Skip to main content

Feds: SMATV Doesnt Pass Cable Litmus Test

A federal advisory group has recommended against granting a
SMATV provider an exemption from guidelines that determine what constitutes a cable

The Federal Communication Commission's Local and State
Government Advisory Committee last week said the agency should deny an exemption to
Entertainment Connections Inc., which offers cable service to apartment buildings in
Michigan over infrastructure provided by Ameritech Corp.

As it looks to expand, ECI wants to be exempted from the
same regulatory requirements as cable operators, arguing that it has no facilities on
public property because it does not own the infrastructure over which its service is

Under the 1996 Telecommunications Act, the FCC can declare
that an entity that "services subscribers without using any rights-of-way" is
not a traditional cable operator.

However, in comments filed last week, the LSGAC -- a group
created by former FCC chairman Reed Hundt -- argued that granting the exemption will
"effectively end franchising of providers of cable service in many

The 15-member group said a ruling in ECI's favor would
lead to cable operators creating entities to own their cable plant. Another entity would
then lease the plant in order to provide service to consumers.

"Without the ability to require a franchise of these
entities within the parameters of the [1996] Cable Act, local governments and their
citizens will lose the authority to require access for public, education and government
programming; to require compliance with customer-service standards; to require compliance
with FCC technical standards; to require service to all portions of a community [as
opposed to allowing the provider to serve only high-profit areas]; and to recover
franchise fees for use of public property," the group said.

Moreover, it said a ruling in ECI's favor would do
little to encourage competition, because it would place an existing cable outfit that does
not restructure its operations at a competitive disadvantage.

"Such a ruling cannot be reconciled with the goal of
competitive neutrality set forth in the Telecommunications Act of 1996," according to
the LSGAC filing.

The advisory group concluded by asking the FCC to rule that
"video services utilizing infrastructure placed in public rights-of-way be considered
cable operators under the Cable Act, regardless of whether those providers own, lease, or
otherwise obtain access to the infrastructure."

Joining the LSGAC in a bid to turn back ECI's bid for
an exemption was the National Association of Telecommunications Officers and Advisors,
which claimed that the SMATV provider is misreading the law.

"The law doesn't say anything about owning the
infrastructure that is in the rights-of-way," said NATOA spokeswoman Eileen Huggard.
"Our position is that ECI still qualifies as a cable operator, and that it still
needs to have a franchise in place."

Predictably, the cable industry also opposed ECI's
request, arguing that an exemption would give the company an unfair advantage over
operators that would remain subject to local regulation.

In its own FCC filing last year, the National Cable
Television Association noted that ECI's support has come from "similarly
situated wireless cable or SMATV operators seeking to avoid franchise and other Title VI
requirements, while expanding the geographic scope of their markets."