**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of: )

)

DIRECTV, Inc., )

Complainant, )

)

v\. ) CSR 5112-P

)

COMCAST Corporation, )

COMCAST-SPECTACOR, L.P., )

COMCAST SPORTSNET )

Defendants; )

)

)

ECHOSTAR COMMUNICATIONS )

Corporation, )

Complainant, )

)

v\. ) CSR 5244-P

)

COMCAST Corporation, )

COMCAST-SPECTACOR, L.P., )

COMCAST SPORTSNET )

Defendants. )

)

)

Application for Review of Orders of the Cable )

Services Bureau Denying Program Access )

Complaints )

**MEMORANDUM OPINION AND ORDER**

**Adopted: November 9, 2000 Released: November 20, 2000**

By the Commission: Commissioner Furchtgott-Roth concurring and issuing a
statement.

**I. INTRODUCTION**

1\. By this *Order*, we consolidate the above-captioned proceedings
involving COMCAST Corporation, COMCAST-SPECTACOR, L.P., COMCAST
SPORTSNET (collectively referred to as "Comcast"), DIRECTV, Inc.
(\"DIRECTV\"), and EchoStar Communications Corporation (\"EchoStar"). In
separate proceedings, DIRECTV and EchoStar (collectively referred to as
"Complainants") filed program access complaints alleging that Comcast
violated Sections 628(b) and (c) of the Communications Act of 1934 and
the Commission\'s regulations by engaging in discrimination and unfair
practices and exercising undue influence over the distribution of
satellite cable programming.[^1] The Cable Services Bureau (the
\"Bureau\"), acting under delegated authority denied the complaints in
both proceedings.[^2] Complainants each filed an Application for Review
requesting Commission review and reversal of the Bureau's decision to
dismiss the complaints.

2\. In both of the Bureau's Orders, the underlying facts and legal
issues were essentially the same. In resolving EchoStar's complaint, the
Bureau relied substantially on the analysis set forth in the *DIRECTV
Order*.[^3] Because the *EchoStar Order* and *DIRECTV Order* presented
essentially the same claim, we see good cause to consolidate the
Applications for Review related thereto and will review both in this
Order.[^4] After examining the record, we deny the Applications for
Review.

**II. BACKGROUND**

3\. Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (\"1992 Cable Act\")[^5] to promote competition,
with the view that regulation would be transitional until the video
programming distribution market becomes competitive.[^6] In enacting the
program access provisions, codified in Section 628 of the Communications
Act,[^7] Congress sought to minimize the incentive and ability of
vertically integrated programming suppliers to favor affiliated cable
operators over nonaffiliated cable operators or other multichannel video
programming distributors (\"MVPDs\") in the sale of satellite cable and
satellite broadcast programming.[^8]

4\. Section 628(b) of the Communications Act states that:

\[i\]t shall be unlawful for a cable operator, a satellite cable
programming vendor in which a cable operator has an attributable
interest, or a satellite broadcast programming vendor to engage in
unfair methods of competition or unfair or deceptive acts or practices,
the purpose or effect of which is to hinder significantly or to prevent
any multichannel video programming distributor from providing satellite
cable programming or satellite broadcast programming to subscribers or
consumers.[^9]

In Section 628(c), Congress instructed the Commission, *inter alia*, to
promulgate regulations that:

\(A\) establish effective safeguards to prevent a cable operator which
has an attributable interest in a satellite cable programming vendor or
a satellite broadcast programming vendor from unduly or improperly
influencing the decision of such vendor to sell, or the prices, terms,
and conditions of sale of, satellite cable programming or satellite
broadcast programming to any unaffiliated multichannel video programming
distributor; \[and\][^10]

\(B\) prohibit discrimination by a satellite cable programming vendor in
which a cable operator has an attributable interest or by a satellite
broadcast programming vendor in the prices, terms, and conditions of
sale or delivery of satellite cable programming or satellite broadcast
programming among or between cable systems, cable operators, or other
MVPDs or their agents or buying groups. . . .[^11]

5\. In *Implementation of Sections 12 and 19 of the Cable Television
Consumer Protection and Competition Act of 1992: Development of
Competition and Diversity in Video Programming Distribution and
Carriage*, First Report and Order (\"*Program Access Report and
Order*\"),[^12] the Commission concluded that non-price discrimination
is included within the prohibition against discrimination set forth in
Section 628(c)(2)(B). While the Commission did not attempt to identify
all types of non-price discrimination that could occur, the Commission
stated that \"one form of non-price discrimination could occur through a
vendor\'s \'unreasonable refusal to sell\', or refusing to initiate
discussions with a particular distributor when the vendor has sold its
programming to that distributor\'s competitor.\"

6\. \"Satellite cable programming\" is \"video programming which is
transmitted via satellite and which is primarily intended for the direct
receipt by cable operators for their retransmission to cable
subscribers.\"[^13] \"Satellite broadcast programming\" is broadcast
programming when such programming is retransmitted by satellite and the
entity retransmitting such programming is not the broadcaster or an
entity performing such retransmission on behalf of and with the specific
consent of the broadcaster.[^14]

# III. THE BUREAU\'S ORDERS

7\. As stated above, the facts in the *DIRECTV Order* and *EchoStar
Order* are essentially the same. Comcast, a multiple system operator
("MSO") based in Philadelphia, debuted a new channel Comcast SportsNet
("SportsNet") on its and other cable operators' cable systems in the
Philadelphia market.[^15] Some of the programming on SportsNet came from
two other cable networks that went dark upon SportsNet's debut.[^16] One
of the dark channels had been distributed through terrestrial
technology, and the other was delivered via satellite. Comcast
distributes SportsNet only through terrestrial microwave and fiber
technology. Complainants, direct broadcast satellite ("DBS") providers,
unsuccessfully sought carriage rights for the SportsNet
programming.[^17] Subsequently, each filed a program access complaint
alleging Comcast's refusal to sell SportsNet programming to DBS
providers constituted an impermissible refusal to sell prohibited by
Section 628(c)(2)(B).[^18] Complainants maintained that if the regional
sports programming were transmitted by satellite, Comcast's refusal to
sell would be an impermissible form of non-price discrimination.[^19]
Complainants argued that Comcast distributes SportsNet\'s programming
through terrestrial means in order to evade application of the program
access rules.[^20] Complainants also alleged that Comcast's actions
constituted an unfair practice under Section 628(b) irrespective of
Comcast's reasons for adopting terrestrial distribution of SportsNet
because the purpose or effect of Comcast's actions was to hinder
significantly or prevent DIRECTV and EchoStar from providing SportsNet
to their subscribers. [^21]

8\. Comcast responded that because it is terrestrially delivered,
SportsNet is not satellite cable programming and falls outside of the
scope of the program access provisions.[^22] Comcast maintained that its
motivation for terrestrial delivery was a rational and legitimate
business decision based on a determination that terrestrial distribution
was significantly less expensive than satellite distribution. [^23]
Comcast argued that because the 1992 Cable Act and the Commission's
rules exclude terrestrially delivered programming, it is entitled to
makes its own determination whether or not to offer SportsNet to any
MVPD. [^24]

9\. The Bureau held that that Section 628(c) applies to satellite cable
programming, not programming that was \"previously\"
satellite-delivered, or the \"equivalent\" of satellite cable
programming, or programming that would qualify as satellite cable
programming, but for its terrestrial delivery. [^25] Because the Bureau
found that SportsNet was not satellite cable programming, it denied the
Section 628(c) claims. [^26] Additionally, the Bureau was not persuaded
that the totality of the circumstances demonstrated an intent by Comcast
to evade the program access rules.[^27] The Bureau determined that
Comcast's decision to use existing terrestrial infrastructure could be
explained based on reasons of logistics and economics. [^28]

10\. Regarding the allegations of a violation of Section 628(b), the
Bureau analyzed the scope of Section 628(b) and determined that in order
to find a violation of Section 628(b), the Commission must make two
independent determinations.[^29] First, the Commission must determine
that the defendant has engaged in unfair methods of competition or
unfair or deceptive acts or practices.[^30] Second, the Commission must
determine that the unfair acts or practices, if found, had the purpose
or effect of hindering significantly or preventing a MVPD from providing
satellite cable programming to subscribers or consumers.[^31] The Bureau
found that in enacting Section 628, Congress determined that while cable
operators generally must make available to competing MVPDs
vertically-integrated programming that is satellite-delivered, they do
not have a similar obligation with respect to programming that is
terrestrially-delivered. [^32] Thus, given the prior finding that
Comcast's actions did not amount to an attempt to evade the Commission's
rules, the Bureau declined to find that, standing alone, Comcast's
decision to deliver SportsNet terrestrially and to deny that programming
to the DBS providers is \"unfair\" under Section 628(b).[^33]

**IV. DISCUSSION**

IV. 11\. Complainants offer three arguments in their Applications for
    Review for reversing the Bureau's decision to deny the complaints.
    Complainants first argue that the Bureau erred in not finding that
    Comcast's use of terrestrial delivery was intended to evade the
    program access obligations.[^34] DIRECTV argues that the Bureau did
    not consider all of the evidence in the record and cites statements
    made by the President of Comcast before Congress and in Vanity Fair
    magazine as clear evidence of evasive intent.[^35] Complainants also
    dispute the Bureau's determination that Comcast's decision to
    distribute SportsNet terrestrially was economically reasonable.[^36]
    In addition, Complainants argue the Bureau erred in not finding
    Comcast's conduct to be an unfair act and method of competition
    under Section 628(b).[^37]

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12. After reviewing the record, we find no basis for overturning the
    Bureau\'s Orders. The Bureau determined that SportsNet was a cable
    channel that was terrestrially delivered, rather than satellite
    delivered, and so is outside of the direct coverage of Section
    628(c). The language of Section 628(c) of the Communications Act
    expressly applies to \"satellite cable programming and satellite
    broadcast programming.\" Given that statutory limitation, we believe
    the Bureau properly found that Section 628(c) had not been violated
    regardless of Comcast's decision to deliver SportsNet terrestrially.

13. Complainants also maintain that the Bureau erred in not considering
    Comcast's actions to be an unfair act under Section 628(b). [^38]
    DIRECTV argues that moving programming to terrestrial delivery and
    refusing to sell to DBS providers is precisely the type of
    anti-competitive behavior Congress intended the Commission address
    under Section 628(b).[^39] EchoStar argues that Section 628(b) has a
    broader scope than Section 628(c), requiring a separate evaluation
    regarding the refusal to sell the terrestrial programming.[^40] We
    have reviewed the Bureau's disposition of the complaints and find
    that its ruling was correct and that no basis exists to warrant
    reversal. We acknowledge that there may be some circumstances where
    moving programming from satellite to terrestrial delivery could be
    cognizable under 628(b) as an unfair method of competition or
    deceptive practice if it precluded competitive MVPDs from providing
    satellite cable programming. However, we agree with the Bureau that
    the facts alleged are not sufficient to constitute such a violation
    here.

14. The Bureau found that the service in question was not a service that
    was moved from satellite to terrestrial distribution, but is in fact
    a new service.[^41] In addition, the Bureau noted the evidence
    explaining the cost advantages of terrestrial delivery.[^42] Neither
    EchoStar nor DIRECTV disputed these savings below or in this
    proceeding. Complainants argue that the Bureau erred in ignoring
    their stated willingness to offset the cost of uplinking SportsNet's
    signal to satellite, which Complainants assert renders irrelevant
    Comcast's legitimate business reasons for terrestrial
    distribution.[^43] Complainants make assertions that each would be
    willing to share such costs, but the record contains no evidence
    that such offers were conveyed to Comcast other than through legal
    briefs filed during the program access proceeding. In addition,
    neither Complainant takes a position regarding how much of the
    uplink cost each would be willing to bear.[^44] The Bureau, in the
    *DIRECTV Order* and *EchoStar Order* concluded that "given our prior
    finding that \[Comcast's\] actions do not amount to an attempt to
    evade our rules, we decline to find that, standing alone,
    \[Comcast's\] decision to deliver SportsNet terrestrially and to
    deny programming to \[Complainants\] is 'unfair' under Section
    628(b)."[^45] Complainants have submitted nothing to cause us to
    question the Bureau's reasoning on this issue.

    **V. ORDERING CLAUSES**

15. Accordingly, **IT IS ORDERED** that DIRECTV's Application for Review
    of the Cable Services Bureau\'s *DIRECTV* *Order* **IS DENIED**.

16. **IT IS FURTHER ORDERED** that EchoStar's Application for Review of
    the Cable Services Bureau\'s *EchoStar Order* **IS DENIED**.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas Secretary

**CONCURRING STATEMENT OF**

**COMMISSIONER HAROLD FURCHTGOTT-ROTH**

*Re: DirecTV, Inc. v Comcast Corp., et al.; Echostar Communications v.
Comcast Corp., et al.*, Memorandum Opinion and Order, CSR 5112-P; CSR
5244-P.

I join the Commission's decision insofar as it concludes that
terrestrially delivered programming is outside the coverage of section
628(c) and that Comcast's actions were not unfair acts under section
628(b). I write separately to express my view on the other, *separate*
allegation that the Bureau understood Echostar to raise in its complaint
-- that is, that the Commission should penalize Comcast for Comcast's
alleged "evasion" of the program access rules. *See* Memorandum Opinion
and Order ¶ 9.

The Commission's order today does not expressly address our authority to
sanction a party based on Echostar's "evasion" theory, and I take its
silence to indicate its disagreement with this novel proposition. I
think it worth making clear, however, that nothing in the statute
authorizes us to take action based solely on a party's "evasion" of our
rules, and petitioners have identified no legal basis whatsoever that
might support this cause of action. To the extent that the Bureau
thought it had authority to evaluate Comcast's conduct to see if the
company had run afoul of some unspecified duty not to "evade" the
program access rules, the Bureau erred.

[^1]: *See* 47 U.S.C. §§ 554(b), (c); 47 C.F.R. §§ 76.1001, 76.1002(a),
    (b).

[^2]: *DIRECTV* *v. Comcast*, 13 FCC Rcd 21822 (CSB 1998) (\"*DIRECTV
    Order*\"); *EchoStar v. Comcast*, 14 FCC Rcd 2089 (CSB 1999)
    *(*\"*EchoStar Order*\"*).*

[^3]: *EchoStar Order,* 14 FCC Rcd at ¶ 19.

[^4]: RCN Telecom Services, Inc. ("RCN") filed a Motion to Consolidate
    and for Oral Argument seeking to consolidate with this proceeding
    RCN's application for review of a Bureau decision involving
    terrestrial delivery of New York City sports programming. *See* *RCN
    Telecom Services of New York, Inc., et al. v. Cablevision Systems
    Corp., et al.*, 14 FCC Rcd 17093 (CSB 1999). Cablevision and Comcast
    filed oppositions to RCN's Motion to which RCN filed a reply.
    Although the instant proceeding and the RCN case facially involve
    the same underlying issue, we believe that the particular facts of
    each proceeding are sufficiently unique as to render consolidation
    inappropriate. Accordingly, RCN's Motion is denied.

[^5]: Pub. L. No. 102‑385, 106 Stat. 1460 (1992) (codified as amended in
    scattered sections of 47 U.S.C.).

[^6]: 1992 Cable Act § 2(b)(2), 106 Stat. 1463. *See also*
    Communications Act § 601(6), 47 U.S.C. § 521(6) (\"The purposes of
    this title are to . . . promote competition in cable communications
    and minimize unnecessary regulation that would impose an undue
    economic burden on cable systems.\")

[^7]: 47 U.S.C. § 548.

[^8]: 1992 Cable Act § 2(a)(5), 106 Stat. 1460-61.

[^9]: 47 U.S.C. § 548(b).

[^10]: Communications Act § 628(c)(2)(A), 47 U.S.C. § 548(c)(2)(A).

[^11]: Communications Act § 628(c)(2)(B), 47 U.S.C. § 548(c)(2)(B).
    Congress provided limited exceptions to this prohibition. A
    satellite programming vendor is not prohibited from:

    > \(i\) imposing reasonable requirements for creditworthiness,
    > offering of service, and financial stability and standards
    > regarding character and technical quality; (ii) establishing
    > different prices, terms, and conditions to take into account
    > actual and reasonable differences in the cost of creation, sale,
    > delivery, or transmission of satellite cable programming or
    > satellite broadcast programming; (iii) establishing different
    > prices, terms, and conditions which take into account economies of
    > scale, cost savings, or other direct and legitimate economic
    > benefits reasonably attributable to the number of subscribers
    > served by the distributor; or (iv) entering into an exclusive
    > contract that is permitted under subparagraph (D) \[of this
    > section\].

    *Id.*

[^12]: 8 FCC Rcd 3359 (1993).

[^13]: 47 U.S.C. § 601(d)(1).

[^14]: 47 U.S.C. § 548(i)(3).

[^15]: SportsNet programming includes various professional and
    collegiate sporting events and other locally produces programming
    such as sports-related talk shows and sports news shows. *DIRECTV
    Order,* 13 FCC Rcd at 21826; *EchoStar Order*, 14 FCC Rcd at 2093.

[^16]: The channels were SportsChannel Philadelphia and PRISM. *DIRECTV
    Order,* 13 FCC Rcd at 21825; *EchoStar Order,* 14 FCC Rcd at 2092.

[^17]: *DIRECTV Order,* 13 FCC Rcd at 21826; *EchoStar Order,* 14 FCC
    Rcd at 2093.

[^18]: 47 U.S.C. § 548(c)(2)(B).

[^19]: *DIRECTV Order, 13 FCC Rcd* at 21827; *EchoStar Order,* 14 FCC
    Rcd at 2094.

[^20]: *DIRECTV Order, 13 FCC Rcd* at 21827; *EchoStar Order,* 14 FCC
    Rcd at 2094.

[^21]: *DIRECTV Order, 13 FCC Rcd* at 21827; *EchoStar Order,* 14 FCC
    Rcd at 2095.

[^22]: *DIRECTV Order, 13 FCC Rcd* at 21830; *EchoStar Order,* 14 FCC
    Rcd at 2096.

[^23]: *DIRECTV Order,* 13 FCC Rcd at 21830; *EchoStar Order,* 14 FCC
    Rcd at 2097.

[^24]: *EchoStar Order,* 14 FCC Rcd at 2098.

[^25]: *DIRECTV Order,* 13 FCC Rcd at 21834; *EchoStar Order,* 14 FCC
    Rcd at 2099.

[^26]: *DIRECTV Order,* 13 FCC Rcd at 21834; *EchoStar Order,* 14 FCC
    Rcd at 2099.

[^27]: *DIRECTV Order,* 13 FCC Rcd at 21836; *EchoStar Order*, 14 FCC
    Rcd at 2101.

[^28]: *DIRECTV Order*, 13 FCC Rcd at 21836; *EchoStar Order,* 14 FCC
    Rcd at 2101.

[^29]: *DIRECTV Order*, 13 FCC Rcd at 21837; *EchoStar Order,* 14 FCC
    Rcd at 2102.

[^30]: *DIRECTV Order,* 13 FCC Rcd at 21837; *EchoStar Order,*14 FCC Rcd
    at 2102.

[^31]: *DIRECTV Order,* 13 FCC Rcd at 21837; *EchoStar Order,* 14 FCC
    Rcd at 2102.

[^32]: *DIRECTV Order,* 13 FCC Rcd at 21837; *EchoStar Order,* 14 FCC
    Rcd at 2102.

[^33]: *DIRECTV Order,* 13 FCC Rcd at 21837; *EchoStar Order*, 14 FCC
    Rcd at 2102.

[^34]: DIRECTV Application for Review at 14; EchoStar Application for
    Review at 10.

[^35]: DIRECTV Application for Review at 14.

[^36]: DIRECTV Application for Review at 16; EchoStar Application for
    Review at 11.

[^37]: DIRECTV Application for Review at 18; EchoStar Application for
    Review at 13.

[^38]: DIRECTV Application for Review at 20; EchoStar Application for
    Review at 14.

[^39]: DIRECTV Application for Review at 20.

[^40]: EchoStar Application for Review at 14.

[^41]: *DIRECTV Order,* 13 FCC Rcd at 21836.

[^42]: Comcast presented evidence indicating that cost savings of up to
    \$1,680,000 per year could be achieved using existing terrestrial
    infrastructure in the Philadelphia market to deliver SportsNet.
    *DIRECTV Order,* 13 FCC Rcd at 21836; *EchoStar Order,* 14 FCC Rcd
    at 2101. The facts relied upon by the Bureau were supported by
    affidavits as required by 47 C.F.R. § 76.1003(b)(3).

[^43]: DIRECTV Application for Review at 16; EchoStar Application for
    Review at 8.

[^44]: Despite its purported willingness to bear part of the yearly
    multi-million dollar cost to uplink SportsNet, DIRECTV argues that
    its current expenditure of uplinking some Philadelphia sporting
    events at \$5,000 - \$8,000 per game is not cost effective. DIRECTV
    Application for review at 7 n.21.

[^45]: *DIRECTV Order,* 13 FCC Rcd at 21837; *EchoStar Order,* 14 FCC
    Rcd at 2102.