Sources: FCC Order Lifting Exclusivity Ban Is Mostly Intact

Additional proposed protections for access to RSNs and other programming will be teed up in separate rulemaking proposal

By John Eggerton -- Broadcasting & Cable, 10/4/2012 4:14:10 PM

At presstime, the FCC's order lifting the program access rule ban on exclusive contracts between distributors and co-owned networks had morphed into an order that looked pretty much like the one circulated by FCC chairman Julius Genachowski last week -- with the addition of a complaint shot clock -- plus a separate notice of proposed rulemaking (NPRM) that would tee up additional access protections suggested by ban critics.

The FCC has to vote by end of day Friday, Oct. 5, which is the last day of the previous five-year renewal of the ban. The ban would sunset if the FCC took no action, but the FCC is taking some action to clarify and streamline the avenues for access complaints even as it lets the ban sink into the West.

One source said there would be no major changes in the chairman's order beyond the shot clock -- sources say the current timeframe is six months -- on resolving a denial of service complaint.

Ban critics had suggested a 60-day clock, but that would leave the FCC insufficient time to collect comment on a complaint before acting, according to one source familiar with the thinking behind the addition to the draft.

The order will also allow for standstills for contract renewal complaints that meet a four-pronged test, but there will be no rebuttable presumption that there be a standstill.

The order lifts the ban and makes clear that there is a rebuttable presumption that withholding regional sports networks is out of bounds, meaning that the burden of proof is not on the complainant that withholding is anticompetitive, but on the distributor to show why it does not unfairly hurt competition.

RSNs are at the heart of the ban, since those are the overwhelming majority of nets with an ownership tie to distributors.

The order and NPRM are both expected to be approved, likely unanimously, though they were still a moving target at press time. Commissioners Ajit Pai and Jessica Rosenworcel were in the office Thursday, according to sources, while chairman Julius Genachowski was in Pennsylvania making a speech and Commissioners Robert McDowell and Mignon Clyburn were out of the country on travel, though the international travelers will be able to vote remotely.

FCC commissioners and staff had been vetting suggestions from the American Cable Association, DirecTV and US Telecom, that the order beef up protections for access to regional sports networks and other "must-have" programming through a series of rebuttable presumptions that withholding that content is unfair and deceptive and hinders competition in violation of portions of the access rules that will remain on the books. Those presumptions included that withholding the top 20 cable-affiliated programming networks hurt competition or that a successful complaint presumes the success of a future complainant, or that a complainant seeking a standstill is going to merit one, or putting a shot clock on complaints.

The National Cable and Telecommunications Association had pushed back hard this week, telling the FCC the ban needed to go, and said that adding all those presumptions would be a de facto retention of the ban. It also pointed out that those proposals had not been put out for comment and an "adequate record" developed to buttress them.

At presstime, NCTA appeared to have prevailed, except on the shot clock.

Rather than being part of the order, some of those presumptions are being rolled up into the separate NPRM, a way to tee those issues up and get comment on them without having to decide them now. It also addresses some concerns by FCC attorneys that teeing up too many issues in the order, and ones that make it different from the way the FCC treats withholding terrestrial programming under its fix of that so-called loophole, could cause legal headaches down the road if not done in a separate proceeding with opportunity for both sides to weigh in.

It was not clear how many and just which issues would be raised in the NPRM, which was said to still be a work in progress at presstime, but one source said it was hard to get worked up about proposals that draw no tentative conclusions.

That said the NPRM also gives the FCC a vehicle for increasing access protections if removing the ban leaves insufficient protection, said a top staffer. "You want to make sure there are sufficient opportunities to increase those protections," said the staffer.

With the ban lifted, complaints about access to programming can still be filed under the FCC's rule 268(b), which makes it "unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers."