Cable Program Deals Targeted in Video Competition Comments to FCC

SBC, spending $5 billion to start pay-TV sales, wants the FCC to consider “remedial schemes” it said would promote competition. Such tactics include an expedited arbitration process for firms that couldn’t successfully negotiate regional sports network deals. “A substantial impediment to the development of video competition is the ability and incentive of the cable incumbents to restrict or deny access to such programming to new entrants, a longstanding problem of which the Commission is well aware,” the Bell said. There’s no evidence that program access rules stifle competition, an NCTA spokesman said, responding to SBC’s filing.

NCTA said competition is vigorous, pointing to DBS customer additions and an increase during the 2004-2005 season in some TV broadcaster ratings. SBC retorted that cable price increases have been limited to areas with competitors. The FCC, in announcing the annual video competition review, said monthly rates for certain cable products rose 32% from 1998 through last year (CD Aug 15 p6). The NCTA said cable rates aren’t a full proxy for service. “If consumers have choices from different service providers, which they clearly do, price is one part of the overall equation,” said an NCTA spokesman: “SBC is now poised to provide in its region precisely the kind of wireline video competition that has been proven to restrain cable pricing,” that firm stated. The NCTA said cable costs may actually rise if SBC gets what it wants -- - avoiding obligations for complete system build-outs: “Faced with such cream skimming, cable operators would face artificially high per-customer costs.”

Cable and SBC did agree that consumers will benefit from competition. NCTA offered the caveat that pay-TV providers should be “governed by marketplace forces” and not “artificially skewed by rules and regulations that unfairly give some competitors an unfair advantage.” SBC has said it shouldn’t be subject to all Title 6 rules (CD Sept 15 p17). That argument is “smoke & mirrors,” an NCTA spokesman said. Other Bells, including Verizon and BellSouth, made arguments like SBC’s. USTA said “build- out requirements prevent entry” to new markets and “access to vital programming is necessary for new video entrants to be successful.” It also said the current franchising process may slow competition. Verizon said the FCC should examine cable operators’ exclusive content agreements and ensure that the franchising process doesn’t involve delays. BellSouth said it took the firm an average of 11 months to get cable franchises.

An ongoing FCC rewrite of its BRS/EBS rules has “created regulatory uncertainty that threatens the very existence” of digital wireless cable operators, WATCH TV told the FCC. The firm said its BRS/EBS system, which uses more than 7 digitized channels to deliver digitally compressed multichannel video service, can’t be accommodated in the 7 channels designed for high-power, high-site transmission of video programming in the new BRS/EBS band plan’s middle band segment (MBS). It said the new band plan’s rules on the lower band segment (LBS) and the upper band segment (UBS) don’t accommodate high- power, high-site transmissions key to the economic viability of WATCH TV’s video service. “Were WATCH TV limited to just the 7 channels in the MBS, its video subscribers would suffer a calamitous 75% loss of video programming,” it said: “While rebanding of the BRS/EBS spectrum may be necessary to prod the larger BRS/EBS spectrum holders like Sprint Nextel into fully deploying the 2.5 GHz band for new services to the public, the Commission must not punish WATCH TV in the process.” WATCH TV again urged the FCC to adopt an automatic opt-out for the BRS/EBS multichannel video programming distributors using more than 7 digitized channels to transmit video programming. FCC rejections of that proposal unfairly forces WATCH TV to seek a waiver of the transition requirement, the firm said: “The waiver process mandated by the [FCC order] is an unnecessary exercise whose additional paperwork, administrative costs, time delays and associated regulatory uncertainty substantially outweigh any speculative benefit it might have to the public, and nothing since the filing of WATCH TV’s waiver request has proven otherwise.”

Disney rejected a la carte pricing, saying it would increase prices. Disney’s filing was a primarily a reprise of last year’s filing; the company had no response about the repetition. Reply comments are due Oct. 3. The FCC’s report to Congress may be released late this year or in early 2006.

Broadcasters Weigh In

Broadcast TV continues to play a vital role in the delivery of video programming, NAB said, providing numerous statistics boasting of the need for terrestrial TV. Between 73 million and 80 million TV sets aren’t connected to pay-TV, instead depending on over-the-air signals, it said. Poorer households are more likely to rely on such broadcasts, the NAB said, citing the Govt. Accountability Office.

Broadcast stations remain the leading provider of vital public safety information and a significant source of diverse, local programming, NAB said. Cable systems “typically do not serve as independent sources of local information; most of any local programming they provide is originated” by broadcast stations, NAB said, citing the FCC. NAB also touted its efforts to help in the digital transition. The broadcast industry this summer submitted a request for an estimate of the cost of developing a low cost converter box to prevent consumers from losing access to video programming when analog broadcasting ceases.

Class A and Low Power TV (LPTV) stations are especially sensitive to competition in the delivery of video programming, the Community Bcstrs. Assn. (CBA) said. Most of those stations don’t have mandatory carriage rights on cable and none have such rights on satellites. Pay-TV providers aren’t required to negotiate in good faith with Class A and LPTV stations regarding retransmission consent, CBA said.