Broadcasters and cable operators have found something new to be at odds over: Whether to allow broadcasters to share channels outside of the spectrum auction, including preserving their must-carry rights when they share.
Other fronts on which the two are battling at the FCC, almost too numerous to mention, include the FCC’s proposal to presume cable video service is competitive in local markets, which lifts basic rate regulation; its proposal to eliminate broadcast exclusivity rules; and its launch of a review of retrans good-faith negotiations.
In this latest dust-up, the FCC, which would be happy to get more spectrum from broadcasters after the incentive auction as well as in it, has proposed allowing channel sharing after the incentive auction, which would allow stations to save operating costs and increase profits by sharing equipment as well as spectrum.
Broadcasters are down with that—the more flexibility and opportunity to preserve their business model in a world gone wireless-mad, the better.
But cable operators have long argued that mustcarry is a government taking of their property—channel space—and an infringement on their First Amendment rights to choose the speakers on their systems.
Commercial broadcasters represented by the National Association of Broadcasters, the Expanding Opportunities for Broadcasters Coalition and the major public broadcasting associations all want the FCC to give broadcasters as much sharing flexibility as possible.
In the other corner stand the National Cable & Telecommunications Association and AT&T, which want the FCC to limit sharing to stations participating in the auction, and if it does allow it, not to extend mustcarry rights.
Cable ops have been trying to hold the line on must-carry, or roll it back, for years, but the broadcast incentive spectrum auction repack is a relatively new front to fight that fight.
With broadcasters lobbying for must-carry rights for sharing stations outside the auction, the NCTA pushed back in its comments to the commission. It said it was clear that must-carry rights only applied to a single primary video stream per channel.
But NCTA is not simply concerned about getting the definition right. It says allowing for two sharing stations to get must-carry rights post-auction could result in expanding MVPD carriage obligations, which it says would turn spectrum legislation on its head given that Congress said that sharing within the auction should not artificially increase the number of stations MVPDs must carry.
“It’s hard to imagine that Congress could have intended that if stations waited until after the auction to engage in channel sharing, it would then be permissible to expand the must-carry obligations on cable,” the NCTA said in its filing.
Cable operators are also concerned channel sharing might prove a disincentive to stations to participate in the auction.
“Channel sharing must not be used as a means to expand carriage rights,” AT&T told the FCC, also citing the legislative language about not artificially increasing MVPDs’ carriage obligations.
The NAB says cable ops have it all wrong. “Broadcasters will participate in the auction with channel sharing bids if they foresee the potential for an attractive financial return based on spectrum relinquishment by one channel sharing partner, not due to perceived incremental cost savings associated with sharing facilities,” said the NAB. “The opening bid prices and estimated high-end compensation levels the Commission has published dwarf any savings.”
As to must-carry and retransmission rights, the NAB said not extending them is what could dampen auction participation.
“[A]ssuring broadcasters that entering into channel sharing agreements will not affect carriage or retransmission rights will help increase participation in the forthcoming broadcast spectrum incentive auction,” the broadcasters’ group said.
While NCTA argues cable, by law, only has to carry the primary video stream, NAB says that means a station, not a swatch of spectrum.
“As much as NCTA might wish otherwise, the statute imposes a requirement to carry one primary video stream per station, not one video stream per six MHz channel. If the FCC separately licenses two stations to share a single channel, there is no reason the cable obligations to carry the primary video stream of those two stations would change,” NAB told the commission.
The FCC will need to sort it out soon. The auction is scheduled to begin March 29.
NOT GETTING THE ‘LEASED’ ATTENTION?
Cable leased access channel fans had little to applaud in the FCC’s recent video competition report and one familiar advocate has let the FCC know it in response to a request for comment on what info to collect for the next report.
Charlie Stogner, president of the Leased Access Producers Association (LAPD), read the FCC the riot act for not even mentioning leased access, either in the 2015 report, or the request for info on the next one.
Cable operators by law are required to set aside channels—in proportion to total activated channels—for lease by unaffiliated programmers.
In the notice of inquiry (NOI), the FCC had asked for info on how many leased channels were carried, on what tiers, and whether that was more or less than had been carried previously.
Stogner would like to know, too, but he’s not holding his breath.
When the report came out last April, said Stogner, there was no mention of leased access. “There is no indication that a single cable operator complied” with the info request, he sid.
For the 2016 report, Stogner said, the FCC didn’t even ask for that info anymore.
“It is clear the Media Bureau has consistently and repeatedly ignored the leased access programmers’ concerns for many years,” he said.
Leased access is supposed to be about diversity of programming, something the FCC certainly professes a particular interest in.
An FCC spokesperson declined to comment on the omission of leased access in the report or information request.