Within the next few months the FCC will ask PCOs and wireless cable providers to explain why they need the federal program access law, and why the FCC should permit key provisions of the law to remain in force.
PCOs and wireless cable operators will be at risk of losing access to regional sports networks and other critical cable programming if they do not participate aggressively in this proceeding.
Under the current law, "vertically integrated" cable networks (i.e., those which are owned by the cable MSOs) are required to make their programming available to cable's competitors on fair and nondiscriminatory terms - exclusive contracts with the cable MSOs are not permitted. If PCOs and wireless cable operators do not make their case, the FCC may "sunset" the ban on exclusive contracts as of October 5, 2002. If that happens, PCOs and wireless cable operators will have no recourse before the FCC if programmers cast them aside.
Make no mistake - this is a winnable fight. To succeed, cable's competitors must recognize that times have changed since Congress adopted the law nearly ten years ago. Due to the growth of DBS, the FCC no longer accepts the usual arguments about cable's "monopoly" power so easily. PCOs and wireless cable operators must convince the FCC that they offer a unique competitive service, and that consumers will be substantially harmed if the FCC eliminates the ban on exclusive contracts.
There is no "magic bullet" that will bring victory here. However, here are some ways that PCOs and wireless cable operators can improve their odds:
Assume nothing. It is dangerous to view the fight over program access simply as David vs. Goliath. PCOs and wireless cable operators cannot win simply by arguing that they are dwarfed by the cable MSOs - the FCC will want compelling evidence as to how the cable MSOs' market power prevents programmers from dealing fairly with cable's competitors.
For example, programmers used to have significant opportunities to sell their programming to multiple cable operators in a local market. Now, by virtue of "clustering," they are now in many cases forced to deal with a single cable operator that controls all of the market's cable subscribers. This creates a substantial risk that programmers will succumb to cable's market power and refuse to sell their programming to PCOs and wireless cable operators that do not reach the same "critical mass" of subscribers.
Be specific. The FCC's Cable Services Bureau (which will have primary responsibility for the program access proceeding) has already sent signals that generic legal arguments and unsupported claims of potential harm will not carry the day. To win, PCOs and wireless cable operators must make a well-reasoned, detailed showing as to (1) the size and potential reach of their operations; (2) the investments they have made in reliance on continued availability of programming; (3) the unavailability of cable overbuilds and/or DBS "local into local" service in their markets; (4) the types of programming that may become unavailable if exclusive contracts are permitted (e.g., if regional sports networks are at risk, PCOs and wireless cable operators will have a better case); and (5) the "real world" harm to their business and their customers if programming becomes unavailable.
Be concise. The FCC's staff appreciates brevity. Fortunately, in this proceeding there will be a variety of common legal, economic and statistical arguments that PCOs and wireless cable operators can and should make in joint filings. In addition to reducing the burden on the staff, joint filings create cost efficiencies and permit operators to devote more resources to their individual filings, where they can show how they will be uniquely affected by elimination of the ban on exclusive contracts.
Meet the FCC's Staff Personally. Time and again, the FCC's staff has said that they obtain the greatest benefit from meeting with operators and hearing their stories face-to-face. No one will tell your story better than you can - make it a point to visit with the staff on the program access issue.
Get Congress Involved. Remember that the program access law is a creature of Congress, not the FCC. There are those in Congress who are sympathetic to the plight of PCOs and wireless cable operators on this issue. However, they may be unaware that the FCC is about to consider whether to permit the law to remain in force. Make sure they become aware of it, and of the potential harm to their constituents of the law is struck down.
It is anticipated that the FCC will begin its program access proceeding in October, and that PCOs and wireless cable operators will have opportunities for comment shortly thereafter. Once the comment cycle closes, the proceeding will be placed on a fairly fast track. Thus, now is the time for PCOs and wireless cable operators to begin talking to each other and with their Washington representatives about forming coalitions and adopting strategies that will enhance their chance for success. In the meantime, Private & Wireless Broadband will continue to report on the status of this proceeding and on other program access-related developments as they occur.