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Cable’s Case for Exclusivity

The following is an edited excerpt from the National Cable & Telecommunications Association’s comments to the Federal Communications Commission on proposed changes to the program-access rules, submitted Jan. 14:

In today’s competitive MVPD marketplace, rules that uniquely restrict or discourage exclusive contracts between cable-affiliated program networks and cable operators are not only unnecessary to protect competition but also, in fact, can unfairly distort or discourage competition in the video marketplace. As the commission reaffirmed in allowing the per se prohibition on such contracts to sunset, exclusivity can be an efficient, pro-competitive means of competition for MVPDs and program networks.

But that competition is skewed when some competitors are advantaged by allowing them to enter into such contracts more readily and with fewer regulatory costs and burdens than others.

Moreover, rules that discourage cable operators from using exclusivity as a means of competing for customers by differentiating their services from other MVPDs in the marketplace also discourage those MVPDs from themselves competing with unique, innovative and attractive price and service offerings of their own — all to the detriment of consumers. The way to promote today is to scale back on the scope and burdens of the program access and preserve competition rules, not to adopt new presumptions that encourage and facilitate complaints.

Predictably, those very MVPDs that have for two decades enjoyed the protectionism of the program-access rules now urge the commission to adopt all the proposed rebuttable presumptions. They argue that exclusive contracts between cable-owned RSNs or other networks and cable operators never benefit consumers or promote competition, so that it is reasonable and lawful to presume that they unfairly hinder competition. But their arguments fail even to address the extent to which exclusivity can be and often is a legitimate and procompetitive means of product differentiation.

There is no basis for concluding that cable operators’ competitors are incapable of responding effectively to, and remaining fully viable in the face of, an exclusive regional sports network contract — much less that such an outcome is so probable as to warrant a presumption that all RSN contracts between a cable-affiliated RSN and a cable operator are unfair and hinder competition. It is even less likely that exclusive contracts with cable-affiliated national sports networks would be unfair or have such an effect.

If it is unwarranted to presume that exclusive contracts with cable-affiliated RSNs (or national sports networks) are unfair, it would be especially unreasonable to presume at the outset of a complaint proceeding that the complainant is entitled to the extraordinary relief of a standstill order, based on the notion that the complainant is likely to prevail on the merits.

Finally, given the multitude of unique characteristics of local cable communities, it would make no sense to presume that, just because an exclusive contract between a cable-affiliated RSN and a cable operator has been deemed to be unfair and significantly hinder MVPD competition in one market, all exclusive contracts involving the same network are also unfair and significantly hinder competitors.