The FCC voted 4-1 to establish rules and procedures that will make it very likely that terrestrially delivered networks owned by cable operators will no longer enjoy an exemption under the program access regime created by Congress in the 1992 Cable Act. FCC Commissioner Robert McDowell, a Republican, opposed the changes, arguing that the FCC lacked the authority to close the so-called "terrestrial loophole." In a news release, the FCC said the rules would promote competition, foster innovation and empower consumers.
"Consumers who want to switch video providers shouldn't have to give up their favorite team in the process. Today, the Commission levels the competitive playing field," FCC Chairman Julius Genachowski said at the FCC's Jan. 20 meeting.
If the FCC's new rules work as intended, at some point in the near future Comcast Corp. can no longer withhold its SportsNet Philadelphia from DirecTV and Dish Network; Cablevision System Corp. can no longer withhold the HD feed of its MSG sports channel from Verizon FiOS; and Cox Communications Inc. can no longer withhold Channel 4 San Diego, which has exclusive rights to Padres professional baseball games, from AT&T U-verse.
The FCC said it acted in the face of evidence that cable competitors need access to sports channels to participate in the market on an equal basis. Citing its own 2006 study, the FCC said Comcast's withholding of SportsNet Philadelphia from direct broadcast satellite operators caused the percentage of television households subscribing to DBS in Philadelphia to be 40% lower than what it otherwise would have been.
Prior to adoption of its new policies, the FCC required cable operators that owned satellite-delivered networks to make that programming available to all multichannel video distributors. After reviewing complaints over many years, the FCC routinely concluded that cable-affiliated programming distributed by terrestrial means was not covered by the program access statute. In doing so, the FCC established what some refer to as the terrestrial loophole.
The impact of the FCC's decision could take some time to be felt in that the agency did not rule that terrestrially delivered programming covered under the new policy had to be made available to competitors automatically. Instead, the FCC said that if it receives a complaint about denial of access to terrestrially delivered programming, the cable operator involved would be given the opportunity to present evidence rebutting the presumption that it had engaged in unfair acts
that significantly hindered another multichannel video programming distributor from providing satellite cable programming to consumers.
In his dissent, McDowell said that Congress adopted program access rules to ensure the availability of satellite-delivered programming only.
"The plain language of [the law] bars the FCC from establishing rules governing disputes involving terrestrially delivered programming, whether we like that outcome or not," McDowell said. "We cannot rewrite statutes."
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