FCC Releases Details of Request for Comment on Must-Carry Rules Post 2009 Digital TV Transition

As we previously advised, the Federal Communications Commission (FCC) recently adopted a notice of proposed rulemaking (NPRM) requesting comment on whether (1) cable operators should be required to carry broadcasters' signals in both analog and digital format after the February 2009 hard-date for completing broadcasters' digital transition, and (2) the standards for judging material degradation of broadcast signals should be revised. On Friday, May 4, the Commission released the full text of the NPRM revealing additional details of the proposals. Initial comments on the NPRM are due July 16, 2007, and reply comments are due August 16, 2007.

With respect to the statutory requirement that cable retransmissions not subject broadcast signals to "material degradation”, the FCC seeks comment on a proposal to move from a subjective standard (i.e., whether the viewer can see a difference) to an objective standard (i.e., whether any primary video and content-related digital bits are in fact missing from the cable retransmission). The FCC specifically asks how compliance with a new objective standard could be verified, what tools or methods could be used to measure such compliance, and what it would cost cable operators to comply with an "all bits" degradation standard. Significantly, the NPRM preserves the FCC’s earlier finding that digital must-carry rights are limited to a single stream of broadcast programming, not multiple streams (sometimes referred to as “multicast must-carry”). It is possible, however, that broadcasters will use this rulemaking as an opportunity to argue to the Commission that limiting must-carry rights to a single programming stream (which they recently have referred to as “stripping”) constitutes "material degradation.”

The NPRM also asks for comment on how cable operators’ statutory obligation to make broadcast signals available to subscribers should apply after the digital transition occurs. Here, the FCC emphasizes the importance that all cable subscribers, including those with analog sets, continue to be able to view all must-carry broadcast stations. The NPRM states that "in order to ensure that subscribers with analog television sets remain able to view" all must-carry stations, cable operators "must either: (1) carry the signals of commercial and non-commercial must-carry stations in analog format to all analog cable subscribers [in addition to carrying each station's digital transmission], or (2) for all-digital systems, carry those signals only in digital format, provided that all subscribers with analog television sets have the necessary equipment to view the broadcast content." The Commission claims that such a step is necessary insofar as "all cable subscribers today are able to view all of their must-carry stations, and . . . it is critical to the successful and timely conclusion of the DTV transition that they are not disenfranchised by the switch to digital-only." This potential requirement to carry both analog and digital streams of the same broadcast programming would be in addition to the requirement that cable operators retransmit any HD broadcast signals in HD format. The Commission intends to require an operator that elects to provide signals in digital-only format to furnish boxes for all analog television sets of a subscriber that are connected to the system, a requirement that may encourage operators to choose dual carriage, thereby increasing the bandwidth committed to must-carry and decreasing the capacity available for carriage of non-broadcast services.

In conjunction with this proposal, the FCC seeks comment on ways to "promote the goal of . . . transitioning all consumers—including cable consumers—to digital" as a general matter. The Commission also questions whether cable operators ought to bear the costs of down-converting digital broadcast signals to analog after the digital transition since, in the Commission’s view, at that point it will become the cable operator's decision, not the broadcaster's, to down-convert the signal rather than providing subscribers with set-top boxes or other equipment to translate the signal for use on analog sets. Similarly, the Commission notes that the decision in the First Report & Order to not require cable operators to provide subscribers with set-top boxes to translate digital signals into signals capable of being viewed on analog sets "was based on factual considerations" that "will not apply . . . post-transition," i.e., the broadcasters' obligation to simulcast and the likelihood that an identical analog signal would likely be present. Consequently, the NPRM seeks comment on the set-top box issue since "after the transition [subscribers with analog-only sets] will face the prospect of not being able to view the signals of must-carry stations unless they possess the necessary equipment," and the FCC believes its prior holding is not relevant to post-transition obligations.