FCC retreats on cable regulation plan
In a blow to the head of the Federal Communications Commission, the agency withdrew a controversial proposal that could have led to sweeping regulation of the cable industry because of opposition from a majority of commissioners.
The dispute forced an 11th-hour postponement of Tuesday's meeting, but when the five commissioners met Tuesday evening, they were expected to consider a modest step toward expanding programming choices on cable by lowering lease rates that some programmers pay cable companies.
FCC Chairman Kevin Martin had wanted the commission to approve a report showing that the cable industry has grown too dominant. Under a 1984 federal law, if cable service is available to 70 percent of U.S. households, and if 70 percent of them subscribe, the FCC may impose rules to promote "diverse information sources."
While the first threshold of the "70/70 rule" was crossed years ago, subscribership has long fallen short of 70 percent. But this year, a Warren Communications survey said 71.4 percent of households with access to cable subscribe.
Such a finding could have lent a stronger legal basis to several attempts Martin has made to more strictly regulate the cable industry. For example, Martin has proposed limiting the portion of households a cable company can serve to 30 percent, a cap that was thrown out by a court several years ago. Another FCC proposal would force programmers such as Time Warner to sell channels such as CNN and TBS to cable systems individually instead of in take-it-or-leave-it bundles.
The cable industry vigorously disputed the subscribership report, noting it has steadily lost subscribers to satellite and that other studies have concluded subscribership falls far short of the 70 percent mark.
Three of the FCC's five commissioners questioned the validity of the Warren study. Instead, the FCC on Tuesday was expected to order cable companies to submit their own data on cable subscribership. That data is not expected to show that the 70 percent threshold has been met, says Brian Dietz, a spokesman for the National Cable & Telecommunications Association.
In an interview Tuesday night, Martin said he thought Warren provided the best data, but he was not trying to force through more regulation of cable.
Tuesday night, the FCC was to consider forcing cable operators to slash the price they charge small programmers to lease access on their systems to 10 cents from 40 cents. Cable operators are required to set aside up to 15 percent of their dials for such leased set-ups, but the space largely is used for infomercials and home shopping.
A price cut could attract independent programmers that have not been able to get on systems via more traditional negotiations with cable companies.
The FCC, however, dropped another proposal to force cable to enter arbitration if they cannot resolve disputes over pricing or carriage with programmers. The NFL Network, for instance, has been in a long fight with Time Warner and Comcast over the companies' efforts to place the channel on a separate sports tier.
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