Arise Ye Independent Cable Programers! The FCC Wants To Hear Why The Current Cable Programming Rules Suck Rocks.

Well, it took nearly a year since the FCC committed to reforming the leased access and carriage complaint processes as part of its Adelphia Transaction Order, but the wait proved worth it. On June 15, the FCC released a notice of proposed rulemaking asking all the right questions and opening the door for major changes in two critical but dysfunctional laws designed to break the stranglehold big cable companies have over cable programming: cable commercial leased access (47 U.S.C. 532) and the prohibition on favoring affiliated programming (aka “carriage complaint process”) (47 U.S.C. 536).

Done right, these two laws can usher in a new era of independent programming by giving programmers access to cable systems on fair terms. As you might imagine from the current cable programming universe — in which we get 30 different flavors of HBO (affiliated with time Warner) and however many Comcast-affiliated channels Comcast chooses to carry regardless of how few people actually watch, but you can’t find local programming or programming that competes with Comcast or Time Warner programming — the FCC has done a rather crappy job of implementing these rules since Congress passed the current versions in 1992. Nevertheless, wild-eyed optimist and occassionally successful crusader for lost causes that Iam, I think we have a real opportunity here to make these rules work. All it will take is for the progressives and conservatives who like to whine about how the media is all biased one way or another to get off their patooties and actually file something with the FCC. Then all the progressive and conservative would-be programmers will have their chance to sell their programming directly to audiences rather than negotiating with the likes of Brian Roberts, Sumner Redstone or Rupert Murdoch.

Notice appeared in the Federal Register on July 18, which makes comments due September 4 and reply comments due September 21. For those without calendars, this translates to the day after Labor Day and the day immediately before Yom Kippur. So I confess I begged for and got and extension. Now, comments are due September 11 and reply comments due October 12. The relevant docket number for those of you who file (and you know you all should!) is MB Docket No. 07-42.

So tired of watching crap you hate on cable, and wondering why people can’t get good programming on despite having a gazillion channels? See below . . . .

For those unfamiliar with the term, “leased access” requires cable operators to lease channel space to indpendent programmers. The idea is that if you make access to channels affordable, programmers can bypass that cable “ownership” of the tv screen and offer programming directly to customers. In 1984, Congress required cable companies to set aside channels for independent programmers, but did not require anything more than “good faith negotiations” between cable system operators and programmers. You can all imagine how well that worked.

Meanwhile, from 1984 to 1992, cable operators used their control over viewers to control the programming market. With the exception of a few early pioneers like Sumner Redstone, whose “I Want My MTV” ad campaign became a generational slogan (i.e. applied by older people to my generation to our considerable annoyance), cable operators generally refused to carry programming that competed with stuff owned by cable operators. When independents with good ideas showed up, the biggest cable operators usually required that the programmer give an “equity share” (ownership interest) in the new network as the price of carriage. Or the largest cable companies just said “no, we won’t carry you because we suddenly had that idea ourselves. Tough nuggies.” (Those who doubt me should feel free to read the legislative history of the 1992 Cable Act).

Finally, the situation got so bad and everybody hated their cable company so much that Congress passed the Cable Television Consumer Protection and Competition Act of 1992 (over a presidential veto no less). As part of the effort to break the market power of cable companies, Congress changed the leased access law to require the FCC to set rates and procedures for leased access. Congress also made it illegal for cable operators to deny carriage to independent programmers just because they compete against the cable company’s own affiliated programming or to demand any kind of ownership or control as a condition of carriage. This later provision is now known as Section 616 of the Communications Act and the process for complaining to the FCC under this provision is the “carriage complaint process.”

Sadly, because until Kevin Martin came along the cable industry led a charmed life at the FCC, the FCC totally screwed up the implementation of these pro-consumer provisions. For leased access, the FCC determined that it needed to balance the interests of programmers and the interests of the public with the profit margins of the able industry (sadly, I am not making this part up). The FCC reasoned that the cable operator should not only get a generous reimbursement for cost, but should get reimbursed for any opportunity cost from placing the leased access network on the system. In addition, the FCC gave the cable operators a free hand to include all manner of fees, to take up to 30 days to respond to any requests for leased access, to exercise considerable control over tier and channel placement, etc., etc.

As if that were not enough, the FCC’s enforcement staff has made it abundantly clear that it felt no rush to actually address any complaints filed. My all time favorite for leased access was the time it took nearly 3 years to resolve a complaint when the cable operator never even bothered to file an answer, and the facts were identical to previous cases. As you can imagine, with cable operators having the lattitude to jerk would be programmers around right and left, and the Cable Bureau folks sitting on complaints, and cable operators retaliating left and right against would-be programmers that dared to complain, commercial leased access never became very popular. Oh, some folks still use it, particularly low-power TV programmers (who do not have must carry rights). But the expected explosion of competitive and diverse programming failed to emerge — which the cable industry trumpets as proof that the leased access business model doesn’t work.

Meanwhile, the carriage complaint process suffered a similar fate. The Cable Bureau (now merged with the Media Bureau) adopted a simple strategy of refusing to act on complaints until the would-be programmer either died or sold out to the cable cos. As you might expect, cable operators went back to their old habits of demanding programmers hand over an ownership interest as the price of carriage and blocking pretty much any independent programming unaffiliated with a cable operator or broadcaster (with the exception of Malone’s Liberty Media, which used to be affiliated with a cable operator until Malone sold out his cable interests and set up as a pure content operator).

And so this ugly situation percolated along, until we got to the Adelphia Transaction. The approval process for that shined a spotlight on the utter failure of the FCC to live up to its obligations to protect independent programmers. Most notably, despite Comcast’s blatant refusal to carry the DC Nationals games after Major League Baseball gave the TV rights to Peter Angelos and his Mid-Atlantic Sports Network (MASN), the cable enforcement staff refused to act on the complaint for more than a year until bludgeoned into doing so by the Commission.

Martin, to his credit and to the continued wonder of media reformers and consternation of the cable industry, decided to make breaking the cable monopoly a signature issue. (Indeed, on some things, such as cable ownership, it is getting downright annoying that a Republican chair wants to regulate the industry with market power while the Democrats keep hanging back and refusing to vote. But that is a post for another time.) So he agreed to a general rulemaking to improve both the leased access and the carriage complaint process. The Notice of Proposed Rulemaking (NPRM) the FCC released asks all the right questions from my perspective. These include:

1) Should the FCC have a “shot clock” to resolve complaints.

Me: You betcha! In fact, while I’m rarely a fan of outsourcing critical government functions, this is one of the few cases where giving parties the option for arbitration by some neutral arbitration company seems reasonable to me.

2) Should the FCC readjust the rate formula for commercial leased access, and if so how?

Me: Can’t spill the beans on this one yet, as I plan to file and don’t wish to tip my hand early. But obviously yes. We can start by eliminating the list of bogus charges the cable operators are currently allowed to take on, such as paying someone $60 to load the program tape by hand.

3) Should the FCC apply leased access rules to video on demand?

Me: Again, this is a no brainer. Let every programmer who wants to distribute via VoD pay to upload their movie or whatever and charge for showings.

4) What else does the FCC need to know about to make leased access effective?

Me: Lets start with the fact that, despite the fact that cable leased access providers are required to respond within 15 days, they never do. In fact, pretty much everyone who tries to use this stuff gets blown off. This needs to get transformed from a negotiation between big cable systems and small programmers into a common-carriage like deal where anyone who wants to lease a channels goes in, picks up a rate card, and gets their programming on the air. The cable operators also need to provide reasonable means of accepting programming. There is no excuse for making a low power telvision programmer, whose signal is available at the head-end like any other over the air signal, provide a taped version of the show to put in some antique tape machine at $60 a play.

And while we’re at it, lets do something about the problem of retaliation. The cable operators can jerk programmers around, make them renegotiate deals every time, move them from their current channel position to a new channel position with no notice, fail to list them in the programming guide registry (thus making it impossible to get recorded on DVRs or attract people surfing via programing guide), and a whole package of other nastiness. And what’s worse, if you even think about trying to assert your rights, the cable guys will make your pathetic life even more miserable, because the cable enforcement bureau has made it abundantly clear that they do not give a crap about enforcing the law and — given a choice between their cable “clients” and the people they are actually supposed to protect — guess who wins?

Let me conclude here by observing that reforming these two sets of rules in the way Congress intended has the potential to create areal video revolution. If leased access programmers paid 25 cents per subscriber as a flat fee (which is, according to the Wall St. J., what cable operators pay most programmers for programming once we exclude the hugely expensive channels like ESPN), it suddenly becomes affordable to start your own network if you think you have a good programming idea. Think the world needs the Indy Media Channel, where Indy Media outllets can afford to get on and compete with CNN or Fox News? Want to see Al Jazeera English get a fighting chance to prove to viewers they aren’t associated with Al Qeda and may actually have something interesting to say? Or do you think the National Rifle Association needs its own channel to overcome the liberal bias of the media? If we get these rules right, you’ll all have a chance to prove it.

You may still flop, but it will be we the viewers who decide, rather than Comcast and Time Warner making the decision for us.

Stay tuned . . . .

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