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FCC Source: Prohibition on Exclusive Ks to Sunset

FCC chairman Julius Genachowski circulated an order on Friday declining to renew the prohibition on exclusive contracts for another five years, according to a highly placed source.

Friday marked three weeks before the FCC's Oct. 5 deadline to weigh in on the rules.  The commissioners must all still vote on the item, which some staffers had not read at press time.

In launching its review of the rules last March, the FCC pondered dropping the outright ban but retaining access mandates for satellite-delivered regional sports nets and other unique programming for which the FCC decides there is no substitute.

The FCC chairman decided not to go that route, according to a source. Instead, as the commission said last March when teeing up its various options, it decided  to "sunset the exclusive contract prohibition in its entirety and instead relying solely on existing protections." Specifially the case-by-case consideration of complaints about exclusive contracts under current prohibitions on "deceptive practices."

The FCC voted in 2007 to extend the rules five more years. Without that renewal, the rules sunset per congressional directive.

The program-access rules require that cable operator-owned programming networks be made available to satellite and wired competitors. Along with the program carriage rule, the access rules are 1992-era regulations of what was then, essentially, the only multichannel game in town.

Major cable operators, represented by the National Cable & Telecommunications Association, say the game has changed, and the rules need to be gone. The American Cable Association, whose members are typically the independents seeking access to unaffiliated programming, has been strongly defending the rules.

In 2010, the U.S. Court of Appeals for the D.C. Circuit denied a Cablevision challenge to the program access rules, saying that the FCC had not been arbitrary and capricious to renew the rules in 2007, but also saying that by the 2012, it might be time for the ban on exclusive contracts to end.

"We anticipate that cable's dominance in the MVPD market will have diminished still more by the time he Commission next reviews the prohibition," said Chief Judge Sentelle in that opinion, "and expect that at that time the Commission will weigh heavily Congress's intention that the exclusive contract prohibition will eventually sunset."

Apparently, the chairman did.