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ACA: Small Cable Must Be Compensated For Post-Auction TV Channel Relocation Costs

The American Cable Association urged the Federal Communications Commission to protect to the maximum extent small cable providers who seek reimbursement, as Congress intended, for costs incurred in continuing to carry local TV signals that have been relocated as a result of spectrum auctions in the broadcast TV band.

"ACA appreciates the FCC's effort to develop a ‘Catalog of Eligible Expenses' for costs incurred by multichannel video programming distributors (MVPDs) that continue to carry broadcast television stations after the FCC conducts the incentive auctions.  Such a list will provide the clarity required to implement Congress' directive in the Spectrum Act that it reimburse costs ‘reasonably incurred' by MVPDs to continue to carry a broadcast signal due to channel relocations, but it must be flexible enough to accommodate all such costs" ACA President and CEO Matthew M. Polka said on Nov. 21.

ACA detailed its views in reply comments filed with the FCC on Nov. 18.  The trade group said it agreed with the National Cable & Telecommunications Association (NCTA) that the FCC should fully account for all of the different scenarios that would require cable operators to incur expenses reimbursable from the TV Broadcaster Relocation Fund (Fund) in setting a schedule of reimbursable expenses, which may go beyond the specific "hard" and "soft" cost categories identified in the FCC's Public Notice.

ACA stressed that the cost catalog must provide for fair reimbursement for any reasonable "hard" and "soft" costs that cable operators incur as a result of a broadcast station voluntarily or involuntarily changing its channel assignment.  Because smaller cable operators have constrained administrative and financial resources and some have headends that lie barely within a broadcast station's signal contour, it is essential that the FCC be comprehensive in its approach in carrying out Congress' directive that cable operators be held harmless and ensure that they have the right to seek reimbursement for all costs reasonably incurred to continue carrying a broadcast signal, subject to funding availability.

ACA underscored the need for the FCC to include other costs that may be unique to small cable operators.  For example, changes in broadcast transmitter location due to channel sharing or repacking may affect the quality of the signal delivered to the cable system.  Inevitably, some cable systems will no longer be able to receive a good-quality signal via antenna, requiring the cable operator to purchase alternative forms of delivery, such as fiber, microwave or satellite, in order to continue carriage of the channel and its availability to their customers.  Unless operators can obtain reimbursement for such additional delivery costs, they may be unable to continue to carry affected stations, contrary to Congress' intent.

"Such outlays should also be eligible for reimbursement from the Fund," Polka said.

ACA said that in designing reimbursement rules, the FCC must keep in mind that these costs can also be highly variable and subject to change and therefore must be sufficiently flexibility to account for such variability.

ACA noted that potential cost savings, such as bulk discounts and competitive bidding, are unlikely to be available to many cable operators, particularly smaller cable operators.  Because infrastructure and equipment purchasing decisions are made at the local system level rather than on a companywide basis, cost-savings measures such as competitive bidding are unlikely to be available to many operators.

ACA urged the FCC to take into account that smaller operators often pay higher prices than larger operators for the same equipment.  If, as NCTA stated, larger operators have few ways to save money when accommodating channel line-up changes due to broadcast station relocation, it is likely that smaller cable operators will have virtually none.

"Small cable operators have limited financial and administrative resources. Failure to properly account and reimburse operators for these reasonably foreseeable additional financial burdens would compound the economic challenges already faced by smaller cable operators, who often serve smaller markets and rural areas," Polka said.

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