October 2005

Will cable operators have to carry the multiple channels that broadcasters transmit on their digital television frequencies? As the question looms over the DTV debate, FCC Chairman Kevin Martin has taken steps to support the idea. Under Chairman Martin, the only one of five commissioners to dissent in February when the agency chaired by Michael Powell denied a "must-carry" requirement, the FCC in recent weeks has issued two reports favoring broadcasters in their disputes with the cable and satellite industries over the issue. The first of the two FCC reports was issued Aug. 23, when the FCC said the satellite companies DirecTV and EchoStar Communications must carry all of the multicast digital channels that broadcasters transmit in Alaska and Hawaii. The agency also ruled that satellite companies must carry their high-definition programs. In a second order relating to the Satellite Home Viewer Extension and Reauthorization Act, issued Sept. 8, the FCC was required to consider the impact of retransmission consent rules on video competition. On this matter, the FCC said, "If broadcasters are limited in their ability to accept in-kind compensation, they should be granted full carriage rights for their digital broadcast signals, including all free over-the-air digital multicast streams." Despite the reports, Martin can do little to affect the issue at the FCC, as the debate about multicast carriage has become one of the hardest-fought, behind-the-scenes battles in the DTV transition on Capitol Hill. Broadcasters have been pushing for the requirement in exchange for accepting a "hard date" for losing their analog spectrum.

Grande Communications Networks, an established overbuilder, this week took advantage of an exception in a new Texas law that allows current cable competitors with low penetration to rescind their local contracts in favor of statewide licensing. A new Texas telecommunications-competition law does not let incumbents like Time Warner Cable or Charter Communications Inc. apply for a statewide operating authority. The law does, however, include exceptions for nonincumbent operators that serve fewer than 40% of cable homes within their municipal franchises.

Changing media ownership rules is becoming a chess match at the FCC. The Commission likely will review cable ownership attribution rules, and act on them before setting national ownership limits. Separating the two items would help align broadcast TV and cable system rules on the thresholds for media properties to be considered owned by a media firm for antitrust purposes. National cable ownership limits have been an open question at the FCC for four years.

Regulators must place “serious and meaningful” conditions on the SBC-AT&T and Verizon-MCI mergers to prevent competitive harm and “remonopolization,” the American Antitrust Institute (AAI) said Wednesday. The mergers probably will be approved “one way or another,” said AAI President Albert Foer.