FCC Unanimously Approves Satellite Market Modification NPRM
The FCC unanimously approved a notice of proposed rulemaking Thursday seeking comment on allowing broadcast designated market areas (DMAs) to be modified “to enable satellite subscribers to gain access to in-state news and other programming that they currently are unable to receive,” a commission news release said. The NPRM was triggered by Section 102 of the Satellite Television Extension and Localism Act Reauthorization, and though the NPRM merely seeks comment on how the rule should be implemented, STELAR requires the FCC to approve final rules by September, FCC officials said. Since a similar rule already exists for cable, the rule change is designed to create "regulatory parity between satellite and cable television providers,” the FCC release said.
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The FCC presented the proposed rule as a solution for “orphan counties” that aren’t able to watch local broadcast content from stations in their state on their satellite feed because they’re located in a DMA primarily based in another state. “It is frustrating for viewers when their satellite provider offers them local programming that just does not feel local,” Commissioner Jessica Rosenworcel said. “Sometimes broadcast stations are beamed in from other states and far-off places that do not reflect the communities where viewers live, or the news, weather, and emergency information that they need.” In 2010, 1.87 million households were unable to receive any in-state stations over satellite, Commissioner Ajit Pai said. Chairman Tom Wheeler also described the rule change as an attempt to solve the orphan county issue, but said the actual results would depend on multiple factors. “The ability of the market modification provision to successfully address orphan county problems will depend in large part on broadcasters’ willingness to grant retransmission consent and satellite carriers’ technical and financial ability to provide the in-state stations,” he said.
Though the NPRM text hasn’t been released, FCC officials told us it proposes a rule largely based on the cable market modification rule, but includes nods to the differences between satellite and cable, such as an exception for market modifications that aren’t “technically and economically feasible.” The threshold for that exception is one of the items the NPRM seeks comment on, an eighth-floor official told us.
The proposed rule might be too close to the cable version, Commissioner Mike O’Rielly said in his statement at Thursday’s meeting. The NPRM seeks comment on whether cable local franchising authorities should be required to be served with satellite market modification petitions, despite conceding franchising authorities aren’t connected with regulating direct broadcast satellite. "I see no reason for the Commission to involve franchising authorities in satellite carriage decisions at any stage of the process, and would be highly unlikely to support such a requirement in any final rules,” he said.
Though satellite industry officials have told us they view the proposal as noncontroversial, broadcast attorneys have told us broadcasters are concerned the rule change could give DBS providers increased leverage in retransmission consent negotiation. However, one broadcast attorney said market modification is not typically used that way on the cable side, partly because getting a DMA modified is a burdensome process. Section 102 of STELAR allows an orphan county to serve as justification for changing a DMA, which could make it easier to get a market modification approved once the final rule is passed, the attorney said.
The FCC should also “transition required document service” related to the rule change and other FCC processes, "to electronic means,” O’Rielly said. “This is not the first time I have suggested expanding the use of electronic communications to promote efficiency around FCC communications and filing requirements,” he said.