Battle Over Pay-TV Rates Surfaces in FCC Program Access Replies

"Mediacom conveniently ignores that ... the program access rules were promulgated -- and have always been intended -- to implement the statutory mandate to curb unfair acts by vertically integrated cable operators,” said Disney, News Corp., Time Warner, Viacom and CBS in a joint filing (http://xrl.us/bnh2wt). “Absent legislative action to broaden the scope of Section 628, the Commission is bound by Congress’s unambiguous intent,” they said of the Communications Act. There’s no evidence in the record to support Mediacom’s claims that independent programmers “'can play competing MVPDs against one another’ to the detriment of consumers,” the programmers said. Such programmers have no incentive to favor one MVPD over another, but to negotiate with all to make themselves as widely distributed as possible, they said: “Without any evidence of harm, there is no policy justification to expand Congress’s clear directive to address unfair acts by vertically integrated cable operators."

Other distributors backed Mediacom. Charter Communications said the courts have given the FCC “'broad and sweeping’ legal authority to address the practices of non-vertically integrated programmers.” Because media companies increasingly have more leverage than distributors in carriage negotiations, the fees distributors pay to networks has increase quickly, Charter said (http://xrl.us/bnh2zy). It has led to a system where smaller distributors may be subsidizing larger ones through the higher rates smaller operators pay per subscriber for the same programming services, Charter said. “Discriminatory pricing practices are unlawful under Section 628 ... and contrary to the public interest,” it said. “The Commission should directly address unjustified volume discounts offered by any programmer -- regardless of whether that programmer has ownership ties to a cable operator."

Cox Communications also supported expanding the rules to include all programmers, but recommended the commission do so in a new proceeding. “While the NPRM sought data and argument only regarding transactions involving vertically-integrated programmers, expanding the scope of a future volume discount inquiry to include programming agreements between MVPDs and non-vertically integrated programmers is necessary to address all the potential anti-competitive and anti-consumer effects caused by discriminatory volume discounts,” Cox said (http://xrl.us/bnh25o).

Mediacom acknowledged the FCC may need a new NPRM to address some issues the company raised such as bundling of pay-TV programming (http://xrl.us/bnh3e5), its reply said. “If the commission does issue a such a further notice, it should also consider therein other practices programmers have begun to employ that are driving up prices and frustrating consumer choice.” Those include programmer restrictions on time-shifting and place-shifting and “the ability of distributors to lawfully develop new technologies (such as remote DVR services, integrated television and Web browser devices, and other substantially non-infringing consumer electronics equipment,” the cable operator said.

If anything, the FCC should strengthen program access rules to make it easier for distributors to buy programming rights from content owners, Dish Network said. “DISH and its subscribers have fallen victim to the harms of bundling,” it said (http://xrl.us/bnh24p). The satellite operator didn’t go as far as Charter in endorsing Mediacom’s proposal to extend the rules to all programmers. Keeping the exclusivity ban is important for the continued success of online video, Dish said. “Some commenters argue that Internet-based video from a variety of sources reduces the need for the exclusivity ban,” Dish said. “But lifting the ban would actually provide a powerful weapon for cable to suppress this new source of potential competition,” Dish wrote. “The ban should not be lifted while this emerging category of new entrants is still in such a nascent stage.”