Appendix S: Franchising and Cable TV

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1 Appendix S: Franchising and Cable TV Cable TV in US: a Regulatory Roller coaster Cable TV franchises awarded by local municipal governments derived from cable TV s need to use public streets Regulation and Deregulation of Cable TV Early cable TV soon suppressed by FCC at behest of TV broadcasters om/art159/bzp033/ Local franchise regulation 1984: cable TV deregulated 1

2 1992 Act repeals that deregulation 1996: de-re-regulation Prices mostly deregulated periodic Congressional grumblings Still regulated: must carry of TV Stations leased access National ownership ceiling Must Carry in most countries Local broadcast TV channels must be carried by cable operators without compensation 2

3 Turner Broadcasting challenged must carry provision as violating cable s Free Speech rights U.S. US Supreme Court upheld rule twice in 5-4 decisions Cable Act gave broadcast stations choice to elect either a must carry status (free access) or something potentially even better, a retransmission consent. Retransmission Consent Broadcasters can require payment from cable operators for carrying their broadcast TV programs Cable operators then adamantly refused to pay cash for retransmission consent Instead, they offered to provide free carriage for additional program networks owned by the TV broadcast networks NBC got distribution for MSNBC ABC got distribution for ESPN2 CBS was punished for being most aggressively anti-cable, got nothing. 3

4 Vertical integration can lead cable MSO s to favor their own company channels US regulation: Cable channels owned program must be made available to competitors(dbs etc.) Access Requirements for PEG Channels public, government educational access channels city council meetings, grassroots organizations productions, student produced work Leased Access Cable operators must lease channels for commercial access To encourage program diversity Examples religious programmers home shopping sex programming Few Limits on Cable Ownership U.S. national ownership ceiling: 35% of homes passed nationwide by cable but question of how to count part-ownership ( attribution ) 1996 Telecommunications Act removed cross-ownership bans 4

5 Germany: Deutsche Telekom, the world s largest cable company 1999: Divestiture of cable from telecom, under EU requirements; keeps minority ownership interests. Must Carry For Digital Multicasting? Big fight of broadcasters vs. cable companies Must-Carry for Satellites? if satellite company offers one local broadcast signal, it must offer all local broadcast signals Local Government and Cable Up to 5% of annual gross revenues goes to local government as franchise fee. 5

6 Copyright Act Compulsory license Cable co. pays a fee to the copyright office, which distributes fees to copyright holders of program Copyright Fees for based on system s gross receipts Pole Attachment Rate Regulation Telecommunications service providers must pay their share of a pole s usable space plus their share of the fully allocated costs associated w/ the unusable space of the pole, duct, conduit, or right of-way Source: Federal Communications Eli Commission, M. Noam, Entertainment FCC Law Cable and Media Fact Regulation Sheet, 6/00 Source: Federal Communications Eli Commission, M. Noam, Entertainment FCC Law Cable and Media Fact Regulation Sheet, 6/00 6

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