Pay-TV Marketing Exclusives With Apartments Get FCC Nod
The FCC allowed all types of subscription-video providers to enter into exclusive deals to market their services to apartments and other multiple dwelling units and to bill MDUs on behalf of residents. The order drafted by the Media Bureau and approved 5-0 this week sidestepped the question of whether pay-TV companies besides cable operators and certain telcos can exclusively serve an entire building. The expanded exclusives would have been allowed by the bureau draft circulated in late December (CD Jan 12 p3). They were excised from the final order, agency officials said.
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The draft conclusion allowing direct broadcast satellite providers, private cable operators and other pay-TV providers not treated as cable operators to be the sole video provider to an entire MDU was taken out because of statutory questions, said an agency official and an industry executive. FCC members decided not to tackle the question of whether pay-TV providers other than cable operators and certain common carriers are subject to Section 628, they said. A 2007 order barring cable operators from exclusives and negating existing deals was limited to companies subject to that section. A bureau spokeswoman declined to comment.
A filing by Cox Communications that said DirecTV is subject to program access rules (CD Feb 19 p14) -- after a 4- 1 January vote to expand rules for some video providers -- may have given some at the FCC pause about whether that section applied to DBS providers, a communications lawyer said. The initial draft of the exclusives order said building-wide exclusives were okay for pay-TV providers not subject to Section 628, said a commission official. A Cox spokesman said he couldn’t comment by our deadline.
“Based on the record, we concluded that contracts with building exclusivity clauses can have some benefits for consumers, but that these benefits are significantly outweighed by anti-competitive harms that building exclusivity clauses cause to MDU residents,” said the order released Tuesday (http://xrl.us/bgxg38) of the earlier ban. “The benefits to consumers of bulk billing arrangements outweigh their harms,” it said. “We have been able to identify no significant harmful effects that exclusive marketing arrangements have on MDU residents, and they appear to confer some benefits on MDU residents by making information about video services and any related services easily available to them.”
The order denied requests from small cable and phone providers for exemption from the earlier ban on exclusives. “There is no room in Section 628(j) for treating common carriers or their affiliates differently based on the effects of their conduct or where they operate,” said the ruling denying a request from Shenandoah Telecommunications. Lafayette Utilities System and Marco Island Cable “merely re- state in brief” earlier arguments, said the commission. “The FCC decided against a finely-tuned rule” reflecting past precedent “and instead opted for a one-size-fits-all rule that will help the incumbents keep markets closed a lot more often than it will help new entrants to compete successfully,” said Jim Baller of the Baller Herbst law firm, which represented Lafayette and Marco Island.
DirecTV is “pleased that the FCC has recognized the consumer benefits that flow from the use of exclusive marketing agreements and bulk billing for MDUs, and allowed us to continue to use these tools to foster competition in the MDU market,” said Vice President Stacy Fuller. AT&T, Dish Network and NCTA spokespeople declined to comment, and representatives of the National Multi Housing Council and USTelecom had no comment by our deadline. Verizon likes the order, “and consumers will, too,” a spokesman said. “It will continue to allow us and other providers to use tools -- including bulk billing and exclusive marketing -- to deliver services to consumers more effectively, without all of the downside problems of the old exclusive access agreements.”