NCTA–The Internet & Television Association wants the U.S. Supreme Court to recognize the First Amendment burden of public, educational and government (PEG) channels when it weighs in on a case involving a programmer and the manager of a New York PEG channel.

At issue: Does a public-access programming producer have a First Amendment right to have that programming aired on a PEG channel, in this case a channel run by Manhattan Community Access?

In an amicus brief, NCTA said the case can’t be considered without acknowledging the First Amendment rights of the cable operator, which owns the network over which both sides argue they should be able to exercise control.

“While the question of whether the PEG-channel requirement is itself constitutional is not directly before this court, it is the backdrop against which this court is deciding the actual questions presented here,” NCTA told the court. “Regardless of how the court comes out on these questions, the First Amendment rights of cable operators will continue to be burdened. The court should recognize that fact in its opinion and should make clear that in resolving this case, the court is not implying or deciding that the PEG-channel requirement is itself constitutional.”

NCTA wants the PEG “forced speech” mandate to go away, as well as the TV station must-carry mandate. It has long argued that the justification for such mandates, that cable is a program-access bottleneck, no longer holds — if it ever did — because of the proliferation of outlets for content.

In the face of that changed circumstance, NCTA tells the court, cable should not be “subject to onerous carriage obligations that place them at a competitive disadvantage based on outdated evaluations of the market in which they operate.”

Whichever way the court rules, NCTA says, cable operators will come out on the short end, so the court should not make it a triple loss by presuming the PEG mandate is constitutional.

“If the court rules for petitioners, it will further cement petitioners’ control over channel capacity that rightly belongs to cable operators,” NCTA said. “And if the court rules for respondents, it means that no one will have the right to exercise editorial discretion over the programming carried on PEG channels, increasing the risk that they will carry programming that is not only of little interest or value to a cable operator’s customers, but also is offensive to those customers.”

WASHINGTON — Cable operators are looking to head off a potential re-regulation of basic cable rates under the Federal Communications Commission’s effective competition standard.

Big cable operator Charter Communications has the backing of the American Cable Association, representing small and midsized independent cable operators, for its petition for an FCC declaration of effective competition in a handful of systems in Massachusetts and Hawaii, the only two states where basic rate regulation has not gone away.

Historically, cable providers have cited the ubiquity of satellite services, including DirecTV, as justification for removing rate regulations, and they could here as well. In this test case of sorts, though, Charter and the ACA members are basing that competition call on the availability of that company’s over-the-top programming service, DirecTV Now.

Cable operators are looking to establish the precedent now as cord-cutting continues to cut into subscriber counts for traditional competitors and as over-the-top becomes the video delivery system of choice for former satellite customers.

Keeping Up With the Tech

The definition of a comparable video provider must change as technology does, argues Charter, the second-largest U.S. MSO. It contends that opponents of its petition — chiefly local franchise authorities in Massachusetts and Hawaii — are advancing a too-restrictive, “facilities-based” definition of video service and of “channels.”

The FCC so far has left the definitional issue open by punting on deciding whether OTT providers should be classified as multichannel video programming distributors.

Cable companies fear that if the subscriber counts for DirecTV (or Dish Network) go south, local franchise authorities could cite that as a reason they were no longer subject to effective competition and reinstate basic rate regulations.

A finding of effective competition lifts basic-cable price regulation, which has now been eliminated in all but that handful of systems.

The ACA said given that the DirecTV Now video service is an affiliate of a local-exchange carrier, DirecTV parent AT&T, and provides video service directly to subscribers in the relevant franchise areas, it meets the test for competition. But it wants the FCC to make that clear now.

“DirecTV Now is a substitute for traditional pay TV services,” ACA said, because it clearly meets the FCC’s definition of a “comparable” video programming service. In addition, the cable operators said, “it has clearly positioned itself in the market as a substitute for cable and DBS, using ad campaigns that specifically encourage viewers to reject traditional pay TV service and replace it with DirecTV Now.”

The ball is now in the FCC’s court, and a decision either way could have a big impact on cable’s bottom line.

This Is Only a Test

The FCC’s test for whether or not a local exchange carrier (LEC) qualifies as a competing video provider is as follows:

“[A] local-exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) [that] offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area.”

As the executive director of the public-access center serving Fairfax County, Va., I have been closely following the reaction to the Federal Communications Commission’s proposed set-top box rules and have concern regarding the likely consequences of these rules.

As many have pointed out, a set-top box provides the subscriber’s first and most immediate point of contact with the cable provider. As The Wall Street Journal reported on Feb. 3 and April 27, regarding Comcast’s greatest quarterly subscriber and revenue success in almost 10 years, Comcast CEO Brian Roberts attributed this achievement to both investment in customer service and technical innovations — giving much credit to the Comcast X1 set-top box.

Comcast’s innovative X1 box provides an “enhanced customer experience” — one significant enough to reduce churn and enable the significant net gains achieved by Comcast in the first quarter. Other MVPDs also realize the significance of the opportunity provided by set-top boxes. In fact, Cox Communications, one of our highly valued local MVPDs, will lease the X1 box from Comcast, providing it to its subscribers.

In the Feb. 3 article on the net gain in Comcast video customers, the Journal reported: “Comcast was able to, at least for now, defy the industry logic that cord-cutters are increasingly abandoning pay TV. It has been investing in customer service and in its set-top box and guide, which it says encourages customers to watch more TV and makes them less likely to cancel service.” (Emphasis added.)

As such, the FCC’s current proposal to require MVPDs to develop an open architecture for their set-top boxes, thereby allowing third-party vendors to offer set-top boxes directly to the MVPD’s subscribers, appears to pose a direct threat to the cable industry’s ability to provide enhanced customer experiences through innovation in advanced set-top boxes developed by providers. Thus, it’s a direct threat to reversing the multiyear industry decline in net gains.

Public, educational and government (PEG) access executives and leaders should recognize the need to join the creative unions (SAG, AFTRA, I.A.T.S.E.), the Directors Guild of America, the Communications Workers of America, programming copyright holders (including the major movie studios), the Congressional Black Caucus, the MVPDs themselves and others in opposing the set-top rules before the FCC issues a final order on this matter.

Yes, the reduction in fees that subscribers currently pay to MVPDs for monthly set-top boxes would have an immediate negative financial impact on those PEG entities that receive a percentage of those fees; however, more importantly, if issued in a final FCC order, these rules would jeopardize the current ability of MVPDs to create the above discussed enhanced customer experiences through new, innovative set-top boxes. That would most likely result in significant damage to the cable industry as a whole, lowering the tide for all involved.

The above, coupled with legitimate concerns regarding the ability of third-party set-top boxes to secure copyrighted programming, ad overlays and the utilization of subscriber information obtained via third-party boxes, should cause concern for the very health of the cable industry.

Cable provides a unique means for PEG centers to connect with our communities — a unique means of community connection that would be terribly diminished if the industry contracted due to the proposed set-top box rules. To many in the PEG community, at first glance, the proposed “unlock the box” rules appear to be very positive, but there are negative consequences for the PEG creative community should these rules be issued in a final order by the FCC.

Chuck Peña is executive director of Fairfax Public Access in Fairfax County, Va.