FCC Cable Probes May Open Path for a la Carte, Slow Digital Moves
FCC probes into many major cable operators’ efforts to save bandwidth by moving channels and only distributing those channels that subscribers actively watch may give the agency a way to study a la carte, agency and industry officials said. Recent letters of inquiry from the Enforcement Bureau to cable operators on use of switched digital video and moving channels from analog to digital packages (CD Nov 3 p6) may yield information on wholesale programming deals, they said. FCC Chairman Kevin Martin, who championed a rulemaking notice on such deals, is thought to remain keen to make it easier for subscribers to buy channels piecemeal, though no order on the subject is circulating, they said.
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By asking how much operators pay programmers for each channel they move to digital-only tiers and asking whether subscribers using plug and play devices in switched-digital systems are cut off from certain channels, the FCC raises the specter of a la carte, said telco and communications lawyers. All major operators are thought to have received the letters on digital channel moves, with many major companies, including Charter and Comcast, believed to have gotten letters on switched digital deployments, said industry and agency officials. Cox and Time Warner Cable were fined by the FCC after such moves. The recent letters may be designed to pressure cable operators to move to a la carte arrangements, they said.
The FCC sent letters of inquiry on analog to digital switches because of subscriber complaints and because in a Wednesday letter to members of Congress Consumers Union said such moves shortchange customers, said an agency spokeswoman. “We've heard increasing complaints as well, and so the letters to Congress caused us to think we should investigate,” she said. “The commission felt it should be looked into to see what’s going on.” A Consumers Union official had no immediate comment. An NCTA spokesman declined to comment.
Several communications lawyers criticized Martin for the investigations, saying the bureau seems to be exceeding its authority by asking for information on cable rates, which it doesn’t regulate. Martin may lack time or support among his fellow commissioners to complete an a la carte proceeding, so he may have decided to ask the bureau to send the letters, said agency and industry officials. Progress & Freedom Foundation fellow Adam Thierer, a critic of a la carte and Martin, said the letters represent the chairman “opening yet another front in his Moby Dick-like crusade against the cable industry and in pursuit of a la carte regulation.”
The switched digital and analog-to-digital channel probes may discourage cable operators from continuing such endeavors, Thierer said. “Anything that creates confusion or ambiguity about the regulatory treatment of a new technology is something that can slow down the diffusion of that technology.” But industry will continue the nascent rollout of switched digital systems and keep moving more channels to digital-only tiers until the FCC says to stop, said cable consultant Bruce Leichtman. “The business strategy is trying to find ways to add incremental HD channels and HD capacity without going through a major upgrade,” and the letters won’t immediately change that, he said. A communications lawyer said cable operators seem to be weighing whether to make operational changes because of the letters. “The view is that Kevin is a short timer and they have got to run their business, rather than sit back and find themselves four or five months behind in rolling out these technologies and reclamation of bandwidth,” he said.
Cable operators face burdens answering the FCC letters, which give them too little time to respond, a communications lawyer said. “There’s no way people could respond with the information sought in the time frame allotted. It’s impossible to do.” Operators could try to draw the inquiry out past Martin’s tenure, he said. They could make direct challenges to commission authority to seek such information, or raise Paperwork Reduction Act challenges, the lawyer said, saying it’s too soon to say what will happen. The letters ask for responses in 14 days.
Attention paid by members of Congress to public and governmental access programming that some cable operators moved from analog to digital may have prompted the letters, the attorney said. Media Bureau Chief Monica Desai told a House committee that such moves may violate FCC rules (CD Sept 18 p3). The FCC spokeswoman declined to comment on the switched-digital letters of inquiry.