Bright House Wins PEG Migration Case

Washington—Florida cities Tampa and St. Petersburg can't stop cable operator Bright House Networks (BHN) from moving public access channels to a digital tier and demanding rent for set-top boxes to consumers that don't want to lose access to those channels, a federal judge ruled last week.

U.S. District Judge Susan Bucklew, based in Tampa, ruled that the cities were powerless to keep public access channels on the analog basic tier because the Federal Communications Commission had previously found that BHN was subject to effective competition within the meaning of federal law.

Public access channels, also known as PEG channels to reflect their public, educational and governmental content, are carried by cable operators typically in exchange for securing or renewing a local or state cable service franchise.

Upon a finding of effective competition, local government may not cap basic rates; may not require carriage of public access channels on a separately available basic tier; and man not tell cable operators how much to charge for set-tops boxes.

"These rate regulation provisions do not apply when the FCC has found that `effective competition' exist in the area," Bucklew said in a 10-page opinion released Dec. 12.

Bucklew's ruling came almost a year after a federal judge in Michigan stopped Comcast Corp. from moving public access channels to a digital tier. The judge has referred the case to the FCC for expert advice.

Not including AT&T and Verizon, BHN is the sixth largest traditional U.S. cable operator, serving 2.3 million subscribers, according to the National Cable & Telecommunications Association.

The FCC deregulated BHN in St. Petersburg in March 1997 and in Tampa in March 2007, based on findings that pay-TV rivals served more than 15 percent of households in those communities.

In December 2007, BHN moved five public access channels in each city to a digital tier, charging $1 a month to rent a digital set-top to access the migrated channels.

The judge agreed with BHN that a 2007 state cable franchising law "explicitly authorizes" placement of public access channels on digital tier, mooting any contrary language in the local service contract signed by the city and the cable operators before the new state law took effect.

In the Michigan case, the FCC has been asked to provide direction on a number of questions, including some addressed by Bucklew in BHN's victory over Tampa and St. Petersburg. The questions include whether a city may regulate public access obligations in a market subject to an effective competition and whether a cable operator may charge for equipment that is used only to view PEG channels.