CABLE, BROADCAST, DBS, CE, PHONE PLAYERS DUEL OVER ITV POLICY

Pushing for “technologically neutral nondiscrimination safeguards” on such vertically integrated MSOs as AOL TW, group of major programmers urged FCC to mandate that all broadband distributors carrying any ITV signals forward signals for all programmers on their cable systems. Group, consisting of Disney, Univision, USA Networks and Viacom/CBS, also called on Commission to ban discriminatory routing or caching practices that would permit cable operators to send their affiliated programming at faster speeds than rival networks. Programmers contended that consumers shouldn’t have to buy additional set-top box to receive unaffiliated ITV services. “It is far easier and requires far less intrusive government regulation to prevent monopoly power from distorting a relatively new market than it is to combat monopoly power already unleashed in a more developed market,” group said.

Public interest groups, ALTV, APTS, BellSouth, EarthLink, Gemstar-TV Guide International, MSTV, NAB, PBS and SBC Communications all made similar arguments in favor of FCC’s adopting ITV rules. For instance, joint filing by Media Access Project, Consumers Union, Consumer Federation of America and Center for Media Education called on Commission “to move expeditiously to begin a rulemaking establishing open access for providers of enhancements on all platforms, whether cable, DBS, DTV or new technologies yet unknown.” They contended that agency’s failure to act would allow cable MSOs to “become the gatekeepers of what has thus far been a gateless online community” and devastate independent content providers. Without safeguards, they said, “ITV is likely to become a digital mirror image of the current closed multichannel cable model.”

Regulatory opponents countered that imposing ITV restrictions on cable systems would discourage them from starting new services, hampering development of emerging industry. Opponents, including AOL TW, AT&T, Cablevision Systems, Charter, Canal Plus Technologies, Comcast, NCTA, NFL, OpenTV, Progress & Freedom Foundation and group of 4 programmers, declared it was too early to impose obligations on ITV providers. They said early regulation would be unworkable, creating administrative nightmare.

Calling even “the threat of regulation” of ITV market “a major mistake,” NCTA, for example, argued that “there is simply no basis for assuming a problem and proposing regulatory solutions.” Saying FCC deliberately had refrained from imposing similar rules on cable high-speed data services, which are much further along in development, NCTA said Commission should refrain from regulating ITV services for same reason. It also warned that agency had very limited authority to regulate ITV services under Communications Act and easily could violate First Amendment rights of cable operators if it tried to do so. Calling inquiry “a peculiar and misguided proceeding,” NCTA said First Amendment “would seem to preclude the very regulations suggested by the notice which would interfere with cable operators’ constitutionally protected editorial judgments.”

Taking different tacks, DBS providers EchoStar and DirecTV said in separate filings that they wanted FCC to keep close tabs on cable operators so they wouldn’t use their market power to keep interactive TV services from other multichannel operators, including satellite TV companies. DBS companies said they were concerned that cable companies might have unfair advantage in marketplace if both industries were regulated in same way by Commission.

DirecTV said it was “premature” for agency to fully regulate ITV services, but it favored “continued monitoring by the FCC of the potential for anticompetitive behavior by cable operators.” “Regulatory intervention at this nascent stage of ITV development makes little sense,” DirecTV said: “There are as yet no dominant providers of ITV services, and the marketplace is still in the process of sorting out the technological standards” that it will follow during future delivery. DirecTV also said it didn’t want personal video recorder services to be characterized as ITV services. Bottom line is that DirecTV wants FCC to refrain from ITV regulation at this time.

EchoStar said there was “absolutely no basis for imposing” ITV carriage obligations on distributors lacking market power in any relevant market such as itself. Such action would penalize new entrants and favor incumbent cable operators, filing said. EchoStar said Commission should use essential facility analysis to determine whether distributor should be subject to ITV regulation. It said agency also should establish restrictions on unfair practices and discriminatory behavior by cable operators and vertically integrated ITV vendors. Cable operators have market power in MVPD market, and they already have leveraged that power into dominant position in broadband distribution, EchoStar argued. Company said there also was significant risk that cable operators would combine their unrivaled broadband access capabilities with their own ITV content to exclusion of alternative distributors.