No Dice on Dual DTV in Revived Plan

Last summer's ill-fated plan to settle the DTV carriage fight between cable operators and broadcasters is being resurrected at the FCC. The plan is sure to anger the cable industry, and broadcasters are professing ambivalence over a victory that they characterize as a split decision.

FCC Media Bureau Chief Ken Ferree told reporters last week he will resubmit a plan for digital-carriage rights for commissioners' review with "no major changes" from one that failed to win a three-vote majority last August.

That proposal, industry sources said, would increase chances that cable companies would one day be required to carry the multiple streams made possible by digital compression. Ferree wouldn't confirm the details of his plan, but sources following the proceeding said the plan calls for the FCC to tentatively conclude that broadcasters are entitled to carriage of all the programming they can cram into the 6 MHz of spectrum allotted for each channel, as long as the programming is offered free to over-the-air viewers.

The downside for broadcasters is that their longstanding demand for carriage of both analog and digital signals during the DDTV transition would be denied. That prospect would make the plan a "mixed bag," said Jack Goodman, attorney for the National Association of Broadcasters.

But winning that right to multicast carriage would be a victory for broadcasters because it would ensure that the 70% of U.S. homes that rely on cable for TV would have access to nearly all their new DTV programming, a key motivation for stations to develop digital channels necessary to whet consumer interest and spur the transition.

Rejection of a dual analog/digital must-carry rule would remove a potential burden from the backs of cable operators, said industry attorney Art Harding. Still, he said multicast carriage demands would strain cable systems' capacity and limit the room for introduction of new pay-TV channels.

Ferree's plan bogged down last summer because it could not win the necessary three votes for approval, in part because there was an empty seat on the five-member panel. Now that Commissioner Jonathan Adelstein has filled that vacancy, chances for a three-vote majority are thought to have improved. Last summer, Republican Commissioner Kevin Martin was said to have opposed a plan proposed by Chairman Michael Powell and Republican Commissioner Kathleen Abernathy to tentatively conclude that multiple-carriage rights was the way to go but seek comment on the constitutionality of that approach. Instead, Martin wanted to declare broadcasters' rights immediately.

One source predicted that Adelstein and perhaps fellow Democrat Michael Copps will sign on now rather than allow lingering uncertainty over digital carriage rights. "There's a possibility of a three-two or even four-one vote to move on this," said Precursor Group analyst Rudy Baca.

Other cable issues are also moving to the top of the commission's agenda now that the FCC has completed its review of broadcast ownership rules. Powell is reviewing a Media Bureau plan to replace the 30% limit on one company's share of U.S. multichannel subs. Unless he asks the bureau to rewrite the plan, it will soon be circulated to the other commissioners for a vote.

Sources have received little indication of what new level the bureau is recommending, although a rumor last December pegged the new number at 45%. The old ownership cap was thrown out by federal appeals judges in 2001.

A decision on whether cable and telephone broadband service should be subject to rules preventing content discrimination will be submitted to commissioners "fairly soon," Ferree said.

First, a Media Bureau plan on cable broadband that is already completed must be compared with a Wireline Bureau plan for telephone broadband still in the works to ensure intellectual consistency. "That doesn't mean the two pipes will be regulated identically," Ferree cautioned.

Another outstanding proceeding, whether to approve a cable industry/manufacturer agreement on plug-and-play set standards will not likely see light of day until fall, despite demands from both sides to get standards established in time for the 2004 selling season.