FCC Commissioners weighed in Friday with
statements on their unanimous vote to sunset the program access rules' ban on
exclusive contracts between cable operators and their affiliated programming
networks. Following are excerpts from those statements, except for the
chairman's, which is presented in full. The order had not yet been issued
at press time.
FCC Chairman Julius Genachowski: "The FCC is focused on promoting competition and
protecting consumers in the evolving video market. Today's unanimous decision
enables the FCC to continue preventing anticompetitive video distribution
arrangements through a legally sustainable, expeditious, case-by-case review."
Commissioner Robert McDowell: "The exclusivity ban
served its purpose, but now the facts justifying its existence have changed in
favor of consumers. Accordingly, this creaky relic must be shown the door...
I do, however, have significant concerns that many of the positive steps we
take today could be undermined by our inquiry into whether we should establish
a series of rebuttable presumptions that would apply to certain exclusive
contracts challenged under our remaining program access rules." The FCC
released a separate notice of proposed rulemaking, to which McDowell concurred,
a step short of a yes vote.
"Despite
the Commission's finding that exclusive contracts can be procompetitive and
should be reviewed on a case-by-case basis, the FCC seeks comment on whether
there should be rebuttable presumptions that certain exclusive contracts should
be considered, by their very nature, to be "unfair" regardless of the specific
market conditions. The Commission also inquires as to whether there
should be a rebuttable presumption for obtaining a standstill arrangement while
certain contracts are challenged. Such a presumption does not appear to
be consistent with Commission precedent finding that a standstill is an
extraordinary remedy that may be awarded only upon a factual showing that the
plaintiff is entitled to such relief. If we proceed, these contradictions
will undoubtedly result in legal challenges under the Administrative Procedure
Act. Also, is this the beginning of a back-handed attempt to
resurrect the exclusivity ban for certain exclusive contracts using the
remaining program access rules and rebuttable presumptions?"
Commissioner Ajit Pai: "It is indisputable that competition in the video
distribution market has become substantially more vibrant over the past twenty
years. I therefore believe that the exclusivity ban has outlived its
statutory purpose as well as its constitutional justification. The market has
changed, and our rules must follow....In sum, it is time to replace our flat
prohibition on exclusive programming contracts with a more pragmatic,
fact-specific adjudicatory approach. Our decision to eliminate the
across-the-board ban on such contracts brings our regulations more in line with
the competitive realities of the marketplace and has the potential to promote
greater competition among cable and non-cable MVPDs. I am therefore
pleased to support the item."
Commissioner
Jessica Rosenworcel: Without question, the video marketplace has evolved in the
past two decades. But technological change does not preclude the need to
be concerned about anticompetitive behavior and the impact of vertical
integration on consumers. Exclusive arrangements for "must have"
programming can still lead to less competition, denying consumers the benefits
of lower prices and higher quality services. This is especially true when
such programming is withheld from unaffiliated distributors that are small,
rural, or new entrants in the marketplace. Accordingly, Section 628 of the
Communications Act provides a number of mechanisms apart from the blanket
prohibition to challenge anticompetitive behavior on a case-by-case
basis.
To
this end, the Order provides a shot clock to ensure timely resolution of
complaints. It also provides a presumption that an exclusive arrangement
with respect to regional sports networks will significantly hinder a
complaining distributor from providing satellite cable programming or satellite
broadcast programming. Furthermore, the Order seeks comment on whether the
Commission should establish a number of additional presumptions, including
whether an exclusive contract for a cable-affiliated regional sports network
should be presumed to be an "unfair act" under Section 628(b) and whether a
complainant should be presumed to be entitled to a standstill for an existing
agreement under certain circumstances.
Consequently,
I support today's decision. However, the Commission must keep a watchful eye on
the evolving marketplace and be ready to take action if the processes we adopt
today do not provide consumers with the safeguards they need and deserve."
Commissioner Mignon Clyburn: "There is much debate over the level of
competitiveness in the current video market, and I suspect that this will
continue. But our job -- to ensure that no matter the opinions and actions
of industry on either side of a dispute, that consumers are not caught in the
middle -- to me is quite clear. While the Order released today reaches a
conclusion with which I ultimately agree, I felt it necessary to include
language that strengthens what already exists on our books.
"While
the exclusive contract prohibition will indeed sunset, and the opportunity for
discriminatory and exclusive dealing will still exist, the language of this rulemaking
will seek to end the ability of a defendant in a program access dispute to
prolong the FCC's adjudication timeline with time-consuming dilatory maneuvers.
"As
the language states, we put forth a six-month deadline for the FCC's resolution
of program access complaints on a case by case basis. This will help to resolve
disputes quickly and efficiently, provide certainty to all parties to the
complaint, and fulfill our statutory mandate to provide for expedited review of
program access complaints."
