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FCC Responds To Cable Operators On Program Access Rules

The FCC has come out strongly in defense of retaining its program access rules.

The FCC called "baseless" Cablevision and Comcast's assertion that a federal court's ruling vacating the commission's 30% cap on national subs should also doom the ban on exclusive contracts.

In a response Tuesday to the cable operators' filing last week obtained by B&C, the FCC told the D.C. U.S. Court of Appeals that the competition in the video marketplace "has not eliminated the need for the exclusivity prohibition," which the FCC under former Chairman Kevin Martin renewed for another five years--until 2012--back in 2007.

It is the same court that three weeks ago threw out the FCC's 30% cap as unjustified. Comcast, with the support of other operators, had challenged the cap.

"The retail competition from DBS operators and telephone companies that the Comcast panel found significant developed after Congress barred cable-only exclusive contracts," the FCC said in its response to the court Tuesday. "thereby ensuring that those competitors could negotiate distribution agreements with cable-owned networks."

The FCC told the court that it could not be sure that competition would continue absent the program access rule that requires require cable operator-owned networks to be made available to satellite operators on similar terms and conditions. It also said that "Here, the Commission took full account of the current state of competition in the video-distribution market, and it found that the exclusivity prohibition was still critical to competition."

That "here" appears to be the FCC drawing a distinction with its 30% review, which the court found did not take DBS competition sufficiently into account. It argues that in renewing the program access rules in 2007, the commission it even noted that the entry of new telco competitors had "increased the incentive of vertically integrated companies to withhold programming," suggesting that telco was the new DBS in need of protection.

The FCC has continued to renew exclusive contract ban, which, like the 30% subscriber cap, was part of the 1992 Cable Act. The ban had a 10-year sunset, but the FCC has kept it in place with two, five-year renewals.

The FCC also argued in its filing Tuesday that the increase in networks and the decline in the percentage that are cable-owned does not undermine the decision to keep the rules in place. "A competitor's access to a variety of new and niche networks cannot compensate for the loss of core cableowned programming that many subscribers insist upon receiving," it said.

The court is scheduled to hear oral argument in the Cablevision/Comcast challenge to the five-year program access extension Sept. 22.