NCTA Fights Post-Auction Must-Carry for Broadcasters

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By Lydia Beyoud

Sept. 1 — The nation's largest cable trade association is pushing back on proposed rules by the FCC to allow TV broadcasters that enter channel sharing agreements after the landmark 2016 spectrum incentive auctions to retain their must-carry rights, a proposal that broadcasters wholeheartedly endorse.

There is no legal or policy reason to extend the one-time channel sharing option created by the Spectrum Act, which established the parameters of the incentive auctions, to TV stations that enter agreements outside of the auction context, the National Cable and Telecommunications Association said in a reply comment filing posted Aug. 31 related to a notice of proposed rulemaking (NPRM) (MB Docket No. 15-137) issued June 12.

“It’s hard to imagine that Congress could have intended that if stations waited until after the auction to engage in channel sharing, it would then be permissible to expand the must-carry obligations on cable. Such a ruling would turn the Spectrum Act on its head,” NCTA said.

Must-carry refers to an election that local commercial and noncommercial TV broadcast stations are allowed to make under the Communications Act of 1934 that requires cable operators that serve the same market as the broadcaster to carry its signal. If a broadcast station asserts must-carry rights, it can't seek compensation from the cable provider.

The trade group, which includes Comcast Corp. and Time Warner Cable Inc., among others, also said that a provision allowing broadcasters to enter into channel sharing agreements post-auction might tamp down broadcaster interest in participating in the auction in the first place.

The incentive auction is expected to make possibly 100 megahertz (MHz) of spectrum available in the valuable 600 MHz band currently occupied by broadcasters. The commission plans to reclaim airwaves from some television stations willing to go out of business or allow other TV stations to be repacked and share spectrum; the reclaimed spectrum will be sold to wireless carriers, with a portion of the proceeds to be paid back to the broadcasters.

NAB Rebuttal

Broadcasters didn't hesitate to push back on NCTA's proposal. The National Association of Broadcasters said NCTA's statement that “must-carry rights are limited to carriage of a single primary video stream per channel” was an incorrect reading of the law.

In fact, the relevant provision “actually requires a cable operator to carry the primary video ‘of each of the local commercial television stations carried on the cable system,'” NAB said in its reply comment filing.

“As much as NCTA might wish otherwise, the statute imposes a requirement to carry one primary video stream per station, not one video stream per six MHz channel. If the FCC separately licenses two stations to share a single channel, there is no reason the cable obligations to carry the primary video stream of those two stations would change,” the trade group said.

The broadcasters further appealed to the FCC's interest in promoting greater diversity in the market by adding that carrying the primary streams of two different broadcasters that happen to be sharing the same channel would promote the commission's goals of preserving source diversity that existed in the market already.

NAB said NCTA's statement that the FCC NPRM's proposals would discourage auction participation “fundamentally misapprehends the incentive for broadcasters to participate in the auction in the first place.” Namely, that broadcasters stand to gain significantly more by having one channel sharing partner relinquish spectrum, rather than the “perceived incremental cost savings associated with sharing facilities.”

Bid Prices Dwarf Sharing Savings

“The opening bid prices and estimated high end compensation levels the Commission has published dwarf any savings from channel sharing,” NAB said. “A station interested in a channel sharing arrangement would be foolish to sit on the sidelines during the auction and forgo substantial auction compensation only to enter a channel sharing agreement after the auction to save facilities costs,” it said.

A group of public broadcasters, including the Corporation for Public Broadcasting (CPB), the Public Broadcasting Service (PBS) and the Association of Public Television Stations (APTS) echoed NAB's statements in their own joint filing.

It added that NCTA's request should not be granted, as pay TV providers have never previously been covered for new costs related to the need to modify their channel lineup or devote more capacity to must-carry stations. Arguments by multichannel video programming distributors (MVPDs) on this point are “no reason to deny the new entrant the carriage rights to which it is entitled under the Communications Act” of 1934, the group said.

Changing Markets

The two trade groups also went head to head on another NPRM provision that would limit post-auction channel sharing to services located in the same community of license. The provision would safeguard cable and other MVPDs from additional burdens related to adding and deleting broadcast stations from a cable channel lineup, which causes customer confusion and disruption, NCTA said.

Broadcast markets “can span large geographic areas and a sharee broadcaster might try to abandon its over-the-air viewers in one community to obtain expanded must-carry rights from a new transmitter location in a different community within” the market, NCTA said.

The Equal Opportunities for Broadcasters Coalition, which represents a number of broadcasters that are inclined to participate in the auction, wants the FCC to structure its rules in the most “risk-free” manner to encourage more stations to relinquish their spectrum to channel share.

To that end, the FCC rules for channel sharing agreements post-auction should mirror those for auction-related arrangements—including the option to change a community of license, the EOBC said in its reply comment filing.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of NCTA's filing is at http://apps.fcc.gov/ecfs/document/view?id=60001123911.

Text of NAB's filing is at http://apps.fcc.gov/ecfs/document/view?id=60001123877.

Text of the public TV collective's filing is at http://apps.fcc.gov/ecfs/document/view?id=60001123849.

Text of the EOBC's filing is at http://apps.fcc.gov/ecfs/document/view?id=60001123995.