FCC Alaska/Hawaii Order a Multicast, HD First

An FCC SHVERA-mandated order implementing satellite TV carriage rules for Alaska and Hawaii marks a multicast carriage ruling that some industry officials said they hope will remain geographically limited. The Tues. move (CD Aug 24 p12), aimed at keeping the noncontiguous states on par with the lower 48 as required by Congress, was the Commission’s first multicast mandate and Martin’s first multicast-related call as FCC chairman. With Comr. Abernathy concurring in part and dissenting in part, the order deflected DirecTV and EchoStar’s technical and First Amendment protests, requiring they carry local broadcasters’ multicast and HD signals in the noncontiguous states.

Congress ordered the rulemaking to implement section 210 of the Satellite Home Viewer Extension & Reauthorization Act of 2004 (SHVERA), which set new and special requirements for satellite carriage of local stations in states outside the U.S. mainland. In late April, the FCC adopted the required NPRM, stipulating a brief pleading cycle so it could implement the new rules before the upcoming carriage cycle. DirecTV and EchoStar, broadcasters from Puerto Rico, Alaskan satellite dealer Microcom and the Alaska Bcstrs. Assn. all commented (CD June 9 p13).

In the Tues. order, the FCC maintained the tilt toward multicasting shown in the NPRM. “We continue to believe that the statutory language requires that satellite carriers carry all multicast signals and HD signals of each local broadcast station in the noncontiguous states,” the FCC said. It found SHVERA’s use of the plural term “signals” in regard to Hawaii and Alaska to “unambiguously mean carriage of the entire free over-the-air digital broadcast, without limitation, being transmitted by a broadcaster,” the FCC said.

The FCC said it wouldn’t “read into the statute a limitation where none exists.” The text of Section 338(a)(4) of the Communications Act, as amended by section 210 of SHVERA, contains no qualifying term, such as “primary video,” in characterizing which digital signals a satellite operator must carry in Alaska/Hawaii, the FCC said. Had Congress meant to limit digital carriage to a single standard definition stream in this case, the FCC reasoned, Congress “would have included similar limiting language in the satellite context.” In its order the FCC went so far as to say that even if it did find the language ambiguous, “we believe… that the better reading, and the one that most accurately reflects Congress’s intent, requires satellite carriers to carry all multicast and HD signals.”

The FCC’s call on multicast didn’t go over well with EchoStar and DirecTV, who said they'll ask the FCC to reconsider. If that doesn’t work, officials said, DBS likely will look to the Hill. And while one satellite executive called it a “one-of-a-kind” decision, DBS will be alert to the risk of multicast requirements expanding to the mainland U.S. In a joint statement, the DBS operators said: “We are extremely disappointed… that the FCC, which has twice rejected multicast, must-carry for the entire cable industry and its 60 million-plus customers, now wants to impose such a mandate in two states for the two satellite competitors. Why the FCC would burden an already capacity-challenged industry in this way is inexplicable.”

Repeating their earlier comments, DirecTV and EchoStar said if forced to comply they would have to “limit future plans for expansion of other, more compelling satellite TV services that consumers have been demanding.” In comments, DirecTV has said it can’t retransmit HD in Alaska and Hawaii without diverting HD service from other markets where it has more subscribers, such as San Francisco, Chicago and Seattle (CD June 9 p13). But in its order the FCC called DBS’s technical arguments “speculative.”

Imposing an HD and multicast carriage requirement for Alaska and Hawaii won’t place a substantial capacity burden on DBS for 2 reasons, the FCC said: (1) the multicast and HD carriage requirement doesn’t begin until June 2007, and (2) at present, no station in either state broadcasts more than 2 streams of programming. Further, the FCC said, unless satellite customers are provided with access to multicasting, Alaskan TV stations won’t have the incentive to develop more programming streams targeted to rural communities. Around 23% of Alaskan households can’t get cable, and those homes can usually only receive one TV station over the air, the Alaska Bcstrs. Assn. has said.

The DBS order hasn’t triggered widespread cable concern that the FCC will issue a similar order affecting that industry. The order reflects Martin’s wish for must- carry nationwide by all video providers, but it’s very narrow in scope, cable officials said. The order repeatedly notes special circumstances in Alaska and Hawaii. “Congress took steps to confine the breadth and burden of the regulation by directing the multicast and HD obligation to apply only in the” 2 states, the FCC said Tues.: “The carriage requirement is thus narrowly tailored.” The Commission carefully noted that the “analysis interprets section 338(a)(4) only, and thus does not interpret sections 614 and 615 or Section 338 with respect to satellite carriage of digital signals throughout the U.S.”

There’s no indication a broader multicast must-carry provision would be passed by a split commission, let alone survive a likely court appeal, industry sources said. And Martin may leave multicasting to Congress, which could tackle the issue this session. “Multicasting is going to be a legislative outcome in any event; either the Congress will say yes to it or not to it,” a cable executive said. Such a law still would be likely to spur a Supreme Court appeal, the executive said.

The cable industry has fought a multicast requirement, and firms including Charter and Comcast plan to simulcast digital and analog signals in a gesture analysts have said may stave off a Congressional mandate (CD Aug 3 p4). Such moves may frustrate any plans by Martin to enforce multicasting. “It’s no secret, he [Martin is for multicast, he’s been an aggressive advocate for multicast for as long as he’s been at the FCC,” a cable executive said. “The broadcasters are trying to put multicasting into play, and you'll have to see how it plays out,” the official said, noting that “this is not a quick trick in terms of a rulemaking.” After passing broader DTV legislation, congressional committees may take up must-carry in a so-called mop-up bill, Hill sources have said (CD July 8 p1).

EchoStar and DirecTV did say they're “pleased that the FCC -- for the 3rd time -- rejected a dual carriage requirement.” The FCC said it found SHVERA ambiguous on dual carriage: “It is unclear whether Congress intended the analog carriage requirement to continue after commencement of the digital carriage requirement… or whether it intended the analog requirement to end when the digital requirement takes effect,” the FCC said. The Commission ultimately sided with DirecTV on dual carriage, saying the “most reasonable reading” would be to end the analog carriage requirement when the digital requirement begins, especially since DBS operators digitize analog broadcast signals anyway. As a result, analog signals must be carried by Dec. 8, 2005, and digital signals by June 8, 2007.

The DBS operators also said they're pleased the FCC kept its ruling to Alaska and Hawaii, rather than incorporating territories and possessions like Puerto Rico and Guam. In step with DBS arguments, the Commission interpreted SHVERA to refer only to the noncontiguous states, and not to the Communications Act’s broader geography -- which includes territories and possessions. Citing the record, technical difficulties of serving territories and possessions and an EchoStar argument that the territories and possessions aren’t included in a DMA, the FCC said sticking with Alaska and Hawaii would be “the best reading of the statute, and the one most consistent with Congressional intent.”