How FCC’s Media Bureau aids cable in suppressing leased access.

Category: FCC Information
Published on Thursday, 09 August 2012 09:00
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While reviewing the voluminous files I’ve compiled on behalf of our national leased access programmers association I came across some very interesting information dating back to what Congress wanted for leased access.

In a file labeled “A Chronological View of Leased Access” I found that in 1992 the FCC Commission itself was reported to be “concerned that cable operators have financial incentives to refuse leased access channel capacity to programmers whose services may compete with services already carried on the cable system, especially when the cable operator has a financial interest in the programming services it carries.”The report says the Senate Commerce Committee largely agreed. The report in LAPA’s files states: “Leased access was intended to “remedy market power in the cable industry.”Specifically, leased access was “a safety valve for programmers who may otherwise be subject to a cable operator’s market power and who may be denied access (or) given access on unfavorable terms”.H.R. Rep. No 92, 102nd Cong., Sess. 30 (1991).


The statutory commercial leased access provisions are intended to provide programmers with a "genuine outlet" for their programming.According to the legislative history of the 1992 amendments to Section 612, the Commission should ensure that programmers are carried on channel locations that "most subscribers actually use,"


Now fast forward to 2008 when FCC’s Media Bureau ruled it was permissible for cable operators to place leased access programming on any tier with more than 50% of the total subscribers.This was done despite the wording in Sec. 76.971Commercial leased access terms and conditions.(a) (1)Cable operators shall place leased access programmers that request access to a tier actually used by most subscribers on any tier that has a subscriber penetration of more than 50 percent


After the Media Bureau made their placement ruling in early 2008, Assistant Bureau chief, Nancy Murphy, told me the phrase ‘actually used by most’ had no meaning in the published rule.


Following the disastrous Gulf of Mexico oil spill it was discovered the U.S. Minerals Management Services had developed such a cozy relationship with the oil industry so as to allow the industry to ‘self-regulate’ itself.I fear the same has long been FCC’s Media Bureau’s approach to cable as regards leased access.


Let me cite some examples of where this seems obvious.


Not too many months after this ruling we learned a long-time LAPer (leased access programmer) had his programming shifted from analog to a digital tier and as a result his monthly revenue, compared to the previous year, feLL over 40%. If you’re wondering why such a significant decrease all you need do is recognize the local ad insert sales team was offering commercials in channels reaching 100% of the site’s subscribers while the LAPer only reached 60 some odd.


If you’re a LAPer or contemplating becoming one you need to be fully aware the greatest competition to our industry is the cable operator’s own local ad insert sales.Its’ odd that FCC’s Media Bureau could not see that by allowing sites to place us on digital tiers immediately increases the cable operator’s ‘market power’ enabling them to make better offers to those same local businesses a LAPer depends on.


Not too long ago a high-ranking officer with a significant MSO shared the following tidbit with a LAPer that was being shifted to a less desirable channel—the third such shift inside two years.

Here’s what the officer wrote: XXXXXXX Media (the advertising arm of Name of cable operator) also has a local sales office to help small businesses advertise specifically in the (the LAP’er cable site) area on major cable networks like ESPN, Fox Sports, TBS, TNT, USA and many many more....


Read it again. This cable official is telling a local subscriber that wrote in asking them NOT to once again change the channel for the local leased access programmer that the MSO provides an advertising service that can serve the area. This is direct competition, unfair direct competition, with the LAPer since the cable operator has now moved his channel location three times, resulting in being on a channel not received by many former viewers.


Now back up to where Congress was saying, “Leased access was intended to “remedy market power in the cable industry. Specifically, leased access was “a safety valve for programmers who may otherwise be subject to a cable operator’s market power and who may be denied access (or) given access on unfavorable terms”.Now ask yourself if the cable operator can, at will, move a local independent programmer’s leased access to a channel with less subscribers than those the cable operator’s own media sales team offers local ‘ad inserts’ in, whether or not this is “unfavorable” or if they’re abusing their “market power”.


LAPA has a staff of one—me-- while the Media Bureau has to have a few dozen employees on the public payroll. Are we supposed to believe that while deciding to ignore that phrase in the rule that says “used by most subscribers” they also were unable to check their own history to find where in 1992 Congress and the FCC Commission were expressing concern over whether or not cable would mistreat leased access users.


In my next blog I’ll address how the Media Bureau refuses to communicate with LAPA while there’s overwhelming evidence of their dilly-dallying with the cable operators.


In spite of cable’s hurtful manner of dealing with leased access and fact that FCC’s Media Bureau tacitly or worse yet, overtly, takes actions that favor cable when acting on ‘petitions for relief’ it’s still possible to operate leased access profitably, albeit it nowhere near the ‘genuine outlet’ prescribed by Congress.So if you’re already a LAPer take heart the association is working with some members of Congress to get FCC’s Media Bureau to change their ways.If you’re thinking of using leased access, contact us for the facts and you’ll probably become one of us.