Communications Advisory Bulletin
FCC Requests Comments on Changes to Its Commercial
Leased Access and Program Carriage Rules
By Maria
T. Browne, John
D. Seiver and Brian
Hurh
[June 2007]
On June 15, 2007, the Federal Communications Commission (FCC)
released a Notice of Proposed Rule Making (NPRM) inquiring whether
changes need to be made to its rules implementing Section 612 of
the Communications Act, 47 U.S.C. § 532, governing rates, terms
and conditions for commercial leased access, as well as its rules
implementing Section 616 of the Communications Act, 47 U.S.C. §
536, governing program carriage agreements. According to the FCC,
the NPRM was prompted by its 2006 review of the transactions involving
the sale of Adelphia’s cable systems to Time Warner and Comcast.
Certain commenters complained to the FCC of leased access and program
carriage problems and potential violations.1
Comments are due 45 days after the NPRM is published in the Federal
Register, and Reply Comments will be due 65 days after the publication
date in the Federal Register.
Commercial Leased Access
The commercial leased access provisions in Section 612 date back
to the 1984 Cable Act. In adopting the provisions, Congress sought
to “divorc[e] cable operator editorial control over a limited
number of channels” so as to “promote competition in
the delivery of diverse sources of video programming and to assure
that the widest possible diversity of information sources are made
available to the public. . . .” However, balanced against
this diversity objective was an explicit direction that the leased
access provisions be implemented “in a manner consistent with
growth and development of cable systems” and that rates, terms
and conditions of leased access use be “at least sufficient
to assure that such use will not adversely affect the operation,
financial condition, or market development of the cable system.”
Congress amended the commercial leased access provisions in 1992
and 1996. In 1997, the FCC issued a Report and Order significantly
revising the commercial leased access rate formula and other leased
access rules.
Under the FCC’s current commercial leased access rules, cable
operators are required to set aside a certain number of channels
for use by unaffiliated commercial programmers. Cable operators
may charge a fee for the use of a leased access channel under the
FCC formula, which is based upon the implicit fee that the operator
would earn from that channel if it were not used for leased access.
Cable operators are permitted to negotiate terms and conditions
of carriage with leased access programmers and may charge for technical
support and equipment—to the extent they charge other unaffiliated
programmers for similar services.
The FCC’s current NPRM requests comments on the extent to
which leased access channels are being used, the types of programmers
that are using the channels, the number of channels cable operators
are providing, whether cable operators are denying access requests,
and whether the terms of leased access agreements are different
from those that cable operators have with other programming networks.
In addition, the FCC seeks specific comments on:
- The current rate formula, and what specific new methodologies
may be implemented that may better serve Congress’ statutory
objectives;
- The effect of the digital transition on channel capacity and
channel count for purposes of the calculation of carriage obligations
and average rates;
- Whether leased access programmers should have the ability to
request carriage on a specific tier, whether cable operators have
acted reasonably in selecting the placement of leased access channels
at specific channel locations, and whether leased access should
apply to video-on-demand;
- How advances in technology or marketplace developments may
affect the FCC’s leased access rules, such as interactive
electronic programming guides, video-on-demand, or addressable
digital set-top boxes; and
- The effectiveness of the current leased access enforcement process,
including comment on the costs and other burdens associated with
the complaint process, and whether changes to the process are
necessary.
Commissioners Copps and Adelstein filed separate statements both
expressing their beliefs that it is the FCC’s responsibility
to ensure that independent programmers have available and viable
options for carriage under the leased access rules. Neither statement
expresses any concern as to the resulting impact upon cable operators
or cable customers.
Program Carriage Agreements
Section 616, which was added to the Communications Act in 1992,
instructed the FCC to adopt regulations prohibiting all multi-channel
programming distributors from requiring “a financial interest
in any program service as a condition for carriage” of such
service, from coercing a programmer to grant “exclusive”
carriage rights, or from engaging in conduct that unreasonably restrains
“the ability of an unaffiliated programming vendor to compete
fairly” by discriminating against such vendor “on the
basis of affiliation or nonaffiliation.” 47 U.S.C. §
636. In implementing its program carriage regulations, 47 C.F.R.
§ 76.1301 et seq., the FCC followed the narrow focus of the
statute finding it should allow the marketplace to play a decisive
part in the private negotiation of programming agreements.
The FCC’s NPRM seeks comment on whether changes to its program
carriage rules are necessary. In particular, the FCC asks whether
the processes for resolving carriage disputes should be modified
and, in particular, whether the elements of a prima facie case initiated
by a complainant should be clarified. Additionally, the FCC asks
whether its existing time lines for resolving complaints are sufficient,
or whether changes or additional time lines are required to promote
a speedy and just resolution. With regard to the complaint procedure
itself, the FCC asks whether additional rules are needed to protect
programmers against retaliation for filing a complaint, and if the
existing penalties for frivolous complaints are adequate or require
modification. Finally, the FCC specifically addresses whether independent
programmers should be permitted to seek nationwide access directly
from multiple system cable operators, as opposed to current claims
that such programmers must negotiate for carriage on a system-by-system
basis, even while cable operators negotiate national carriage agreements
with other programmers.
Finally, the FCC is considering whether it should establish arbitration
procedures specifically for leased access and program carriage disputes,
including whether arbitration should be elective or mandatory, and
who should bear the costs.
Comments are due 45 days after the NPRM is published in the Federal
Register, and Reply Comments will be due 65 days after the publication
date in the Federal Register.
Footnotes
1
See, e.g., Applications for Consent
to the Assignment and/or Transfer of Control of Licenses, Adelphia
Communications Corporation, Assignors to Time Warner Cable, Inc.,
Assignees, et. al., Memorandum Opinion and Order, MB Docket
No. 05-192, FCC 06-105, 21 FCC Rcd. 8203, 8277 at ¶ 165 (rel.
July 21, 2006).
If you would like additional information
or assistance with these matters, please contact us.
This advisory is a publication of the Communications Group of Davis
Wright Tremaine LLP. Our purpose in publishing this advisory is
to inform our clients and friends of recent developments in the
communications industry. It is not intended, nor should it be used,
as a substitute for specific legal advice as legal counsel may be
given only in response to inquiries regarding particular situations.
Attorney Advertising. Prior results do not guarantee a similar outcome.
Thank you.
Copyright © 2007, Davis Wright Tremaine LLP.
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