four commissioners seem sympathetic to cable complaints that Martin’s DTV order would mean reduced system capacity and company profits, FCC and industry officials said. Separate proposals last week by the NCTA and the American Cable Association interest most commission members, FCC officials said. Commissioners are seriously weighing NCTA’s request (CD Sept 7 p2) that cable operators be subject to what the industry calls “dual carriage” for only three years, two FCC officials said.

Operators with less than 552 MHz capacity or fewer than 15,000 subscribers would be exempt from the rule if ACA prevails, an ex parte filing shows. Exempt systems would have to carry the primary DTV signal “on the basic tier available to all subscribers in either in either analog or digital format, at the operator’s discretion,” according to the filing. ACA also asked the commission for a rule that requires stations to make all their programming available to cable operators in standard definition. ACA fears the cost to members of having to buy gear to convert HD programming to SD. Under the plan that some commissioners are reviewing, dual carriage would expire Feb. 17, 2012, an FCC official said.

After that, cable operators no longer would be subject to the rules, letting them save bandwidth by carrying only in digital TV stations that forgo compensation for their signals. Broadcasters have lobbied the commissioners to approve the rules, which industry and Martin refer to as a “DTV viewability” order. According to Martin and broadcasters, this approach would ensure that all cable customers get the must-carry TV stations after the transition. Broadcasters worry that otherwise analog cable customers no longer would receive programming from must-carry stations, often set in smaller cities or featuring programming aimed at minorities. Broadcasters “intrigued” by the NCTA and ACA proposals want to learn more, an NAB spokesman said.

Commissioners got encouragement from Capitol Hill for last-minute order tweaks, a cable lawyer said. Late last week, members of Congress told FCC officials they fear that Martin’s carriage order imperils small cable operators. “There’s no disagreement in Congress that the costs of compliance would be a problem for systems that don’t service tens of thousands of subscribers,” the lawyer said. “If the FCC does not find the right balance with the dual carriage order, then Congress is sure to examine the issue closely in hearings scheduled for this month and next. I'd assume that the Commission would want to avoid passing an order that will draw the fire of Congress.”

RCN offered a different take on the order in meetings last week, according to a Sept. 7 ex parte filing. The overbuilder wants a two-year limit on the “dual carriage” provision. And the rule should exclude cable operators whose subscribers’ homes all have a digital service package, RCN said. Additionally, cable operators need to be able to set their own channel lineups and “determine the channel position of the analog channel,” it said. Last week Comcast lobbyists worked the eighth floor to argue that the Martin order would be unconstitutional, an ex parte shows.

Independent cable programmers opposed Martin’s plan last week as well. TV One, Ovation TV, Outdoor Channel, Africa Channel and Inspiration Networks executives told the commissioners that Martin’s plan would harm programming diversity -- echoing arguments they made earlier against his campaign for a la carte. “Dual must-carry requirements could be equally damning for cable networks by crowding them out to make room for two and three copies of the same broadcast,” an ex parte said. Separately, Bloomberg’s attorney wrote that Martin’s proposal would force cable operators to choose between keeping nonbroadcast programming like Bloomberg TV and improving other services, like broadband. That “necessarily means that unless a cable operator is willing to diminish the quality of its non programming services (a dubious proposition at best in the current highly competitive MVPD landscape) non-broadcast services like BTV will have to be deleted,” it said.

Franchise Order, Program Access

A separate order letting cable operators pay lower municipal fees once existing franchises with cities expire could get a vote this week or next, according to industry and FCC sources. Commissioners may want a quick vote so the agency is within striking distance of a 6-month deadline it set in a March 5 order giving Bells video franchise deregulation, they said. Another goad to speedy action is next week’s deadline for a brief defending FCC franchise policy with 6th U.S. Circuit Court of Appeals on a lawsuit against the March order, they said. Martin pulled the pending cable order, but commissioners were ready to vote, said an FCC official. A 3-2 vote is all but certain, with Commissioners Jonathan Adelstein and Michael Copps dissenting, the official said.

Also set for a vote -- though colleagues asked that Martin delay it -- is an order to extend for five years a requirement that multichannel video programming distributors make their vertically integrated programming services available to competing video distributors. The rule expires Oct. 5. The FCC may have to act if a gap opens in its effectiveness, said Richard Ramlall, RCN senior vice president of strategic and external affairs. “Given the fact that any order issued by the Commission will likely need to be published in the Federal Register, the Commission may need to address any interim period between the scheduled October 5, 2007, sunset and the effective date of the Commission’s order extending that date,” he said. The FCC typically takes a week between issuing an order and publishing it in the Federal Register -- so there could be a gap between the sunset data and the new rule’s kicking in, he said.