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Sources: FCC Order Lifting Exclusivity Ban Is Mostly Intact

At presstime, the FCC's order lifting the program access
rule ban on exclusive contracts between distributors and co-owned networks had
morphed into an order that looked pretty much like the one circulated by FCC chairman
Julius Genachowski last week -- with the addition of a complaint shot clock -- plus
a separate notice of proposed rulemaking (NPRM) that would tee up additional
access protections suggested by ban critics.

The FCC has to vote by end of day Friday, Oct. 5, which is
the last day of the previous five-year renewal of the ban. The ban would sunset
if the FCC took no action, but the FCC is taking some action to clarify and
streamline the avenues for access complaints even as it lets the ban sink into
the West.

One source said there would be no major changes in the
chairman's order beyond the shot clock -- sources say the current timeframe is
six months -- on resolving a denial of service complaint.

Ban critics had suggested a 60-day clock, but that would
leave the FCC insufficient time to collect comment on a complaint before
acting, according to one source familiar with the thinking behind the addition
to the draft.

The order will also allow for standstills for contract
renewal complaints that meet a four-pronged test, but there will be no
rebuttable presumption that there be a standstill.

The order lifts the ban and makes clear that there is a
rebuttable presumption that withholding regional sports networks is out of
bounds, meaning that the burden of proof is not on the complainant that
withholding is anticompetitive, but on the distributor to show why it does not
unfairly hurt competition.

RSNs are at the heart of the ban, since those are the
overwhelming majority of nets with an ownership tie to distributors.

The order and NPRM are both expected to be approved, likely
unanimously, though they were still a moving target at press time.
Commissioners Ajit Pai and Jessica Rosenworcel were in the office Thursday,
according to sources, while chairman Julius Genachowski was in Pennsylvania
making a speech and Commissioners Robert McDowell and Mignon Clyburn were out
of the country on travel, though the international travelers will be able to
vote remotely.

FCC commissioners and staff had been vetting suggestions
from the American Cable Association, DirecTV and US Telecom, that the order
beef up protections for access to regional sports networks and other
"must-have" programming through a series of rebuttable presumptions
that withholding that content is unfair and deceptive and hinders competition
in violation of portions of the access rules that will remain on the books.
Those presumptions included that withholding the top 20 cable-affiliated
programming networks hurt competition or that a successful complaint presumes
the success of a future complainant, or that a complainant seeking a standstill
is going to merit one, or putting a shot clock on complaints.

The National Cable and Telecommunications Association had
pushed back hard this week, tellingthe FCC the ban needed to go, and said that adding all those presumptions
would be a de facto retention of the ban. It also pointed out that those
proposals had not been put out for comment and an "adequate record"
developed to buttress them.

At presstime, NCTA appeared to have prevailed, except on the
shot clock.

Rather than being part of the order, some of those
presumptions are being rolled up into the separate NPRM, a way to tee those
issues up and get comment on them without having to decide them now. It also
addresses some concerns by FCC attorneys that teeing up too many issues in the
order, and ones that make it different from the way the FCC treats withholding
terrestrial programming under its fix of that so-called loophole, could cause
legal headaches down the road if not done in a separate proceeding with
opportunity for both sides to weigh in.

It was not clear how many and just which issues would be
raised in the NPRM, which was said to still be a work in progress at presstime,
but one source said it was hard to get worked up about proposals that draw no
tentative conclusions.

That said the NPRM also gives the FCC a vehicle for
increasing access protections if removing the ban leaves insufficient
protection, said a top staffer. "You want to make sure there are
sufficient opportunities to increase those protections," said the staffer.

With the ban lifted, complaints about access to programming
can still be filed under the FCC's rule 268(b), which makes it "unlawful
for a cable operator, a satellite cable programming vendor in which a cable
operator has an attributable interest, or a satellite broadcast programming
vendor to engage in unfair methods of competition or unfair or deceptive acts
or practices, the purpose or effect of which is to hinder significantly or
prevent any multichannel video programming distributor from providing satellite
cable programming or satellite broadcast programming to subscribers or