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FCC Set to Decide on Program Access Rule

Decision could change lineups on cable
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Programming lineups at most cable and satellite systems look alike, carrying the same networks and channels, with only a few exceptions. That could be about to change. When the Federal Communications Commissions returns from the long Labor Day weekend, it will have a month to decide whether or not it wants to retire a 20-year rule that requires cable companies that own programming, like Comcast or Cablevision, to make their programming available to their competitors at reasonable terms.

The rule, called the program access rule, was part of the Cable Act of 1992. Without it, DirecTV and Dish may have never gotten off the ground, let alone newer entrants AT&T and Verizon.

The FCC has already renewed the rule twice, once in 2002 for five years and the second time in 2007 for another five. The deadline to extend, retire or modify it is Oct. 5. If the FCC does nothing, the rule goes away, leaving cable companies free to cut exclusive programming deals for their networks or to deny the programming to other distributors all together.

Programming that could be at risk of disappearing from cable systems, satellite services or the telco TV services (AT&T and Verizon) that don't own the programming or aren't willing to pony up whatever fees the owners ask, could be Comcast-owned SportsNet, MSNBC, CNBC or Cablevision's MSG. It's easy to see how having exclusive programming translates into a competitive advantage for the cable company pitching exclusive sports networks to the consumer, especially the avid sports fan that can't live without Knicks or Rangers games who would select a pay TV distributor based on sports.

The debate over the rule pits big cable up against smaller cable systems. Big cable, of course, would like to see the rules sunset, arguing that the original purpose of the rules, to spur competition, has been achieved. "Competition has undeniably taken hold in the multichannel video marketplace, with most consumers having a choice of at least three, and many having the choice of four, or even five [multichannel video programming distributors]," wrote the National Cable and Telecommunications Association, in comments to the FCC.

While big cable argues that there is more programming available than ever before, smaller cable systems counter that it's not about the number of programs but which programs are most popular. If such "must have" programming were withheld for competitive reasons, smaller rivals would be hurt.

"The need of rival MVPDs to have reliable access to the full array of highly popular cable-affiliated, satellite-delivered programming remains as critical today as it was at the time of the FCC's first sunset review in 2002," said Matthew Polka, president and CEO of the American Cable Association, which represents 840 smaller and medium-sized independent cable companies.

It won't be an easy decision for the five FCC commissioners, especially since an appeals case in 2010 that challenged the rule (Cablevision v. FCC) suggested that the FCC should think twice before renewing it again. "We anticipate that cable dominance in the MVPD market will have diminished still more by the time the commission next reviews the prohibition and expect that at that time the commission will weigh heavily Congress' intention that the exclusive contract prohibition will eventually sunset....We expect that if the market continues to evolve at such a rapid pace, the commission will soon be able to conclude that the exclusivity prohibition is no longer necessary to preserve and protect competition and diversity in the distribution of programming," the court said.

An FCC staffer told Adweek the FCC is likely to decide what to do on circulation, meaning the item is unlikely to be an agenda item on the agency's monthly public meeting on Sept. 28. Some have suggested the FCC could sunset the rule for some programming, but likely not sports programming, arguably the most valuable cable-owned programming.