FCC BARRAGED BY LOBBYISTS ON PRIMARY VIDEO AND MUST-CARRY

FCC in recent weeks has been virtually overrun by lobbyists seeking to convince commissioners and their staffs that “primary video” means either single video programming stream or as many as 6 streams of video, data and other material. Whether agency is poised to make decision remains unclear. Question could land Commission in Supreme Court, which is why commissioners are weighing arguments so carefully, FCC sources said. Sources said Commission may soon put issue out for public comment in new rulemaking in order to further spur DTV transition, but it couldn’t be determined at our deadline whether it would be on Sept. 12 meeting agenda. Issue centers on “must-carry” in digital world, where broadcasters will have 6 MHz of digital spectrum at their disposal. Although FCC already has decided broadcasters have right to carriage on cable systems, cable MSOs are fighting idea that stations have right to carriage of however many streams they can pack into that 6 MHz using digital compression technology.

Cable operators don’t believe they should have to carry everything broadcasters transmit, saying if they did so it would: (1) Violate their First Amendment rights. (2) Crowd out other video programming and other services that would benefit cable subscribers more. (3) Keep cable operators and their limited carriage capacity virtually hostage to broadcasters. “We've been arguing I think very strongly that if you interpret ‘primary video’ to permit multicasting, you are affecting the First Amendment rights of the operators, who now have less authority over their own channel lineup and the nonbroadcast programmers who go to the back of an even longer line than they were before,” NCTA Senior Vp-Law & Regulatory Policy Daniel Brenner said in interview last week. He said controversy centered on whether primary video included allowing broadcasters to transmit six 1-MHz digital signals vs. one 6-MHz high-definition channel, citing ex parte filing by Bloomberg TV that said technologies existed that would allow cable operators to dynamically use any spectrum not taken up by broadcasters at certain hours of day to provide other services to cable subscribers.

In apparent anticipation of FCC action on DTV must-carry (CD Sept 3 p7), FCC received wave of ex parte filings on subject last week. Paxson Communications Chmn. Lowell Paxson said FCC definitely should decide issue Sept. 12 because stations had to decide between must-carry and retransmission consent by Oct. 1. Selection will determine cable carriage obligations through Dec. 31, 2005, he said. Paxson said “full digital must-carry is the critical linchpin” to success of DTV transition. However, NCTA said that when defining primary video, “the principle of constitutional avoidance requires acting with the least impingement on the First Amendment rights of cable operators and programmers,” and must-carry for multicasting failed to meet that standard. It said 6-for-one multicasting in N.Y.C., for example, would require cable systems to carry 72 broadcast channels, making it much harder for cable-originating channels to compete. Hallmark Channel CEO Lana Corbi said in ex parte filing that giving must-carry status to multicasts would “bestow preferential treatment on broadcasters” and compromise cable channels’ “ability and willingness to take risks: If the government mandates multicast carriage for time-shifted, standard definition broadcast programming, the end result will be less innovation and less reason for consumers to make the investments in new equipment that ultimately are necessary if the digital transition is to succeed.”

Lawyers for Gemstar-TV Guide urged FCC to reconsider its decision to apply 3-part program-relatedness test to determine what portions of DTV signal must be carried. They said Commission instead should define program-related material as anything that enhanced viewer access to programming, awareness of program schedules or viewer understanding and enjoyment of programming. Gemstar had been on losing end of battle on that subject with Time Warner Cable, which at one point stripped what it considered to be non-program-related material out of broadcast signal -- decision that thus far has stood up to govt. scrutiny. In its ex parte filing, MSTV briefed FCC on benefits of Program & System Info Protocol (PSIP) for carrying program-related information in DTV signal.

Discovery Communications COO Judith McHale in recent meeting with Comr. Copps said cable programmers faced challenges in securing carriage on cable systems and that situation would be worse if mandatory carriage were allowed for more than broadcasters’ primary digital signal. McHale said networks such as Discovery Health and Discovery En Espanol “would be in serious jeopardy of losing carriage,” and broadcasters should have to compete for carriage of programming above and beyond single programming stream: “Having to compete for carriage will cause broadcasters to create compelling/quality digital programming that operators want to carry and consumers want to see.” Charter Communications, in its ex parte filing, said it had plans for spectrum not used by broadcasters, including high-speed data, video-on-demand, interactive TV, even IP telephony.

Assn. of Public TV Stations said interpretation that primary video included multicast programming was “grounded in the language of the Communications Act and advances the fundamental legislative goal of preserving free, over-the-air television.” APTS said in ex parte filing that cable industry’s arguments didn’t take into account increased capacity created by digital compression techniques. Broadcaster’s entire digital programming stream occupies 3 MHz of cable bandwidth, whether that stream consists of single channel of high-definition video or up to 6 channels of standard definition video, APTS said. “Thus, whether a cable operator places a single high-definition broadcast stream on one channel or various standard definition broadcast streams on multiple channels, the number of channels that the cable operator has available for other programming is the same,” APTS said.

NAB said burden on cable operators would be far less than they claimed because of “exploding” cable capacity and that cable industry didn’t take into account Congress’s intent to preserve free broadcasting. In fact, NAB said, 6 MHz was less of burden now than what analog must-carry was under 1992 Cable Act. Also, any free services or programming that broadcasters wanted to transmit or multiplex should be protected by must-carry rules, NAB said. “Is there anything more proconsumer than encouraging more free program channels to viewers?” NAB spokesman asked: “You would think the FCC would want to encourage that.”