Cable Services Bureau Docket 01-290
The prohibition was enacted as part of the Cable Television Consumer Protection and Competition Act of 1992. At that time, Congress found that cable operators dominated the market for the distribution of multichannel video programming, and concluded that the use of exclusive contracts between cable operators and their affiliated programmers inhibited the development of competition to cable. The exclusive contract prohibition was adopted to address this concern. The Commission was instructed by the statute to re-examine the continuing need for the general prohibition after it had been in effect for ten years.
In extending the prohibition for five years, the Commission found that without the prohibition on exclusivity, programmers that are affiliated with cable operators would have the incentive and ability to favor their cable affiliates over other cable operators and other competitive MVPDs, and this favoritism would result in the failure to protect competition and diversity. The Commission found that the prohibition continues to be necessary to preserve and protect competition and diversity in the distribution of video programming.
The Commission reviewed the changes in the market that had taken place during the last ten years and concluded that, although there has been a significant increase in competition from direct broadcast satellite service (DBS), few of the other terrestrial competitors to incumbent cable operators had developed to the extent anticipated when the 1992 Cable Act was adopted. The Commission found that programming affiliated with cable operators remains some of the most popular programming, and that the loss of even a small amount thereof would harm a cable competitor’s ability to compete for subscribers. The Commission noted that regional programming, particularly regional sports programming, was an important component of any competitive service offering and that the regional clustering of cable systems that had taken place over the last ten years increased the likelihood that cable affiliated programmers would withhold programming from competitors.
The Commission further concluded that a partial sunset of the exclusivity prohibition affecting only DBS service providers is not warranted at this time. The Commission also found that the scope of the exclusivity prohibition should not be narrowed to apply to particular types of programming or specified geographic areas. The Commission determined that it does not have the discretion to expand the prohibition to terrestrially delivered programming or non-vertically integrated programming.
Consistent with Congress’s recognition that exclusivity could be a legitimate business practice in a competitive environment, the Commission will continue to review, on a case-by-case basis, petitions for waiver of the prohibition to determine whether a particular exclusive agreement serves the public interest.
Section 628(c)(2)(D) of the Communications Act of 1934, as amended, generally prohibits, in areas served by a cable operator, exclusive contracts for satellite cable programming or satellite broadcast programming between vertically integrated programming vendors and cable operators. Under Section 628(c)(5), the prohibition on exclusive programming contracts contained in Section 628(c)(2)(D) will cease to be effective on October 5, 2002, unless the Commission finds that such prohibition continues to be necessary to preserve competition and diversity in the distribution of video programming. This Notice initiates a proceeding in order to make that determination.
The program access provisions contained in Section 628 of the Communications Act were adopted as part of the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Cable Act”) which was enacted on October 5, 1992. In enacting the program access provisions, Congress was concerned that the majority of cable operators enjoyed a monopoly in program distribution at the local level, and concluded that the use of exclusive contracts between vertically integrated programming vendors and cable operators served to inhibit the development of competition among distributors. Congress concluded that vertically integrated program suppliers have the incentive and ability to favor their affiliated cable operators over other multichannel programming distributors, such as other cable systems, home satellite dish (“HSD”) distributors, direct broadcast satellite (“DBS”) providers, satellite master antenna television (“SMATV”) systems, and wireless cable operators. In addition, Congress found that increased horizontal concentration of cable operators, combined with extensive vertical integration, created an imbalance of power, both between cable operators and program vendors and between incumbent cable operators and their multichannel competitors. Congress determined that this imbalance of power limited the development of competition and restricted consumer choice.
Nov 30, 2001 - IMCC Comments