Programmers, Cable Operators Debate Leased-Access Rules
Cable companies and programmers disagreed on whether the FCC should change its leased-access rules, in comments this week on a rulemaking (CD June 19 p1). NCTA, Time Warner Cable and Comcast said all evidence indicates that cable systems offer ample capacity to programmers, which generally buy time by the hour or half hour because they can’t afford to run a channel full time. The Community Broadcasters Association, Shop NBC and others said the FCC should overhaul the system because it’s too costly and difficult to access. The America Channel and NFL Enterprises, seeking cable carriage deals, singled out Comcast for criticism.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Cable operators aren’t to blame for scant use of leased access, NCTA said in an FCC filing a Tuesday. Leased-access programmers rely on single sources of revenue -- ad sales or viewer contributions -- not the twin compensation streams that cable channels generally get: carriage fees and ad revenues. “The economics of leasing, then, account for its limited utility,” NCTA said. In 1991, Congress saw that the system “might not be economically viable,” it said. “The number of channels devoted to leased access use should not be viewed as the measure of success.” It added that the commission “has found as much” and cited a 1997 FCC order. The current rulemaking is said to have arisen from an agreement between FCC Chairman Kevin Martin and Commissioner Jonathan Adelstein that helped persuade Adelstein to vote for the $17 billion purchase of Adelphia by Comcast and Time Warner (CD July 14/06 p1). Still, Adelstein dissented in part.
NCTA and individual cable operators see no need to reform leased access, they said. Programmers rarely complain, NCTA said. “The rules should not be modified to create additional or greater obligations for cable operators,” it said. Nor should the FCC make industry cut channel capacity rental fees, said Time Warner Cable. “The constitutional underpinnings of these rules is suspect” and changes “would increase the burdens that these rules already impose on cable operators’ speech and property rights,” the company said. “The fact that the demand for leased access capacity appears to be relatively modest and that the Commission is not overwhelmed with a deluge of leased access or program carriage complaints are not indications that the rules are failing.” The dearth of complaints testifies to the fact that satellite, Bell, and Web video rivalry brought in more programmers, said Time Warner Cable.
Concentration of cable-system ownership has surged since the 1992 Cable Act requirement of leased access, NFL Enterprises said. That makes it more difficult for the NFL Network and other programmers not owned by cable operators to get carriage. Operators routinely put their own channels in lower-numbered slots, where more subscribers are likely to see them, than they do those of non-affiliated programmers, the programmer said. “Perhaps the best example is Comcast,” the NFL said. It fought Comcast when the cable operator announced plans to move the network to a costlier and less- popular channel tier. The FCC should make it easier for independent programmers to show they experience bias, NFL Enterprises said, asking that cable companies be required to negotiate with the channels “in good faith” as they must with broadcasters. The FCC should let programmers seek binding arbitration in carriage impasses, NFL Enterprises said.
The FCC should “overhaul” leased access, allowing more programmers to rent cable capacity, said the Community Broadcasters Association. Many of its Class A and low-power TV station members need leased access, since, unlike full- power broadcasters, they can’t get guaranteed carriage on cable operators in large cities, the group said. “The active efforts of cable operators to discourage leased access have also contributed to the failure of the system” the group said. “CBA urges the Commission to recognize that the leased access system has never functioned at all beyond a de minimis extent.” Shop NBC said the FCC should reduce the maximum that cable operators can charge. When the FCC cut fees in 1997, Shop NBC was quoted prices of $4 a year for each cable subscriber it reached, when the programmer said no more than $2 was affordable. High prices result in cable systems carrying 0.7 leased access channels on average, it said. “Leased access remains unaffordable to large and small independent programmers alike,” Shop NBC said.
Start-up cable channels not owned by pay-TV providers have a tough time because operators often won’t carry them until they get other distribution deals, the America Channel said. Comcast often carries its own channels before they secure distribution elsewhere -- unlike its treatment of independents, said the channel. “These are easy methods to discriminate because, as the Commission has recognized, Comcast can prevent an independent channel from gaining market entry, if Comcast declines carriage.”
FCC Chairman Kevin Martin has circulated an order that would help the channel get carriage on Comcast as a regional sports network under arbitration condition in the Adelphia deal. But most commissioners don’t support the order, two FCC officials said. The order doesn’t have three votes yet, a source said. Comcast said the channel failed to show the need for leased access reform. “Programmers appear to be encountering few instances in which operators are not properly fulfilling their duties,” Comcast said. “Within the past seven years, only 20 leased access complaints have been filed with the Commission.”