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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.
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.
Copyright
© 2007, Davis Wright Tremaine LLP.
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