November FCC Meeting to Focus on Cable Industry
The cable industry will come in for heavy scrutiny at the Nov. 27 FCC meeting. Chairman Kevin Martin asked the other commissioners to vote on a 2006 video competition report to Congress that relies on controversial statistics to make a case that the cable industry needs more regulation, two agency officials said. They said Martin asked his colleagues to vote on an order that would slash the fees cable operators can charge independent programmers for channel capacity leases, and approve a notice of inquiry for the 2007 competition report.
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The commissioners were asked to consider another plan of Martin’s, which would force cable operators to carry the digital signals of independent programmers that lease spectrum from TV stations, the sources said. The notice of rulemaking on leased access has been on the FCC’s eighth floor for some time, like some other items that Martin wants action on. He circulated the leased access rulemaking in March (CD March 12 p6). The video competition report has been on the FCC’s top floor since late August. It covers the 12 months through June 2006.
Some commissioners are skeptical of data used in the report to make the case that the cable industry passed a threshold that would subject it to additional rules, said agency sources. It’s unclear if Martin has the votes for the report, but commissioners are unlikely to seek out data on their own to make the case that the so-called 70/70 test hasn’t been met, said an official. Using data from the Television and Cable Factbook published by Warren Communications News (which also publishes Communications Daily), the report finds that more than 70 percent of homes passed by cable subscribe to the service, said two agency officials. There’s disagreement among industry and FCC officials about whether cable operators have met the second threshold. NCTA agrees that more than 70 percent of households are served by cable systems with 36 or more channels, the first part of the test.
The FCC report Martin’s seeking a vote on says 71.4 percent of homes got cable on Oct. 10, 2007, citing Warren data, said two agency officials. An FCC form cable operators must complete puts that figure below 70 percent, “in the high 60s,” said another source. NCTA said Nielsen data show 61.1 percent of homes served by more than 5,000 systems bought cable as of Oct. 31. SNL Kagan forecasts a 58.1 percent figure for all systems by the end of 2007, said NCTA. The most recent video competition report cited Warren data to conclude 67.8 percent of such homes bought cable, said NCTA. That figure has fallen, not risen, since 2005 as more people sign up for pay-TV from telecommunications companies, it said.
The NCTA sent a sharp letter to Martin and the other commissioners saying section 612(g) of the 1984 Cable Act, which imposed the 70/70 threshold, gave the FCC authority over only leased access if the standard was met. “As in previous instances, important factual inquiries are subject to sudden, inexplicable shifts in the FCC’s methodology and conclusions,” wrote NCTA President Kyle McSlarrow. “Regardless of what statutory provision is at issue, there is a relentless drive for more regulation and more government micromanagement without looking at what is actually happening in the marketplace,” he wrote. The report asks the commission “to endorse a false view of the video marketplace,” McSlarrow said. “That fictional view is even more astonishing because it ignores the reality that the marketplace consists of robust competition among cable,” phone and satellite TV. The leased access order would limit cable operators to charging independent programmers 10 cents per subscriber per month for letting them use cable channels, FCC officials said.
Martin won’t use the threshold to force consumer offerings of individual cable channels, he told reporters Tuesday. “I do continue to encourage the cable industry to offer more consumer choice,” he said. He said the finding that the 70/70 threshold was exceeded was “not just a commission finding” but “by an outside, independent firm.” He didn’t name the firm.
The figures from the Television and Cable Factbook aren’t well suited to determining whether the threshold has been met, said Managing Editor Michael Taliaferro. Taliaferro said Factbook figures understate the number of homes passed by cable systems -- and the number of subscribers -- because not all operators participate in its survey. “More and more operators are just not giving up” those numbers, he said. “We could go with two dozen footnotes when we start to report this data.” Cable operators participating in the Factbook survey said they passed 94.2 million homes and had 67.2 million basic subscribers.
The FCC official who asked him for the cumulative figure didn’t say how it would be used, Taliaferro said. If he had known, he would have provided a list of caveats, he said. “It would have been a very lengthy e-mail,” he said. Taliaferro said he did point out the shortcomings in a phone conversation with the FCC official but didn’t put it in writing because he wasn’t asked to. “I had no idea what they were doing with it.”