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FCC Requests Comment on Cable Operator Obligations with Respect to Mandatory Carriage of Digital Televisio Signals; Seeks to Update Record Regarding Whether Home Shopping Stations Should Remain Eligible for Must-Carry Status

May 9, 2007                       

The FCC has released a Second Further Notice of Proposed Rulemaking seeking comment on cable operators’ digital must-carry obligations in light of the upcoming analog cut-off for full-power broadcast television licensees on February 17, 2009.  To ensure that consumers with analog television sets do not lose access to broadcast stations currently entitled to must-carry and that cable operators comply with the Cable Act’s requirement to make all commercial and non-commercial must-carry signals viewable by all of their subscribers, the FCC proposes that upon the cessation of analog broadcasting cable operators should either:

1. Carry the signals of commercial and non-commercial must-carry stations in analog format to all analog cable subscribers; or
   
   
2. For all-digital systems, carry those signals only in digital format, provided that all subscribers with analog television sets have the necessary equipment to view the broadcast content. 

This requirement would be in addition to the requirements to carry digital must-carry signals and to pass through any high definition (“HD”) signals in HD format.  Furthermore, because the approach described above contemplates down-conversion at the discretion of the cable operator rather than the broadcaster, the FCC proposes that cable operators bear the entire cost of such down-conversion.  Note that until the cut-off date, digital-only stations will continue to have the option to request that their digital signal be carried on the system in an analog format at their expense. 

The FCC also seeks comment regarding the prohibition against “material degradation” of digital broadcast signals.  With respect to carriage of bits in the digital broadcast signal, the FCC asks whether it should require cable operators to carry all primary video and program-related content bits, or whether it should retain a non-discrimination requirement that cable operators may not provide a digital broadcast signal in a lesser format or lower resolution than that afforded to any other digital programmer.  Additionally, the FCC asks whether it should identify specific measurement tools to determine compliance, and if so, what tools would be appropriate. 

The FCC also seeks comment on a number of other related issues.  Can cable operators employ any bandwidth-conserving practices (e.g., compression, statistical multiplexing, rate shaping, etc.) that would not result in material degradation?  Should the FCC require cable operators who wish to reduce the number of content bits to demonstrate to the broadcaster that such reduction will not result in material degradation?  Must a cable operator continue to carry all bits during negotiations regarding bit reduction or during the pendency of a material degradation complaint?  Moreover, what are the costs associated with compliance with material degradation requirements, especially for smaller cable operators, and are there any means of minimizing the economic impact for such operators?  Are there any other more efficient ways to move cable subscribers from analog to digital reception? 

Comments in this proceeding are due July 16, 2007, with reply comments due August 16, 2007.

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In a separate public notice, the FCC seeks renewed comment on whether home shopping stations should continue to qualify as local commercial television stations for must-carry purposes.  Previously, the FCC had concluded that home shopping stations serve the public interest and thus qualify for mandatory carriage.  The public notice seeks to update the record in the proceeding in response to a petition for reconsideration filed by the Center for the Study of Commercialism, which contends that the FCC failed to consider:

1. The amount of the commercial programming that home shopping stations broadcast when it concluded that such stations serve the public interest; and
   
   
2. Non-broadcast uses (e.g., those of police and fire departments) for the spectrum used by home shopping stations. 

The FCC seeks comment regarding these assertions, as well as information concerning the current number of broadcast stations that provide home shopping programs for the majority of their broadcast day and how these stations meet their public interest obligations.  Comments and reply comments will be due 30 and 45 days, respectively, after publication of the notice in the Federal Register.

We would be pleased to respond to any questions regarding these matters.

 

 

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