FCC Kicks Off Exclusive Contract Review

A Notice of Proposed Rulemaking (NPRM) initiating a review of the exclusive contract prohibition of the program-access rules was opened yesterday (FCC 12-30) by the Federal Communications Commission (FCC).

The prohibition, which expires Oct. 5, was adopted some 20 years ago to promote competition in the video distribution market, “generally bans cable operators from entering into exclusive contracts with cable-affiliated programming vendors that deliver their programming to cable operators via satellite,” the agency says.

The NPRM seeks comment on whether the prohibition continues to be necessary, and it asks for industry input on various options, including retaining the prohibition; allowing the prohibition to sunset and relying instead on protections provided by the program access rules that do not sunset; and relaxing the prohibition, such as by considering petitions to remove the prohibition on a market-by-market basis or retaining the prohibition only for certain “must have” programming, such as regional sports networks.  

The NPRM also asks about the First Amendment implications of the various options, the costs and benefits of these options, and the impact of a sunset of the prohibition.??In addition, commenters are asked for:

>> Input on how the program-access procedural rules should be revised to accommodate the case-by-case consideration of complaints alleging a violation of the program access rules; and
>> Insight on whether the program-access rules adequately address potentially discriminatory volume discounts and uniform price increases and, if not, how these rules should be revised to address these concerns. ?

Comments American Cable Association President/CEO Matthew Polka, “ACA commends the FCC for asking the right questions in the program access NPRM released yesterday…ACA members have extensive experience negotiating program-access contracts with suppliers, relying on the program access rules to ensure small cable operators are able to receive a fair bargain.”

He continues, “ACA has long held that FCC regulations are flawed because they leave small operators with no more than a few remedies, if that, to combat vertically integrated suppliers of programming that demand discriminatory prices, terms, and conditions, and engage in other types of behavior barred by the rules.”  ? 

In previous filings, ACA has pointed out that “program-access rules place no restriction on quantity discounts; provide no automatic right to continued carriage while complaints await FCC action; do not address arbitrary internal transfer pricing; and may not apply to programming for online distribution by multichannel video programming distributors.”?