Los Angeles has drafted nine ordinances and held multiple hearings on open programming access, but the city's Board of Information Technology still hasn't decided if or how to pursue the policy.
At the prompting of Verizon Communications, the city is attempting to craft an ordinance that would prevent the city's incumbent cable operators from denying popular channels to competing telecommunications providers. Supporters hope officials in the nation's second-largest media market will set a precedent that can be copied elsewhere.
"Exclusive satellite agreements are improper under federal law and they should be improper terrestrially. Until Congress acts, the rubber meets the road here," said Bryson Cook of Venable LLP, an attorney for Verizon.
Verizon made note of Altrio Communications Inc., an overbuilder with franchises in the San Gabriel Valley suburbs outside Los Angeles. Altrio has obtained deals with the premium and basic cable networks it wants to carry, but has not been able to sign a deal for subscription video-on-demand with cable operator-owned In Demand LLC.
The company is proceeding with an SVOD launch in the region, but will offer only content from Starz Encore Group.
An In Demand spokesman was unable to provide a comment on the situation by press time.
Altrio officials were loath to testify at the Dec. 16 meetings, saying they already are on "thin ice" for criticizing companies as they continue to negotiate with them. But Altrio attorney Steve Ross confirmed the company has been unable to negotiate an agreement with In Demand, weakening a "critical product" for the overbuilder.
That left it to the Verizon representatives to pound on cable's "abuses" of those second to market.
Verizon director of broadband strategy Albert Parisian related some anti-competitive behavior experienced by company predecessor GTE Corp., which operated overbuilds in Southern California in the 1990s. He cited predatory pricing by incumbents, and said GTE was unable compete effectively because it was denied participation in Adlink, the market's advertising interconnect.
"We fatally overlooked cable's engineering of the local competitive environment," he said of the failed cable venture. "Without help, an overbuild franchise is just a license to lose money."
Lined up against the resolution are the city's incumbent operators, including Adelphia Communications Corp., Time Warner Cable, Comcast Corp. and Cox Communications Inc.
MPAA backing
They've also received support from the National Cable & Telecommunications Association and the Motion Picture Association of America.
MPAA attorney Melissa Patack told the board that the film industry's trade group fears the ordinance would prevent studios from effectively protecting their content from piracy. But the MPAA opposes the overall goal of an open program access ordinance, she added.
"Attorneys at seven studios have looked at this and are in a heightened state of anxiety," said Patack.
The hearing revealed a deep division among commissioners. Chairman Henry Gradstein, an attorney with experience in intellectual property law, said he "does not endorse this particular document." But another commissioner, Dean Hansell, noted there is "substantial support" for an open programming access ordinance from City Council members.
Gradstein criticized the drafts as "overbroad," but Hansell countered that a new draft might take a "surgical approach." Such a law might allow exclusive one provider-one distributor agreements, he suggested, but require broad distribution if more than one company had access to specific content.
The board has concluded its meetings for the year, so any resolution of the issue is delayed until 2003.
