FCC said in rulemaking on cable ownership limits (CD Sept 14 p5) it presumed that any regulations it adopted must preclude single MSO from serving “all cable subscribers nationwide.” Commission cited several hypothetical scenarios in which one MSO could overwhelm market. For instance, it asked whether new market entrants had trouble getting licensing agreements with program packagers because latter feared they would be dropped by incumbent multichannel video programmers. Rulemaking also said brand name networks could require carriage of their own networks, thereby increasing their dominance. Commission asked whether single MSO could determine success or failure of programming network. Rulemaking requested comment on must-carry rules, specifically extent to which they limit barriers that cable systems can place between programmers and subscribers. Commission noted increasing effect of DBS and asked parties to present evidence on extent of that impact. Specifically, FCC wants studies examining viability of DBS and overbuild competitors “at various levels of cable concentration.” Such studies may indicate “appropriate limit” on cable MSOs, notice said. Comments are due 75 days from publication in Federal Register, replies 30 days later.
FCC asked public interest groups and cable companies to justify necessity of horizontal and vertical ownership caps, saying Commission would adopt rules limiting industry consolidation based only on credibility of data from opposing sides. FCC Cable Bureau staff took “fresh approach” in rulemaking launched Thurs., saying it wants Commission decision to withstand judicial scrutiny. Cable Bureau didn’t suggest any specific numerical cap, but outlined 2 regulatory models it believed could fit: “Safe Harbor” or “Open Field.”
FCC began review of 1975 rule barring cross-ownership of broadcast station and daily newspaper in same market. In rulemaking voted Thurs., Commission asked series of wide-ranging questions that noted changes in number and kinds of media outlets established in last 30-plus years, including Internet. Original rule was designed to ensure diversity of voices in market. Notice says there are some 40 newspaper-broadcast combinations that have been grandfathered in, and FCC has granted 4 permanent waivers of rule. Commission asked parties to provide data on how public interest was harmed or benefited from such combinations. Proceeding comes as result of June 2000 biennial review on broadcast ownership. Sec. 202 of Telecom Act of 1996 directs FCC to revisit broadcast ownership every 2 years.
FCC unveiled details of its restructuring plan at Thurs. agenda meeting, most dramatic of which would be combination of Cable and Mass Media Bureaus into newly named Media Bureau. As expected, bureau would include separate Office of Broadcast License Policy, which would be headed by current Mass Media Bureau Chief Roy Stewart, FCC Chief of Staff Marsha MacBride said at media briefing. Also as expected (CD Aug 29 p1), bureau would handle “postlicensing” policy for direct broadcast satellites (DBS), which would be shifted from International Bureau. Common Carrier Bureau would be renamed Wireline Competition Bureau and would have greater emphasis on technical and economic analysis, said Mary Beth Richards, special counsel to FCC Chmn. Powell, in presentation after meeting’s regularly scheduled business. Under changes, which require approvals from labor union, 8th floor and congressional appropriators, Consumer Information Bureau would carry new name of Bureau of Consumer Information & Intergovernmental Affairs and have broader policy functions. Wireless Bureau and Enforcement Bureau would assume some new duties, but their structure would remain intact. “This is a substantial effort at reorganization but it’s not radical,” Powell said.
Cable industry analysts said they doubt reported AOL-Time Warner (AOL-TW) bid for AT&T Broadband could pass regulatory muster, but one observer said govt. disarray over ownership caps could provide “a window of opportunity” for megadeal. Prospect of such corporate marriage was raised by Liberty Media Chmn. John Malone in discussions with analysts, many of whom said any alliance between AT&T Broadband, largest cable operator in nation with 15.3 million subscribers, and TW Cable, second largest cable operator with 12.8 million, would raise serious regulatory questions, even with courts openly criticizing FCC’s cable cross- ownership cap and new FCC Chmn Powell’s stated reluctance to impose such limits. AOL declined comment. AT&T officials said they were exploring their restructuring options and were in talks with “more than one company” but declined to identify any.
We were hard-pressed to find anybody in standing-room-only audience at U.S. Appeals Court, D.C., oral argument Fri. on FCC’s 35% TV station ownership cap that thought 3-judge panel would leave rules in place just as they were drafted. Following argument, Legg Mason analyst Blair Levin predicted “the rules are headed for an exit.” Levin, FCC chief of staff under Chmn. Reed Hundt, expressed opinion of most other observers (most of them lawyers): “The court was focused on how to send it back to the FCC rather than whether to send it back.”
NEW ORLEANS -- Without specifically confirming expected merger of FCC Mass Media and portion of International bureaus into Cable Services Bureau, Mass Media Bureau Chief Roy Stewart said he planned to remain in merged bureau and denied that merger was antibroadcast move. At NAB Radio Show here Thurs., he would say only that he had read in the press about restructuring (CD Aug 29 p1), but said it should be seen as further effort to convince broadcasters to accept fact of convergence of media.
Cable and broadcast ownership rules will be on agenda for FCC’s Sept. 13 meeting. Commission will consider further notice of proposed rulemaking on its cable horizontal and vertical ownership limits and certain aspects of attribution rules affected by recent ruling of U.S. Appeals Court, D.C., in case of Time Warner v. FCC. Broadcast item will consider Notice of Proposed Rulemaking (NPRM) to modify rule or waive policies related to common ownership of broadcast stations and newspapers in same geographic area. Also on agenda: (1) On common carrier side, NPRM to reexamine safeguards for provision of in-region interexchange services by “independent” ILECs. (2) Office of Engineering & Technology item to consider first report & order to streamline equipment authorization procedures for software defined radios.
FCC commissioners have received rulemaking proposals from Mass Media and Cable Bureaus on proposed relaxation of ownership restrictions, with both now likely to be on agenda for Sept. 13 Commission open meeting. We're told 2 rulemakings are being proposed on broadcast side -- one involving newspaper-broadcast station cross-ownership ban, other on 35% TV station ownership cap. “They're pretty wide open” proposals seeking comments on wide range of issues, source told us, ranging from leaving restrictions in force to adopting formal waiver policy to outright repeal. Cable proposal will consider relaxing current restriction on single cable company’s providing service to no more than 30% of U.S. cable homes.
FCC will issue further notice of proposed rulemaking “in the next month or 2” on cable ownership limits, Cable Services Bureau Chief Ken Ferree told reporters in his first media briefing Wed. U.S. Appeals Court, D.C., in March remanded ownership rules, which limit given provider to 30% of cable and DBS market, back to FCC. Ferree, referring to harsh language criticizing Commission’s decision-making in court decision, said: “We want to be very careful to support whatever we do the next time around… I will not have a case sent back with the kind of language that was in the last ownership reversal.” He also dismissed any link between cable consolidation and rising cable rates, and said bureau was working “feverishly” on open access issue.