from: Technology Daily [1]

Bell Companies Ask FCC To Maintain Content Rules

By David Hatch

(Monday, April 2) Regional Bell companies seeking to compete directly with cable television systems asked the FCC not to eliminate rules designed to ensure the widespread availability of content.

But the National Cable and Telecommunications Association argued that the 1992 "program access" restrictions are outdated now that direct broadcast satellite has morphed into a major competitor and cable companies own a decreasing percentage of channels.

The rules, which limit the ability of cable operators to cut exclusive programming deals, were designed to foster the growth of satellite television and other nascent services. They were imposed for a decade, but the FCC granted a five-year extension until October 2007 and is considering whether to sunset the restrictions or retain them for another five years.

"Vertically integrated cable programmers still have the incentive to withhold content from cable's competitors in the multichannel video market," warned the U.S. Telecom Association, whose members include AT&T and Verizon Communications.

By denying access to popular fare, cable systems that own programming can "undercut potential entrants, nipping competition in the bud," it said.

But NCTA countered that competitors such as DirecTV, which has proprietary agreements to carry NFL and Major League Baseball games, have a distinct advantage.

"A ban that singles out cable operators and their affiliated program networks has surely become an anachronism,” NCTA argued.

Verizon and AT&T, which are each spending billions to deploy new subscription TV services, said the rules are needed because there is insufficient cable competition.

Verizon noted that five of the six largest cable firms have ownership stakes in nationwide channels. While it considers the regulations "critical" to the growth of new players, it wants the limits removed after robust competition develops.

In a separate filing, AT&T warned that cable incumbents continue to control prominent channels, including CNN, Discovery, HBO and regional sports networks. "In order to offer consumers a viable video option, new telco entrants like AT&T need continued access to 'must have' programming," it said.

Comcast, the nation's largest cable operator, emphasized that the law was intended to be temporary.

"American consumers enjoy access to a greater abundance and diversity of programming, delivered in a multitude of ways, than at any previous point in history," it wrote. "The aggressive entry into video by the nation's two largest telecommunications companies is taking the battle for consumer affection to new heights."

Meanwhile, the Coalition for Competitive Access to Content, an alliance of telecom companies and public-interest advocates, said the regulations have been "absolutely essential to competitive entry."

While the coalition acknowledges that vertical integration has decreased, it complained that incumbent cable systems still control core programming. Vertical integration refers to ownership of content by video providers.

Coalition members include AT&T, DIRECTV, Inc., Embarq, Independent Telephone and Telecommunications Alliance, Media Access Project, Organization for the Promotion and Advancement of Small Telecommunications Companies, RCN and USTA.