FCC set to open cable market

New rules readied to foster diversity

November 10, 2007|By New York Times News Service.

WASHINGTON -- The Federal Communications Commission is preparing to impose significant new regulations to open the cable television market to independent programmers and rival video services after determining that cable companies have become too dominant in the industry, senior commission officials said.

The finding, under a law that gives the commission expanded powers over the cable television industry if it becomes too big, is expected to be announced this month. It is a major departure for the agency and the industry, which was deregulated by an act of Congress in 1996.

Officials say the finding could lead to more diverse programs; consumers groups say it could also lead to lower rates.

Heavily promoted by those groups and by the commission's Republican chairman, Kevin J. Martin, the decision would be a notable exception to the broad deregulatory policies of the Bush administration. Officials in various agencies have relaxed industry regulations and have chosen not to challenge big corporate mergers.

"The finding will provide the commission with additional authority to assure that there is opportunity for additional voices," Martin said yesterday in an interview.

"It is important that we continue to do all we can to make sure that consumers have more opportunities in terms of their programming and that people who have access to the platform assure there are diverse voices," Martin said.

The FCC's conclusion that the cable industry has grown too large will be used to justify a raft of new cable television rules and proposals. They include a cap that would prevent the nation's largest cable company, Comcast Corp., from growing, and would prevent other large cable companies, like Time Warner, from making any new large cable acquisitions.

The decision comes as Martin is about to formally announce his plan to relax a different media ownership rule. That rule has restricted a company from owning a newspaper and a television or radio station in the same community. This month, the commission struck down exclusive contracts between individual cable companies and apartment buildings.

The dominance of the cable industry is a matter of dispute between industry players who say they are under increasing competition from the satellite and telephone companies, and from consumer groups and FCC officials. The latter say that the fact cable rates are rising at a significantly greater rate than that of inflation proves that there has not been significant competition in most cities.

Next week, Martin is expected to formally propose that the newspaper and broadcast cross-ownership restriction be relaxed in the nation's largest cities if the television station is not one of the largest in the community. He has told officials that he hopes to complete action on that rule next month.

The cable finding suggests that Martin is not approaching the media ownership debate with a uniform deregulatory approach - as his predecessor did - but is instead taking a more nuanced approach and intervening in one market, cable television, even as he tries to loosen the rules for other media conglomerates.

In the cable proceeding, senior FCC officials said the agency would announce this month as part of its annual report on the state of the video services market that it has broad new regulatory authority over the cable industry under the so-called 70/70 rule of the Cable Communications Act of 1984.

Under that provision, the agency may adopt rules necessary to promote "diversity of information sources" once the commission concludes that cable television is available to at least 70 percent of American households, and at least 70 percent of those households actually subscribe to a cable service.

Officials and consumer groups said the 70/70 cable television finding would provide the legal basis for the commission to adopt rules aimed at increasing programming and reducing rates for consumers.

The consumer groups and networks that are independent of the cable companies have long maintained there is no adequate process for the commission to sort complaints when a cable company refuses to carry programs.

The FCC is preparing to take steps to make it less expensive for rivals of the largest cable conglomerates to buy their programs - so that, for instance, a satellite company would find it less expensive to purchase programs by Turner Broadcasting System, a unit of Time Warner Inc.

One of the proposals under consideration by the commission would force the largest cable networks to be offered to the rivals of the big cable companies on an individual, rather than packaged, basis. That proposal, known as "wholesale a la carte," is vigorously opposed by the large cable companies.

The agency is also preparing to adopt a rule this month that would make it easier for independent programmers, which are often small operations, to lease access to cable channels.

And Martin has been circulating a plan that would use the finding on cable television dominance to set a cap on the size of the nation's largest cable companies so that no company could control more than 30 percent of the market.

The limit would prevent Comcast from acquiring more cable companies and would significantly limit the growth of other large players, notably Time Warner. The FCC's previous cap on cable ownership was thrown out six years ago by a federal appeals panel that said the agency had not provided an adequate justification for the rule.

Immediate winners from the cable finding are independent program networks, such as NFL Network and Hallmark Channel, that do not have business affiliations with the cable companies, the satellite television companies and the telephone companies that are seeking to compete by offering their own video services.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.