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FCC Unplugging Terrestrial Exemption

1/23/2010 2:00 AM Eastern

The Federal Communications Commission's vote to substantially close the exemption of terrestrially delivered networks from program-access rules last week had telcos and satellite companies high-fiveing over the prospects of getting access to cable-owned regional sports networks.

While the order does not apply to past actions, pending complaints — and there are a number of them — can essentially switch gears and charge a violation under the new enforcement regime if that programming is still being withheld after the order takes effect. The FCC's program-access rules require cable operators to sell any satellite-delivered networks they own to satellite-TV providers, telcos, overbuilders or other competitors.

Looking to capitalize on the change will be AT&T, which filed a program-access complaint against Cox Communications for withholding Channel 4 San Diego, a terrestrially delivered network that holds exclusive TV rights to Major League Baseball's San Diego Padres. The FCC Media Bureau has denied the complaint, citing the terrestrial exemption, but also pointed out that the best place to resolve the issue was in the rule-making that the FCC decided last week.

There are two other pending complaints, one filed by Verizon Communications against Cablevision Systems over high-definition feeds of RSNs MSG and MSG Plus in New York, and one by AT&T, also against Cablevision's withholding of an HD feed in Connecticut.

“We are hopeful that with these new rules, consumers in Connecticut will no longer have to watch their favorite sports teams in standard definition just because they want to sign up for AT&T's award-winning U-Verse video service,” AT&T said in a statement. “Nor will baseball fans in San Diego have to give up the Padres to make the same choice.”

The FCC said last week that it would treat HD and standard-definition feeds as different networks, meaning that providing an SD feed does not resolve the issue.

RSN Comcast SportsNet Philadelphia is also an early target, though it has no complaints filed against it at the FCC at present.

Comcast has not been required to make CSN Philadelphia available to its satellite competitors, despite the program-access conditions imposed in its 2006 acquisition of Adelphia Communications. That's because the Philadelphia network was terrestrially delivered before those merger conditions were imposed.

The FCC majority (a 4-1 vote, with only Republican Robert McDowell dissenting) went out of its way to point out that multichannel video providers could now file complaints against Comcast if the MSO is still withholding that programming when the new order takes effect, 30 days after it's published in the Federal Register.

Look for DirecTV to do just that, spokesman Robert Mercer said. “[W]e will likely file in Philly, since no one has a complaint pending there,” he said. Comcast had no comment on the decision last week, but in discussions with the FCC just days before the its vote, Comcast executives counted the ways they thought the FCC rule change would be the wrong thing to do.

As a legal matter, Comcast said, extending program access to terrestrially delivered programming “is inconsistent with the text, structure, history, and purpose of the statute.” The company also says it is bad policy not to allow competitors “to distinguish their services by offering exclusive programming is a benefit to consumers … As a factual matter, multichannel video programming distributor competition has become well established and there is no evidence in the record that competing MVPDs have been in any way hindered from providing satellite cable programming.”

Comcast has said in the past that it would make its Philadelphia RSN available to DirecTV when the National Football League makes its DirecTV-exclusive “NFL Sunday Ticket” out-of-market game package available to Comcast.

Comcast had no comment on whether it would take this decision to court, as it has a number of previous FCC efforts to regulate its business, including the BitTorrent decision, in which the MSO was found in violation of FCC Internet-openess principles, and rule limiting any one pay TV provider to no more than 30% of the U.S. market. Comcast won the latter challenge and could well win the former.

McDowell said he expected it to be challenged. “It is a pity that [FCC general counsel] Austin Schlick and I can't get credit for previewing what is likely to be an appellate oral argument later,” he said.

The National Cable & Telecommunications Association had no comment on whether it would challenge the decision. “We still have to review the order before commenting further,” said NCTA spokesman Brian Dietz. But he did say that the trade group appreciated that the FCC “recognized that local news programming is pro-consumer” and established a “rebuttable presumption” that is tied to findings of fact.

The FCC did not exempt regional news networks from the new rules. But there is a presumption that RSNs are must-have, nonsubstitutable programming whose withholding is problematic, a presumption not applied to news nets.

Cablevision latched on to those as positives in an otherwise disappointing decision for the company.

“We are pleased that the FCC recognized the value of Cablevision's local programming strategy and investments,” said Cablevision. “Verizon and AT&T will not receive an FCC bailout that will allow them to capture News 12, MSG Varsity and other programming that we have developed for our customers. We are also pleased that despite the phone companies' overwhelming lobbying effort, the FCC has ensured a complaint process.”

The FCC did not totally close the terrestrial exemption, but made clear it did not interpret the exemption to mean program withholding is immune from complaints because it was terrestrially delivered.

Cablevision said it was ready to defend itself under the FCC's new rules.

“If the phone companies complain that they are unable to compete, we are confident that we can prove that it is for a variety of reasons, none of which have to do with HD sports programming. Verizon and AT&T do not need a regulatory bailout in order to compete.”

The FCC also voted to institute a “standstill” process for requiring programmers to make their networks available during program-access complaints related to carriage renewals.

SIGNALS IN DISPUTE

In an order establishing new rules, the FCC cited examples of the ongoing withholding of cable-affiliated programming:

—John Eggerton

HD Feeds of MSG and MSG Plus: Cablevision has withheld the terrestrially delivered HD feeds of its affiliated RSNs MSG and MSG Plus from certain competitors in New York City, Buffalo and Connecticut.
Channel 4 San Diego: Cox has withheld the terrestrially delivered 4SD channel, which has exclusive rights to the San Diego Padres baseball games, from DirecTV, Dish Network and AT&T.
Comcast SportsNet Philadelphia: Comcast has withheld this terrestrially delivered RSN, which carries regional professional sports programming in Philadelphia, from satellite providers.
Sports Programming in New York City: The FCC previously noted evidence that Cablevision withheld certain sports programming from RCN after Cablevision revised its distribution system from satellite to terrestrial delivery.
New England Cable News: The FCC previously noted claims that this terrestrially delivered, Comcast-affiliated regional news network had been withheld temporarily from RCN.
CN8—The Comcast Network: The Commission previously noted claims that this terrestrially delivered, Comcast-affiliated local news and information channel is available only to Comcast and Cablevision subscribers and is withheld from competitors to incumbent cable operators.
In Demand: The Commission previously noted claims that the company's terrestrially delivered, cable-affiliated programming has been withheld from certain multichannel competitors.


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