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Court Upholds FCC Closing of Terrestrial Exemption

The U.S. court of Appeals for the D.C. circuit has upheld the FCC's decision to drop the exemption of terrestrially-delivered program networks from the FCC's program access rules. But it vacated the commission's finding that what qualified as "unfair methods of competition or unfair or deceptive acts or practices" in the satellite sphere necessarily qualified as unfair in terrestrial delivery.

The court upheld the FCC on all but that finding, which it threw out as arbitrary and capricious and remanded without prejudice back to the commission to take another crack at.

Cablevision took that as the birght side of the decision. "We are pleased the Court of Appeals vacated the FCC's order in part and is requiring the FCC to reconsider the idea that exclusive terrestrial programming contracts are categorically unfair," said Cablevision in a statement. "As we've said all along, and as the Court today reinforced, given the local and regional nature of terrestrial programming such exclusives can be highly pro-competitive, particularly in markets like New York with as many as five video providers.

Cablevision had challenged the rules in April of last year, saying the order exceeded the FCC's jurisdiction and authority, was unconstitutional an abuse of discretion and more. The court disagreed on virtually all counts.

As have cable operators before it, Cablevision argued that when Congress applied the program access rules to satellite-delivered programming, it meant it, and not to terrestrially delivered networks -- like some regional sports nets.  

"It does not follow, however," said the court, "that just because Congress required mandatory minimum regulations for some technologies, it intended to exclude other technologies from regulation. Hardly clairvoyant, especially with respect to rapidly evolving technologies, Congress may well have targeted satellite programming in section 628(c)(2) simply because it was at the time far and away the dominant form of video programming and thus the focus of concerns about anticompetitive withholding."

The court added that even had that been the right reading, there was nothing that would not preclude the FCC from extending it to terrestrial on a case-by-case basis.

In its order, the FCC did not exactly scrap the exemption, but said there was a rebuttable presumption that withholding co-owned terrestrially delivered programming did violate program access rules.

The FCC ruled back in January 2010 that cable operators who do not share their owned terrestrially-delivered regional sports networks with their competitors will be presumed to be in violation of FCC rules against unfair acts or practices.

They get to rebut the presumption, but the FCC majority made clear that it was taking action against what it saw as a loophole for multichannel video providers to withhold must-have programming from competitors.

MVPDs are not allowed to deliver a standard-definition version of a regional sports network and withhold the HD version as a way of complying with access requirements. The HD version will be treated as a separate service for purposes of filing program access complaints.