FCC Media Bureau Wants to Narrow Terrestrial Loophole

Says 628b prohibition on "deceptive practices" can be used to prohibit exclusive terrestrial contracts.

The new equation for access to terrestrially delivered programming appears to be b + c = mandated carriage.

The FCC's Media Bureau has circulated an order on the terrestrial exemption that, according to sources, narrows rather than closes the exemption ("loophole" to those who oppose it) by applying the prohibition on unfair or deceptive practices.

The 1992 Cable Act requires program distributors to make "satellite cable programming" in which they have a financial interest available on a nondiscriminatory basis to competitors (section 628c for those keeping track).

According to the sources, the order does not add "and terrestrial" to the language of that prohibition on exclusive contracts. Instead, it leaves c intact and says that the prohibition in that section can be extended to terrestrially-delivered programming if a case can be made that an exclusive contract violates the rule against "unfair methods of competition or unfair or deceptive acts or practices." (Section 628b for those still keeping score).

"Subsection c would still operate for all satellite-delivered programming, and subsection b might operate for terrestrially delivered if there were evidence to show that it was significantly hindering their ability to compete in the marketplace," said one source, who said that the FCC has never tried to get at terrestrially delivered programming through the broad authority of section b before.

"The approach of this order is they kind of want to deal with these issues on a case-by-case basis," said another source.

The FCC asserted the same 628b authority to declare that exclusive contracts between cable operators and multiple dwelling unit owners were unenforceable, a call that was upheld by the D.C. Circuit.

There are currently three terrestrial exemption-related complaints pending at the commission, said one source, and the order will give those an opportunity to supplement their complaints, said the source

The FCC had no official comment on the order. Its openness and transparency does not extend to orders being circulated among commissioners, as this one was starting last week. No vote is expected until after the holidays.

The National Cable & Telecommunications Association argues exclusivity can be "pro-competitive":

"Exclusivity allows competing providers to invest in new services that have dramatically changed the marketplace, as can be witnessed by DirecTV's overwhelming success with the NFL Sunday Ticket package," it said last week in a statement.

NCTA's largest member, Comcast, has cited the satellite-exclusive Sunday Ticket when the issue of access to cable programming is raised.