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Must-Buy Repeal Lacks FCC Support

The cable industry lacks support inside the Federal Communications Commission to repeal a 1992 law that requires cable subscribers to buy local TV signals before they may purchase traditional cable networks like Discovery Channel, Oxygen and Fox News Channel.

In recently released documents, four out of five FCC commissioners expressed concern about taking down the so-called “must-buy” requirement, which is designed to ensure that every subscriber has access to local TV signals. All FCC members took a position except chairman Kevin Martin, who is expected to do so later.

The absence of support was notable in part because FCC members are regulators charged with enforcing the law; they seldom go out on a limb to discuss ways of improving the architecture of telecommunications law.

Responding to a series of questions from members of the House Energy and Commerce Committee, four FCC members indicated that lifting the must-buy requirement would inflict harm on local TV stations that are not market leaders.

“If, for example, less popular stations — especially those that rely on must-carry — could be placed on a tier with low penetration, they may not be able to attract enough viewers to survive economically,” FCC Democrat Michael Copps told the House panel in his July 23 response.

Republican Deborah Taylor Tate urged caution, agreeing with Copps that the impact on local TV stations might be too severe.

“Such legislation could compromise the continued viability of local stations, with the possible loss of their more locally oriented over-the-air service by those residents in their service area that choose to not [or economically cannot] subscribe to the higher tier of a pay service,” Tate said.

Democrat Jonathan Adelstein noted, “Providing consumers with the option to buy or bypass the purchase of local broadcast channels would be consistent with an a la carte regime.” He added that it was “unclear” what would happen if cable subscribers could opt out of buying local TV signals, “but it would likely be disruptive.”

In his comments, FCC Republican Robert McDowell called repeal of must-buy “an interesting idea,” but, like his colleagues, he said he would be “concerned about those consumers losing the benefit of the local news and information provided by their local broadcast stations.”

Martin did not submit responses last week. Jodi Seth, spokeswoman for Energy and Commerce chairman John Dingell (D-Mich.), said that Martin’s response might arrive within a few days.

Cable-industry lobbyists and executives have quietly sought repeal of the so-called must-buy law, saying that such a step would remove a regulatory disparity with satellite-TV competitors.

Avoiding the purchase of the basic tier — where local TV signals must be carried despite their availability for free over the airwaves — would save subscribers about $14.03 a month, according to the FCC’s 2005 cable price survey, the most recent one available.

The basic tier includes not just local TV signals but often public, educational and governmental channels. At their discretion, operators may add cable networks to the basic tier, but the FCC’s basic tier price regulations and federal copyright laws discourage loading up the basic tier with non-broadcast fare.

When cable operators refer to the regulatory disparity with satellite-TV providers, they mean that DirecTV and EchoStar Communications do not need to provide local TV signals at all by law. If they elect to provide those signals, they are not burdened by the same must-buy requirements applicable to cable operators.

The U.S. has 210 local TV markets, with EchoStar providing local TV signals in 170 and DirecTV in 142. North Dakota broadcasters have asked the FCC to compel DirecTV to serve all 210 markets at some point before allowing Liberty Media to take effective control of the DBS firm.