September 2008

FCC Wraps Affiliation-Contract Review

The Federal Communications Commission Wednesday issued a declaratory ruling clarifying the do's and don'ts in affiliation contracts between networks and local TV stations -- officially ending a years-long review of those contracts. Those clarified rules of the road include the rights of stations to pre-empt shows they think are inappropriate and a prohibition on networks reserving space on station's digital channels for content they have not come up with yet. The FCC clarified that: affiliates retain ultimate control over programming, operations and critical decisions; contracts cannot allow the networks to hinder or prevent stations from rejecting programming they feel is "unsatisfactory, unsuitable or contrary to the public interest" or prevent them from pre-empting for "programming of greater local or national importance." That is not an unfettered right, the two sides agreed, but the dispositive factor cannot be the economics, and the right may not be limited to breaking news or any other specific category of programming. Stations must also be allowed to reject unsuitable programming even if they have not done so with a similar program in the past. That rejection should also not count against contractual limits on pre-emptions, although the FCC said such limits are fine for programming that does not fall under a "right-to-reject standard." That standard is ""unsatisfactory or unsuitable or contrary to the public interest," rather than, say, a network-series repeat the station wants to pre-empt for a local sports-team-preview show in which it gets to sell all of the ad time. The FCC said the networks should not be able to impose any penalties, money or otherwise, for rejected programming. The networks were also prohibited from "optioning" time on stations without having the programming in hand to fill it, including being prevented from requiring affiliates "to carry, at some unspecified future date, unspecified digital content that the network may, or many not, choose to offer."

Wilmington DTV Switch Is On

"Everything is on for Monday," said Gary McNair, general manager of WECT-TV, the NBC affiliate in Wilmington (NC) even if a category 1 hurricane blows into town Friday or Saturday. Category one has winds of between 74 and 95 miles per hour and storm surges of 4-5 feet, with no anticipated damage to structures other than "unanchored mobile homes and shrubbery." The station is preparing to pull the plug on analog early (Monday, Sept. 8), along with four other Wilmington stations, as part of a market test of the national switch to digital Feb. 17, 2009. McNair said the plug will get pulled "unless there are lives at stake," and he doesn't expect that to be the case. Tropical storm Hanna is threatening the East Coast, but McNair said "go" status for the switch would only change "if there is a storm that was going to be here Monday. The only reason we would delay this is if we were in the thick of things right then, and I just don't see that happening."

Professor to Document Wilmington Switch

A team of students led by Elon University professor Connie Book will travel next week to Wilmington (NC) to document what happens when the first American media market transitions from traditional analog to all-digital television broadcast. The Elon team will have exclusive access to real-time reaction after the conversion is made on Sept. 8. Students will be on site at broadcast towers with digital video recorders to capture images of the moment when engineers shut down the analog signal transmitters. They will also assist local television stations with answering phones once the conversion takes effect at noon. They will survey local residents who call to complain, collecting from them demographic information, their prior knowledge about the conversion, and reasons for not buying a digital converter box. Prof Book, who has extensively researched the television industry, hopes to share data with the FCC and television networks in the lead-up to the national digital transition that takes place in February 2009.

36,000 Wilmington Households Request 67,000 TV Converter Box Coupons

As Wilmington prepares to be the first market to transition from analog to digital television on September 8, the Department of Commerce's National Telecommunications and Information Administration (NTIA) announced today that more than 36,000 Wilmington households have requested 67,000 coupons and redeemed 25,000 from the TV Converter Box Coupon Program. More than 17,000 of these households rely on television with an antenna, according to coupon applications. "Wilmington shows that consumers who prepare and plan ahead will be ready for the digital television transition, and will enjoy a clear picture and more programming," said Acting NTIA Administrator Meredith Baker. "I encourage households nationwide that need to order and redeem coupons to do it now."

There Is No Broadband 'Price War'

[Commentary] Yesterday the Wall Street Journal insisted there was now an erupting broadband "price war," simply because AT&T and Verizon were offering some relatively minor promotions to battle last quarter's dismal quarterly additions. The Journal's piece led to a flurry of articles that seemed to agree: yes, we're either in the midst of, or on the cusp of, a very exciting broadband industry price war -- which would be really very interesting, were it actually true.

Illinois Plants 'Johnny Appleseed' Projects Promoting Broadband in State

In describing efforts to improve broadband in Illinois, Lieutenant Governor Pat Quinn uses this analogy: "We have to be the modern-day, 21st century Johnny Appleseeds, planting good technology projects all over the state." Quinn already has a team full of "Johnny Appleseeds" working across Illinois as a part of his and Governor Rod Blagojevich's Broadband Deployment Council. Under the 2007 Illinois High Speed Internet Services and Information Technology Act (SB0766) -- which established the council -- these seeds will ensure "that all state residents and business will have access to affordable and reliable high speed Internet services." Broadband investment and policy engagement have been hallmarks of the Blagojevich administration since it first established its "Eliminate the Digital Divide" initiative. It used funds received as part of the state's settlement of the SBC/Ameritech merger. Their goal has been to expand Internet connectivity in the most underserved parts of the state. Efforts like this have been expanded and supplemented by investments in telecommunications infrastructure by municipal governments, public private partners, and universities. Today, the primary goal of Quinn's Broadband Deployment Council is to coordinate and support the seemingly endless efforts by various stakeholders in Illinois.

Tribune sells 10% stake in CareerBuilder to Gannett

Gannett Co. said Wednesday that it bought a 10 percent interest in CareerBuilder from Tribune Co. for $135 million, giving it a majority stake in the employment Web site. The deal bumps Gannett's interest in CareerBuilder up to 50.8 percent. Tribune now owns 30.8 percent of the Web site, with McClatchy Co.'s stake at 14.4 percent and Microsoft Corp.'s interest at 4 percent. The controlling interest gives Gannett, publisher of USA Today, three seats on CareerBuilder's six-seat board of directors. The other seats are held by Tribune, McClatchy and CareerBuilder.

Liberty Media to split off Liberty Entertainment

Liberty Media Corp will spin off its stake in DirecTV Group and other assets into a publicly traded company called Liberty Entertainment Group SA, taking the first step to simplify ownership of the satellite TV provider. Liberty's 50 percent stake in DirecTV will be the dominant asset in Liberty Entertainment, accounting for more than 80 percent of its value. Wall Street analysts said the long-anticipated move could eventually lead to Liberty Entertainment and DirecTV being merged into one trading entity, which would make it easier to trade the stock for acquisitions in the future.

Rural providers ask courts to repeal USF cap

Rural wireless carriers asked a federal appeals court to review a Federal Communications Commission decision to impose an interim cap on high-cost universal service fund payments to eligible telecommunications carriers. The legal challenge, filed at the U.S. Court of Appeals for the District of Columbia Circuit, is being pursued by the Rural Cellular Association, Cellular South Licenses Inc., N.E. Colorado Cellular Inc., the Cellcom Companies, Smith Bagley Inc., Carolina West Wireless Inc., Bluegrass Cellular Inc., MTPCS L.L.C. and Leaco Rural Telephone Cooperative. The companies previously asked the FCC to reconsider and put on hold the controversial cap ruling in May, but they withdrew their petition for reconsideration in view of the new court appeal. The wireless providers claim the cap is based on inaccuracies, faulty assumptions, skewed legal reasoning as well as being at odds with congressional direction and the principle of competitive neutrality.

Headline Highlights for August 2008

Ah, August. Time to relax, to vacation. Washington shuts down and heads to the beach. Presidents go to ranches. Nothing important happens in August. But not this year. With the only major test of the digital television transition waiting in the wings, the Federal Communications Commission did not take the month off and issued what may be the most important regulatory decision ever concerning the Internet. And there's no way to forget that this is an election year including telecom policy positions from Republicans and Democrats.

Benton

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