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FCC Probes Channel Moves

11/07/2008 7:00 PM Eastern

The Federal Communications Commission is investigating whether cable companies are effectively raising prices by moving a handful of channels from analog to digital tiers.

In all, the FCC sent letters to 12 companies on Oct. 30 to determine whether they violated FCC rules. They were: Bend Cable Communications, Bright House Networks, Cablevision Systems, Charter Communications, Comcast, Cox Communications, GCI, Harron Entertainment, RCN, Suddenlink, Time Warner Cable and Verizon Communications.

The FCC’s Enforcement Bureau is seeking extensive data going back to November 2006. It demanded responses within 14 calendar days.

The FCC is evidently concerned by allegations made by consumers, including a Consumer Reports magazine story, that cable operators are moving channels to digital and then charging consumers to rent digital boxes to maintain access to the same number of channels. The FCC is also looking at whether cable operators lowered the price of an analog tier after channels have been removed.

“Consumers should not have to pay more to receive those channels, nor should they pay the same as they had previously for less channels if those channels are moved from a basic pricing package to an all-digital tier,” FCC chairman Kevin Martin said last Tuesday.

National Cable & Telecommunications Association spokesman Brian Dietz was critical of the FCC’s inquiry. “It is perplexing that the FCC [is] insinuating [that cable operators] are acting inappropriately in rolling out new digital video services and technologies. The bureau’s actions are clearly contrary to the FCC’s own policies encouraging the rollout of new digital services,” he said.

Martin also suggested that cable operators are improperly using the TV stations’ transition to digital TV on Feb. 17, 2009, to justify their channel changes.

NCTA president Kyle McSlarrow last Thursday sent a letter to Senate Commerce Committee chairman Daniel Inouye (D-Hawaii) denying that allegation.

“The cable digital migration has been under way for many years, wholly separate and apart from the broadcasters’ digital transition,” McSlarrow said.

It’s not clear that cable operators have violated rules by moving channels and by changing or not changing rates as the case may be. The FCC might be able trip up a cable operator or two that made the changes without providing sufficient subscriber notification.

Local governments regulate basic rates of cable systems that are not considered subject to effective competition. In March 1999, the FCC lost its authority to regulate the price of program tiers higher than basic.

The FCC’s probe into cable’s digital-TV transition is related to another investigation into whether cable operators are deploying switched-digital-video (SDV) technology in a manner consistent with federal rules designed to allow consumers to access cable programming without an MSO-supplied set-top box.

A cable-industry lawyer said the FCC’s investigations have prompted some cable companies to put on hold their various digital-TV–transition and bandwidth- management strategies until the FCC has issued rulings.

September