Telecom Reform Bill Deep Sixes Down-rezzing

Notably missing from the telecom bill introduced on the Hill this week -- a hard shutoff date for analog broadcast TV. What was in there, and what may very well have contributed to a cable lobby nitpick, was a provision against down-rezzing broadcast signals and the preservation of must-carry and retransmission. "The
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Notably missing from the telecom bill introduced on the Hill this week -- a hard shutoff date for analog broadcast TV. What was in there, and what may very well have contributed to a cable lobby nitpick, was a provision against down-rezzing broadcast signals and the preservation of must-carry and retransmission.

"The signals of local commercial television stations that a cable operator carries shall be carried without material degradation," reads a clause in Section 13 of the Broadband Investment and Consumer Choice Act, or BICCA. The bill was introduced on the Senate floor Wednesday by Sen. John Ensign (R-Nev.). Its co-sponsor, Sen. John McCain (R-Ariz.), has an analog deadline bill floating around, but it was not discussed at the only Senate DTV hearing held this session. Ensign's bill was referred to the Senate Commerce Committee, where it will be taken it up when lawmakers return from August recess.

"Material degradation" refers to the practice of converting digital broadcast signals to analog, thus reducing the resolution of the video, or down-rezzing. Cable operators would prefer to convert at headends rather than at set-top boxes in homes, because the first way involves a smaller pile of money than the second. The broadcast lobbies want set-top conversion so all cable subscribers receive digital-quality broadcast signals. Otherwise, 40 million analog-only cable customers would get materially degraded signals from the local stations that just invested eleventy-bazillion dollars to make nice, clean digital signals.

Elsewhere, the act prohibits exclusive programming rights, meaning networks owned by cable companies, such as regional sports nets, have to be made available to all multichannel video providers, i.e., cable, DBS and telcoTV. This rule sunsets 10 years after BICCA is enacted or whenever Congress again rewrites the telecom law, whichever comes first.

Cable lobby chief Kyle McSlarrow's nitpick about "specific provisions we would want to work on with Sen. Ensign," was couched in a statement commending the senator for "taking a constructive step forward." McSlarrow, president and CEO of the National Cable Telecommunications Association, has a thin line to walk because much of the rest of the bill is a mother lode for cable. Section 13 also frees video service providers from franchise agreements and pesky third-party interlopers. BICCA would take local franchising out of the telecom picture, even to the extent of nullifying existing agreements:

"Any provision in any franchise granted by a franchising authority that is inconsistent with the provisions of this Act shall be deemed to be preempted and superseded," S.1504 states.

Franchise agreements are a bonanza for municipalities, but often a pain in the withers for cable operations subject to the whims of various and sundry local governments. A 2003 agreement between Insight Communications and the City of Bloomington, Ind., for example, calls for a complete 750 MHz fiber-cable upgrade within two years, or the term of the agreement would be cut from 10 to six years.

Under BICCA, such conditions would not be allowed, nor would municipalities get to hog bandwidth. A 1998 franchise agreement between SBC and Montgomery County, Md. called for SBC to give up 10 percent of the system's downstream digital capacity for up to 25 public, education or government channels, aka PEG channels. The new legislation caps the PEG channel requirement at four.

Franchise agreements also often include provisions for allowing third-party ISPs, specific use of cable facilities, and customer service rules. BICCA puts a stake in them. The legislation instructs the FCC to take over customer service and consumer protection requirements.

The one thing in BICCA preserved for municipalities is the money generated by franchise fees, via an annual assessment amounting to 5 percent of a cable operation's gross revenues. That's where the local government goodies end.

BICCA further limits the rights of municipalities in broadband territory. States or cities that want to build broadband networks would first have to publish the funding, costs, tax breaks and physical details of the project, which would then become available to any non-government entity for a bidding process.

"In the event that market failure leads state or local governments to contemplate construction of their own communications services, the option to enter that market should first be provided to commercial providers under similar terms to ensure that governments are not competing unnecessarily with private industry," the bill states.

BICCA received glowing reviews from the Consumer Electronics Association as well as the Competitive Enterprise Institute. The broadcast lobby kept its thoughts to itself.