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FCC Eases Basic-Tier Regs

Cable operators facing increasing competition have gained new freedom from federal regulations regarding broadcast-signal placement within their channel lineups.

As part of the recent digital must-carry order, the Federal Communications Commission ruled that cable operators deemed subject to effective competition do not have to provide TV signals on the basic tier.

Rate-regulated cable operators are required to provide local TV signals on the basic tier. Their subscribers are required to buy that tier before they may purchase higher tiers, premium networks or pay-per-view events.

The FCC's decision might be useful for deregulated operators planning to create a digital broadcast tier or a high-definition TV tier unbundled from analog broadcast and cable channels.

"It is helpful to have more flexibility on the carriage of digital signals because it means we can respond.and we can put it where we think we can most viably provide it," said Daniel Brenner, senior vice president of law and regulatory policy at the National Cable Television Association.

In March 1999, the FCC lost its authority to regulate upper-tier cable rates. Local governments retain the authority to regulate basic rates for operators not subject to effective competition.

Under FCC rules, a cable operator is subject to effective competition if the subscriber penetration of all cable competitors exceeds 15 percent of area households or if the competitor is a video-providing phone company, regardless of subscriber penetration.

The FCC's ruling will likely affect cable systems owned by Time Warner Cable and Comcast Corp. in Florida, Michigan and Ohio due to the entry of Ameritech Corp. (prior to SBC Communications Inc.'s purchase of the company) and GTE Corp. (before it merged to form Verizon Communications Inc.).

Nationally, the impact won't be that big. According to the FCC's cable competition report released in January, the agency has granted cable-filed petitions for effective competition in 330 individual communities, based on the entry of a wireline competitor.

An FCC source said the agency intended its action to include both analog and digital signals.

Separately, the FCC delivered a setback to TV stations that thought they had a right to purchase cable networks under the FCC's program-access rules. The rules apply to satellite-delivered cable programming owned by cable operators in whole or in part. TV stations that plan to offer multicast services for a fee might be considering the purchase of cable programming to occupy those channels.

But the FCC said that under the program-access rules, DTV stations that offer programming for a fee did not qualify as multichannel-video programming distributors with the right to cable operator-affiliated programming.