Dual Carriage Proposals Unconstitutional, Cable Says

But that is a Hobson’s choice for cable, considering the estimated $6.3 billion price tag for taking all U.S. cable networks digital, the NCTA said. “The second option is effectively no option at all,” NCTA said. The group hired former U.S. Assistant Attorney General Charles Cooper to analyze both options. Were the FCC to mandate dual carriage, it would expose the Treasury to liability for “billions of dollars in just compensation under the Fifth Amendment,” Cooper wrote. And requiring cable systems to convert entirely to digital distribution would violate the First Amendment, like forcing newspapers to publish only online, he said.

If adopted, the proposal would invite legal challenges to the entire must-carry regime, Comcast commented, predicting the rules wouldn’t survive in court. “In today’s intensely competitive video marketplace, it is unlikely that must-carry in any form -- much less a vastly more burdensome form… could survive judicial review,” it said. And if the FCC’s goal is to minimize assumed harm done to TV viewers by having to buy or lease a set-top box to keep watching analog TV, “the only feasible solution is to require both broadcasters and DBS providers (as well as cable operators) to transmit their signals in analog, indefinitely,” Comcast said.

NAB and MSTV defended the proposal. Without such rules in place, cable operators could use broadcasters’ digital transition to “pick winners and losers among digital broadcast stations,” they said. “Permitting cable operators to use the downconversion option as a license to pick which must-carry channels to offer to their subscribers only in digital and which to offer only in analog would fly in the face of Congress’ explicit objectives in the Cable Act.” And cable operators shouldn’t be able to choose between the two options laid out in the notice station-by-station, NAB and MSTV said. Instead, the FCC should clarify that operators must make the same choice “with respect to all local must- carry broadcast stations,” they said.

The FCC plan wouldn’t violate the law, NAB and MSTV said. Cable operators have ample capacity to carry broadcast stations, a situation that undermines operators’ First Amendment arguments, they said, citing Cablevision’s vow to have capacity for 500 HD channels by year-end. “Any cable capacity issues that may have once given rise to First Amendment concerns are long a thing of the past,” they said. Not so, Discovery said, citing difficulty it has had securing carriage for some of its Spanish-language programming networks due to lack of capacity on cable systems.

Entravision endorsed the FCC goals but offered its own solution. It would have the FCC require cable operators to keep offering must-carry stations to analog subscribers until 85 percent of subscribers in a given zip code move to digital cable. That would give operators some flexibility, encourage digital cable deployment and make sure poor neighborhoods don’t lose out, it said.

Block Communications sided with cable, though it owns both cable and broadcast assets. “Rather than be forced to carry multiple feeds of each DTV must-carry station, we should be able to convert DTV signals into a format we can deliver to all subscribers. For us that would be a conversion to analog,” Block said. “If a station wanted more, it could elect retransmission consent and negotiate for it.”

The American Cable Association argued for rules letting operators convert digital signals to any format they can provide to all subscribers and choose whether to provide dual carriage for must-carry stations. It went further, asking the FCC to force must-carry broadcasters to reimburse cable operators for the cost of converting digital signals to that format.

Picture Quality

Comments also addressed the degree to which cable operators and other multichannel video programming distributors can compress broadcaster signals without causing “material degradation” to signals. Taking off from the FCC’s query on the topic, NAB and MSTV argued for an objective standard in this regard. Broadcasters, not distributors, should get to choose whether downconverted programming is carried in “letter-boxed” format, they said. And any digital signal converted to analog must meet the International Telecommunication Union Grade 4 standard, they said. For HD programming, the FCC should require distributors to pass along the entire signal they get from stations, allowing for a 1 percent variance, they said.

Such strict objective criteria are not needed, said AT&T in its comments. Degradation should be measured by assessing the picture quality a distributor delivers, not by counting the number of bits it carries on the network, it said. Advanced video encoding technologies let distributors compress high picture-quality streams in relatively little bandwidth, it said. “The Commission should decline the broadcasters’ invitation to set in stone arbitrary technical standards that have little to do with the picture quality viewers actually experience,” AT&T said.

The FCC should avoid objective standards, said Time Warner Cable. Today’s comparative regime works; changing it would harm innovation, it said. “Stymieing efficiency- improving transmission methods would hurt consumers.” Plus, cable operators shouldn’t have to carry pieces of a broadcaster’s signal not meant for the TV set, NCTA said. It highlighted Advanced TV Systems Committee work on a standard for broadcasting to mobile and handheld devices within the DTV spectrum. “A ‘carry all the content bits’ rule not only would defy broadcasters’ own expectations; it would upend cable digital operations for no legitimate reason,” NCTA said.

Religious and Low Power Broadcasters

Religious broadcasters praised the proposal. In talks with cable operators, many of them elect must-carry status, making them the most sensitive to these rules, Religious Voices in Broadcasting said. Without protections like those in the FCC notice, “cable operators will continue to favor the major networks and their own programming channels while stripping and censoring small, independent and religious broadcast channels from their systems,” the group said.

The FCC should revise its proposal to favor low power and Class A stations, said United Communications Corporation, which owns several of each. Existing must-carry rules too often leave low power broadcasters out, it said. Some Class A stations are carried on basic cable tiers, spots they could lose without FCC action, it said. “There is a real danger that cable subscribers will lose access to such stations, or that broadcasters will be subject to undue market power from cable operators,” it said. Reply comments are due August 16.

A “marketplace solution” is the only satisfactory way out of the policy “conundrum” that the FCC faces in trying to ensure that all cable subscribers can view must-carry TV stations on cable systems after the February 2009 analog cutoff, CEA told the Commission. The DTV tuner mandate, though “reaffirmed as a valid policy choice” by a federal appeals court, imposed receiver costs “unnecessary” for consumers not getting TV signals over the air, CEA said. Tens of millions of cable subscribers already have paid the “price of the digital transition” by buying TV receivers with digital tuners that they do not need yet, CEA said: “These cable subscribers should not, now, have to pay again for the same digital transition. Therefore, via this proceeding, the Commission should exploit the capabilities of devices that consumers already own or that are now in the market, rather than saddle consumers, again, with investments in redundant hardware.”

The FCC “can utilize these sunk consumer costs” by requiring cable operators to carry digital broadcasts that are “in the clear” and avoid codecs incompatible with MPEG-2 coding in ATSC and QAM circuitry put into 43 million-plus sets sold since 2004, CEA said. Cable carriage of digital broadcasts also should be free of “switched digital” transmission “that would make this programming unavailable to such receivers,” CEA said.

FCC rules ban cable encryption of digital broadcast channels specifically because those channels must be included on the basic tier, CEA said. The FCC has “the statutory authority and the clear necessity to require… that digital broadcast channels subject to must-carry obligations must remain unencrypted, preferably on the basic tier,” CEA said. CEA called switched-digital transmissions incompatible with competitive devices -- a situation “entirely the fault of the cable industry.”

CEA knows of no “automated, objective measure of video degradation which faithfully matches human visual perception,” it said. The FCC should keep a “high standard” when enforcing its 2001 decision on material degradation, CEA said.