Lines Drawn in Comments on Exclusive Pay-TV Contracts with Landlords
The FCC should extend a ban on exclusive contracts between landlords and cable operators to all pay-TV operators, AT&T said in comments, siding with incumbent cable operators and coming down against DBS, private cable operators and some landlords. The FCC banned such deals between cable operators and multiple dwelling units, which are subject to Section 628 of the Communications Act. When the order was adopted, Chairman Kevin Martin promised an order on other multichannel video programming distributors’ exclusive deals within six months of the first’s publication in the Federal Register (CD Nov 2 p3).
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“Congress’ goals of promoting diverse sources of video services and further broadband deployment would be better achieved… by ensuring that MVPDs cannot bar access to MDUs to new entrants willing to invest [in] and offer alternative video and broadband services,” AT&T said. Its arguments echoed those of the cable industry, which claims the Oct. 31 MDU order unfairly singled it out. The NCTA appealed that order to the Federal Court of Appeals for the D.C. Circuit, but said in comments that if affirmed in court the ban should apply to all pay-TV operators. “From a consumer perspective, the identity of the company that holds the exclusive access rights is completely irrelevant because the effect is the same,” the cable group said. “The choices available to the tenant are limited by the building owner.”
Verizon didn’t say whether the FCC should expand the ban on exclusivity to other pay-TV operators, but did say that the commission should avoid regulating exclusive bulk billing and marketing arrangements. Such deals don’t deny competitors physical access to MDUs, so they shouldn’t be regulated the same way, Verizon said. The NCTA also urged the commission to steer clear of such rules.
Not applying the ban to other pay-TV operators could stymie efforts to increase competition for non-video telecom services, Cox Communications said. In its comments, the cable operator posed a scenario in which it might have to hand over a significant portion of interior wiring it installed to a video-only pay-TV operator that made an exclusive agreement with a landlord. “Should such a scenario be allowed to play out, Cox would in essence be precluded from offering to any resident of that building any type of communications service over the very wire it went to considerable expense to install,” it said.
The FCC shouldn’t extend the ban to DBS operators, said DirecTV and EchoStar in separate comments. First, the FCC lacks the authority, since, unlike cable operators, DBS operators aren’t subject to Section 628, DirecTV said. And DBS operators “possess a negligible share of the MDU market,” DirecTV said. “Unlike cable operators, DBS operators are limited to only one revenue stream per MDU customer,” it said. “There are thus many types of MDUs that DBS operators simply cannot serve without exclusivity.”
Private cable operators, small cable operators that don’t use public rights of way, also want exemption from the rule. “The PCO business model depends on exclusivity clauses to be viable,” the Independent MultiFamily Communications Council said. “The commission has both the authority and incentive to prevent PCO exit from the marketplace, and can do so by regulating PCOs differently than other MVPDs subject to an exclusivity ban,” it said. Shenandoah Telecommunications is seeking a clarification by the FCC exempting PCOs from exclusivity bans.
The commission may need to scrutinize incumbent cable operators’ dealings with landlords, wrote RCN Senior Vice President of Strategic and External Affairs Richard Ramlall in a Feb. 6 letter to Martin and Media Bureau Chief Monica Desai. Beyond bulk billing and exclusive marketing arrangements, RCN’s latest communications with an MDU owner in its service area suggest there may be “other types of agreements being entered by incumbents which… appear to be solely targeted at providing incentives for MDU owners to exclude competitive providers,” he said. RCN is trying to get the details on such arrangements, he said. Reply comments are due March 7.