PITTSBURGH, December 17, 2012 - The American Cable Association urged the Federal Communications Commission to reform its program access rules in a manner that gives program buying groups, such as the National Cable Television Cooperative (NCTC), the ability to seek relief under the important statutory protections that remain following the recent expiration of the program access exclusivity ban.
"ACA commends the FCC for recognizing the valuable role played by buying groups and urges it to adopt key reforms to ensure small and medium-sized multichannel video programming distributors (MVPDs) who license programming through buying groups receive the full benefit of the protections intended by Congress," ACA President and CEO Matthew M. Polka said.
ACA set forth its positions in comments filed with the FCC on Friday, Dec. 14, that continue its efforts to ensure that independent MVPDs will have access to all cable-affiliated programming - especially non-replicable, highly valued sports channels - at fair and non-discriminatory prices, terms and conditions.
In October, the FCC allowed the statutory ban on exclusive contracts to expire, thus ending a 20-year-old policy that guaranteed MVPD access to cable-affiliated, satellite-delivered programming controlled by large vertically integrated cable operators historically viewed as having both the incentive and ability to withhold key programming assets from rivals to achieve anticompetitive aims.
In place of the categorical ban, the FCC will examine claims of "unfair acts" involving exclusive contracts on a case-by-case basis. Moreover, the program access rules not subject to expiration continue to permit an aggrieved MVPD to bring a program access complaint against a cable-affiliated programmer that charges it higher prices than another MVPD for reasons other than those expressly permitted by statute.
Under current FCC rules defining a buying group for program access purposes, NCTC is effectively barred from representing its members before the agency in the event disputes arise in negotiations with cable-affiliated programmers. ACA explained that buying groups play an extremely important role in today's video distribution marketplace by negotiating master agreements that members can opt into to obtain lower license fees than they could by bargaining on their own. NCTC represents the vast majority of the country's small and medium-sized cable operators.
The FCC's definition -- created in 1993 and updated only once several years later -- requires a buying group to assume a level of liability under programming agreements not required by programmers today. A buying group that does not assume this level of liability is categorically prohibited from taking advantage of the program access complaint process. By revising the definition of a buying group so that the buying group is required just to pass through payments received from the member and due the programmer, the rules will better reflect the level of liability that programmers actually demand from NCTC in master agreements.
ACA also asked the FCC to clarify that cable-affiliated programmers are required to extend to buying groups the same volume discounts or other advantageous terms and conditions based on the number of subscribers that they would ordinarily extend to an individual MVPD providing the same number of subscribers as the buying group. This clarification, ACA argued, would reduce regulatory uncertainty, reduce needless litigation costs and make it easier for harmed parties to obtain redress.
Further, ACA called on the FCC to prevent cable-affiliated programmers from arbitrarily excluding members of a buying group from participating in master agreements. ACA stressed that even though the rules require cable-affiliated programmers to negotiate non-discriminatory master agreements with buying groups, this protection can be rendered completely meaningless if cable-affiliated programmers can self-select the buying group's members who may enter into master deals with the buying group. To address this matter, ACA proposed that the FCC establish a safe harbor based on a subscribership level of 3 million so that a member of a buying group serving up to that number is presumptively entitled to participate in master agreements between the buying group and cable-affiliated programmers.
Lastly, ACA said that it is opposed to a requirement that a buying group may not unreasonably deny membership to any MVPD requesting membership. Under such a rule, an MVPD denied membership could file a petition for a declaratory ruling that the buying group had unreasonably denied it membership with the result that, if the FCC were to agree, the buying group would lose the ability to use FCC processes to enforce program access protections. ACA reasoned that flexibility on membership decisions was essential, that a buying group may need to use membership restrictions simply to organize itself efficiently and effectively and better represent its membership and that adequate protections were in place under the antitrust statutes for MVPDs aggrieved by a buying group membership decision.
In its filing, ACA also urged the FCC to improve the case-by-case complaint process by adopting a rebuttable presumption that exclusive contracts for regional and national sports channels represent either an unfair act or a significant hindrance to MVPD competition or, in some cases, both. ACA called on the FCC to adopt these rebuttable presumptions to improve the effectiveness of vital program access rules still standing in the wake of the exclusivity sunset.
ACA said the FCC should rule that the unfair act standard is met in the case of exclusive contracts with respect to RSNs, both satellite and terrestrial, and that the significant hindrance standard and the unfair act standard are both satisfied in the case of exclusive contracts involving national sports network programming.
ACA also asserted that the FCC should presume the significant hindrance and unfair act standards have been satisfied with respect to programming that has previously been successfully challenged under an exclusive contracting complaint. In defending this view, ACA said that in most cases where the complaining MVPD had prevailed, the competitive significance of the programming will be more important than the identity of the MVPD seeking access to the content.
"If one MVPD has previously been able to establish that it will suffer significant competitive harm if the cable-affiliated programming is withheld and that any potential competitive benefits were unlikely to exceed the competitive harms, then it very probable that other MVPDs would be able to establish a similar claim," Polka said.
ACA urged the FCC to protect consumers and MVPD competition by preventing the sudden loss of cable- affiliated RSN programming at the expiration of contracts that are subject to complaint proceedings. ACA argued that the FCC's current standstill procedures fail to offer immediate temporary relief to a program access complainant to prevent withdrawal of programming under a contract that expires during the period of time between the filing of the complaint and standstill petition and action by the FCC on the standstill request.
To avert public interest harm of subscriber loss of access to highly valued programming pending resolution of the complainant's standstill request, ACA asked the FCC to adopt a process where any program access complainant can seek to obtain an immediate temporary stay for a 14-day period for an existing but expiring contract pending resolution of the complainant's request for standstill. Additionally, ACA urged the FCC to direct the Media Bureau to resolve requests for standstill relief pending resolution of program access complaints within 14 days of filing. By doing so, the FCC can avert the public interest harm of subscriber loss of access to highly valued programming pending resolution of the complainant's standstill request and the underlying dispute.
About the American Cable Association
Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.4 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit http://www.americancable.org/
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