Commissioners Set to OK Revamp of Cable Leased Access
A majority of commissioners are likely to approve a controversial order from FCC Chairman Kevin Martin that would revamp the rates that cable operators can charge to lease channel capacity to independent programmers, agency sources said. The FCC confirmed Tuesday that the commissioners will vote on the order at their Nov. 27 meeting, along with several other cable rulemakings drawing scrutiny from members of Congress and some commissioners (CD Nov 14 p2). The leased access order would cut the maximum monthly price that cable operators can charge for leased access to 10 cents a subscriber from 40 cents, FCC officials said. Martin told an October conference that he wants to slash leased access fees to help independent programmers.
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The order would eliminate a complex formula used by cable operators to set rates, an FCC official said. The formula lets operators charge an “average implicit fee” that varies widely by system. Cable companies base charges on their cost to carry independent shows and the “opportunity cost” of forgoing potentially profitable programming (CD Oct 16 p5), Media Access Project has said. It and other critics of leased access rules have asked the commission to junk the formula.
The commissioners seem interested in making changes, though it’s unclear what changes they would make, said attorney Peter Tannenwald, representing the Community Broadcasters Association. He and other CBA officials met Nov. 14 with aides to each of the commissioners to discuss proposed changes. The CBA wants rates limited “to reasonable levels, one suggestion being 5 percent of the lessee’s gross revenue,” said an ex parte filing. It proposed a monthly minimum fee of 2 cents a subscriber for analog channels and 8 cents annually for digital channels.
Pay-TV companies have spent considerable time lobbying commissioners and their aides against changing the system. Verizon told aides to Commissioners Robert McDowell and Deborah Tate that “current leased access rules and the proposed modifications are disproportionately harmful to new entrants,” said an ex parte filing Friday. Charter said the FCC should seek public comment on any changes in leased- access rules before the commissioners vote. The NCTA wants no changes in the pricing system, it said in a Tuesday filing. “The record does not support revising the leased access formula, and the FCC cannot and should not reduce the existing leased access rates.” The group also wants no changes made in the leased-access system itself, said a spokesman.
Republicans on the House Commerce Committee criticized many of Martin’s cable plans, including several set for a vote Tuesday. “Onerous rate regulation of leased access makes little sense when the Commission is appropriately deregulating other cable rates as required by statute because of effective competition,” 23 of the committee’s 26 GOP members wrote in a letter Tuesday to Martin. The legislators also said Martin shouldn’t use a finding that cable operators have exceeded the so-called 70/70 threshold in a 2006 video competition report to further regulate the industry by setting a la carte, an ownership cap and other rules. (See separate report in this issue.) “This is not the first time that some of us have raised these concerns,” wrote Ranking Member Joe Barton of Texas and colleagues. “Yet it appears that the Commission is once again entertaining such proposals. Doing so would be misguided and harmful.” The letter asked for information by Monday on data used to find that the threshold has been exceeded.
The next day, the FCC is set to vote on the 2006 video competition report, which contains data saying more than 70 percent of homes passed by cable systems with 36 or more channels buy service. Commissioners also will vote on a notice of inquiry for the 2007 video competition report. They will consider an order that includes rules for selling low-power FM stations and act on an order on broadcaster public-interest rules. - Jonathan Make