New Rules Hurt Small Cable Most

Small cable companies are up in arms over the FCC’s Sept. 11 ruling requiring the carriage of both analog and HDTV signals after the February 2009 end of analog television broadcast.
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WASHINGTON
Small cable companies are up in arms over the FCC’s Sept. 11 ruling requiring the carriage of both analog and HDTV signals after the February 2009 end of analog television broadcast.

Smaller operators—joined by their giant competitor Comcast—say the requirement will create vast costs for operators, slow rural broadband development, reduce channel choice and even drive small operators out of business.

“At the commission, we showed that equipment and labor costs required to carry the broadcasters’ signals in multiple formats could exceed $150,000 for systems that provide broadband, video and voice services,” the American Cable Association, which represents small operators, said in a statement after the ruling. “The new carriage obligations now make it more difficult for operators of small systems to stay in business.”

The unanimous commission also ordered that for three years after the analog shutoff, cable operators with analog subscribers would have to continue to provide analog signals by downconverting broadcasters’ DTV signals.

CAPACITY ISN’T FREE

It’s that dual HD and analog requirement—which some operators have called “triple must-carry,” because they’ll also be carrying SD signals for viewers without HDTVs—that could be tough.

“Some systems don’t have enough frequency, and they actually have to rebuild their network,” said Donald Miller, CEO of Northwest Communications and ATC Cablevision, two very small Iowa operators that share a headend with seven other companies to serve a total of 3,000 viewers. “In order to do HD [and analog], you have to drop other channels.”

The FCC order—which, at press time, had been announced but not actually released with all its details—allows cable operators with less that 552 MHz of bandwidth to apply for waivers. But that can be a slow process and generally requires paying a lawyer. And based on their experience with the FCC’s recent slow actions on waiver requests on another issue, the integrated set-top box ban, many small operators are apprehensive of the process—especially with no guarantee a waiver will be granted, said Miller.

At least one cable operator has argued that the FCC should clarify its rule to mean that operators would not be required to deliver broadcasters’ HDTV if the system offers no HDTV whatsoever from any source. But that interpretation is likely to be contested by some of the commissioners, who celebrated the order as an HDTV catalyst.

“If a broadcaster has made the investment to transmit in HD, that’s exactly what cable subscribers will get,” said Commissioner Michael Copps. “That obligation never sunsets and should provide additional incentive for cable subscribers to purchase digital equipment.”

EVERYTHING’S FINE

The National Cable and Telecommunications Association—with the notable exception of Comcast, one of its members—doesn’t share the small operators’ apprehensions.

NCTA President Kyle McSlarrow declined to characterize the new regime as triple must-carry. But others in his industry disagree, noting that a system carrying HD and analog signals is also likely to carry the SD signals viewable my most digital cable subscribers.

Also, the rules apply only to broadcasters that assert must-carry privileges; the rule does not apply to the most popular channels, which reach retransmission agreements with cable operators. However, these HD channels too are likely to be carried by cablers where available.

NAB also celebrated the decision.

Comcast withheld comment on the ruling, directing inquiries to the NCTA comments. But before the ruling, Comcast has lobbied the FCC to call the analog carriage requirement unconstitutional, unnecessary and unlawful, but a spokeswoman declined to say whether Comcast would challenge the ruling in court.

The order also calls for more comment on some carriage issues, including the specifics of how cable should handle or convert between 16:9 and 4:3 pictures, and on how to further address the concerns of small cable operators.