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Court Hears Dual Must Carry Case

9/15/2008 1:56 PM Eastern

Washington—An attorney for major cable networks Monday afternoon urged a federal appeals court to void a Federal Communications Commission rule that would effectively force cable operators to carry some local TV stations in both analog and digital formats for three years.

Bruce Sokler, representing C-SPAN, Discovery Communications and four other cable programmers, said the duplicative carriage of some local TV stations would unnecessarily eat up cable's channel capacity, threatening the ability of cable networks to reach their audience.

"There's still far more speakers than there is capacity," Sokler said during a 53-minute oral argument before a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit.

The cable programmers are in a hurry to see the rule struck down before it takes effect on Feb. 18, 2009, a day after all full-power TV stations are required to shut off their analog signals and go all-digital.

National Cable & Telecommunications Association president Kyle McSlarrow has promised that his cable operator members would comply with the FCC rule even if programmers prevail in court -- a commitment that one judge suggested hurt the cable programmers’ cause.

"Do you have causation or redressability problem here? Haven't they all said they will to this anyway? This is [NCTA's] proposal that they adopted," Judge David S. Tatel asked.

Sokler replied, “The marketplace can change over a three-year period time. It shouldn't be the government that decides that."

FCC attorney Joseph Palmore insisted that cable programmers shouldn't be allowed to pursue the case because the FCC's rule applied to cable operators and they are not in court today."

Judge Judith W. Rogers reminded Palmore that the U.S. Supreme Court held that cable programmers did not make "a statement of abstract injury" when they fought the must carry law after its passage in 1992.

"They are not a gadfly in this field. They are major players," Rogers said.

In September 2007, the FCC ordered cable operators with analog and digital capacity (so-called hybrid systems) to provide subscribers with digital and analog versions of TV signals whose owners demand cable carriage. The number of commercial TV stations that elect must carry is not kept by the FCC.

The FCC granted all-digital cable systems an exemption, but since so few cable operators are all-digital, Sokler called the exemption "an empty gesture."

Sokler argued the FCC should have read the law to require cable carriage of just a digital version of a must carry signal, provided the cable operator offered set-tops boxes to subscribers with analog TV sets.

"I don't think the interpretation we advanced is an illogical one," Sokler said, adding "the converter box is the solution for everybody," from broadcast-only viewers after the DTV transition to pay-TV homes served by satellite carriers today.

The set-top box proposal, FCC attorney Palmore said, would put the burden on about 40 million cable subscribers to take action to see the must carry stations after the Feb. 17, 2009 analog cutoff.

Cable's intention, he added, was to "demote must carry stations to the digital tier, making them nonavailable to analog customers."

Sokler's set-top box approach appeared the better option to Judge Brett M. Kavanaugh, who expressed doubt that dual carriage was viable under the First Amendment.

"While they are hybrid [systems], there's no real choice," Kavanaugh said.

Tatel asked a few questions attempting to understand how many local TV stations elect must carry. The FCC just announced that it was exempting small cable operators from the dual carriage rule, making it difficult to know the actual burden on cable operators, according to Tatel.

The FCC's new rule exempted all systems with 552 MHz or less of activated channel capacity, or all systems with 2,500 subscribers or fewer that are not owned by Comcast or Time Warner. Eligible systems may carry must carry stations only in analog until 2012.

Jack Goodman -- an attorney for both the National Association of Broadcasters and the Association for Maximum Service Television -- said the FCC's dual carriage mandate would have "extremely modest incremental effect" on capacity, given that 87% of cable subscribers are served by systems with 750 MHz of capacity.

"Cable capacity is virtually unlimited," Goodman said.

FCC attorney Palmore said the FCC's exemption for all-digital cable systems, to the extent it gave cable operators incentive to go digital, would actually free up capacity for programmers.

Palmore also said that the court needed to examine closely the cable programmers' claim about their access hybrid cable systems had the dual-carriage rule not been adopted.

Cable operators, he said, could just as easily use newly available channel capacity on non-video programming services, such high-speed Internet access and digital telephone service.

September