[Federal Register Volume 77, Number 78 (Monday, April 23, 2012)]
[Proposed Rules]
[Pages 24302-24336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8991]



[[Page 24301]]

Vol. 77

Monday,

No. 78

April 23, 2012

Part III





Federal Communications Commission





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47 CFR Part 76





Revision of the Commission's Program Access Rules; Proposed Rule

Federal Register / Vol. 77 , No. 78 / Monday, April 23, 2012 / 
Proposed Rules

[[Page 24302]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket Nos. 12-68, 07-18, and 05-192; FCC 12-30]


Revision of the Commission's Program Access Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on whether to 
retain, sunset, or relax one of the several protections afforded to 
multichannel video programming distributors by the program access 
rules--the prohibition on exclusive contracts involving satellite-
delivered, cable-affiliated programming. The current exclusive contract 
prohibition is scheduled to expire on October 5, 2012. The Commission 
also seeks comment on potential revisions to its program access rules 
to better address alleged violations, including potentially 
discriminatory volume discounts and uniform price increases.

DATES: Comments are due on or before June 22, 2012; reply comments are 
due on or before July 23, 2012. Written PRA comments on the proposed 
information collection requirements contained herein must be submitted 
by the public, Office of Management and Budget (OMB), and other 
interested parties on or before June 22, 2012.

ADDRESSES: You may submit comments, identified by MB Docket Nos. 12-68, 
07-18, and 05-192 by any of the following methods:
    <bullet> Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
    <bullet> Mail: Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although the Commission continues to experience 
delays in receiving U.S. Postal Service mail). All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
    <bullet> People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#63252020565357230500004d040c15"><span class="__cf_email__" data-cfemail="b5f3f6f6808581f5d3d6d69bd2dac3">[email protected]</span></a> or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    In addition to filing comments with the Secretary, a copy of any 
PRA comments on the proposed information collection requirements 
contained herein should be submitted to the Federal Communications 
Commission via email to <a href="/cdn-cgi/l/email-protection#fcacaebdbc9a9f9fd29b938a"><span class="__cf_email__" data-cfemail="baeae8fbfadcd9d994ddd5cc">[email protected]</span></a> and to Nicholas A. Fraser, Office 
of Management and Budget, via email to <a href="/cdn-cgi/l/email-protection#efa1868c8780838e9cb0aec1b0a99d8e9c8a9daf80828dc18a809fc1888099"><span class="__cf_email__" data-cfemail="8cc2e5efe4e3e0edffd3cda2d3cafeedffe9fecce3e1eea2e9e3fca2ebe3fa">[email protected]</span></a> 
or via fax at (202) 395-5167. For detailed instructions for submitting 
comments and additional information on the rulemaking process, see the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
David Konczal, <a href="/cdn-cgi/l/email-protection#b9fdd8cfd0dd97f2d6d7dac3d8d5f9dfdada97ded6cf"><span class="__cf_email__" data-cfemail="3a7e5b4c535e1471555459405b567a5c5959145d554c">[email protected]</span></a>, or Diana Sokolow, 
<a href="/cdn-cgi/l/email-protection#a9edc0c8c7c887fac6c2c6c5c6dee9cfcaca87cec6df"><span class="__cf_email__" data-cfemail="b5f1dcd4dbd49be6dadedad9dac2f5d3d6d69bd2dac3">[email protected]</span></a>, of the Media Bureau, Policy Division, (202) 418-
2120. For additional information concerning the information collection 
requirements contained in this document, send an email to <a href="/cdn-cgi/l/email-protection#0f5f5d4e4f696c6c21686079"><span class="__cf_email__" data-cfemail="a8f8fae9e8cecbcb86cfc7de">[email protected]</span></a> 
or contact Cathy Williams at (202) 418-2918. To view or obtain a copy 
of this information collection request (ICR) submitted to OMB: (1) Go 
to this OMB/GSA Web page: http://www.reginfo.gov/public/do/PRAMain, (2) 
look for the section of the Web page called ``Currently Under Review,'' 
(3) click on the downward-pointing arrow in the ``Select Agency'' box 
below the ``Currently Under Review'' heading, (4) select ``Federal 
Communications Commission'' from the list of agencies presented in the 
``Select Agency'' box, (5) click the ``Submit'' button to the right of 
the ``Select Agency'' box, and (6) when the list of FCC ICRs currently 
under review appears, look for the OMB control number of this ICR as 
shown in the Supplementary Information section below (or its title if 
there is no OMB control number) and then click on the ICR Reference 
Number. A copy of the FCC submission to OMB will be displayed.

SUPPLEMENTARY INFORMATION: This is a summary of document FCC 12-30, 
adopted and released on March 20, 2012. The full text is available for 
public inspection and copying during regular business hours in the FCC 
Reference Center, Federal Communications Commission, 445 12th Street 
SW., CY-A257, Washington, DC 20554. This document will also be 
available via ECFS (http://www.fcc.gov/cgb/ecfs/). Documents will be 
available electronically in ASCII, Word 97, and/or Adobe Acrobat. The 
complete text may be purchased from the Commission's copy contractor, 
445 12th Street SW., Room CY-B402, Washington, DC 20554. To request 
this document in accessible formats (computer diskettes, large print, 
audio recording, and Braille), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="15737676202521557376763b727a63">[email protected]</a> or call 
the Commission's Consumer and Governmental Affairs Bureau at (202) 418-
0530 (voice), (202) 418-0432 (TTY).
    This document contains proposed information collection 
requirements. As part of its continuing effort to reduce paperwork 
burden and as required by the Paperwork Reduction Act (PRA) of 1995 (44 
U.S.C. 3501-3520), the Federal Communications Commission invites the 
general public and other Federal agencies to comment on the following 
information collection(s). Public and agency comments are due June 22, 
2012.
    Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology; In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might ``further reduce the information collection burden for 
small business concerns with fewer than 25 employees.''
    OMB Control Number: 3060-0888.
    Title: Section 1.221, Notice of hearing; appearances; Section 
1.229, Motions to enlarge, change, or delete issues; Section 1.248, 
Prehearing conferences; hearing conferences; Section 76.7, Petition 
Procedures; Section 76.9, Confidentiality of Proprietary Information; 
Section 76.61, Dispute Concerning Carriage; Section 76.914, Revocation 
of Certification; Section 76.1001, Unfair Practices; Section 76.1002, 
Specific Unfair Practices Prohibited; Section 76.1003, Program Access 
Proceedings; Section 76.1302, Carriage Agreement Proceedings; Section 
76.1513, Open Video Dispute Resolution.
    Form Number: Not applicable.
    Type of Review: Revision of a currently approved collection.
    Respondents: Businesses or other for-profit; not-for-profit 
institutions.
    Number of Respondents and Responses: 828 respondents; 828 
responses.
    Estimated Time per Response: 6.8 to 98 hours.
    Frequency of Response: On occasion reporting requirement; third 
party disclosure requirement.

[[Page 24303]]

    Obligation to Respond: Required to obtain or retain benefits. The 
statutory authority for this collection of information is contained in 
sections 4(i), 303(r), 616, and 628 of the Communications Act of 1934, 
as amended.
    Total Annual Burden: 43,387 hours.
    Total Annual Costs: $4,719,600.
    Privacy Act Impact Assessment: No impact.
    Nature and Extent of Confidentiality: A party that wishes to have 
confidentiality for proprietary information with respect to a 
submission it is making to the Commission must file a petition pursuant 
to the pleading requirements in Sec.  76.7 and use the method described 
in Sec. Sec.  0.459 and 76.9 to demonstrate that confidentiality is 
warranted.
    Needs and Uses: On March 20, 2012, the Commission adopted a Notice 
of Proposed Rulemaking (``NPRM''), Revision of the Commission's Program 
Access Rules, MB Docket No. 12-68, FCC 12-30. In the NPRM, the 
Commission seeks comment on (i) whether to retain, sunset, or relax the 
prohibition on exclusive contracts between cable operators and 
satellite-delivered, cable-affiliated programming vendors; and (ii) 
potential revisions to the program access rules to better address 
alleged violations, including potentially discriminatory volume 
discounts and uniform price increases.
    The NPRM proposes to add or revise the following rule sections, 
which contain proposed information collection requirements: 47 CFR 
76.1002(c)(5), 47 CFR 76.1002(c)(7), 76.1003(e)(1).
    If adopted, 47 CFR 76.1002(c)(5) would provide that, to the extent 
the exclusive contract prohibition sunsets or is relaxed, a cable 
operator, satellite cable programming vendor in which a cable operator 
has an attributable interest, or satellite broadcast programming vendor 
in which a cable operator has an attributable interest must submit a 
``Petition for Exclusivity'' to the Commission and receive approval 
from the Commission to preclude the filing of complaints alleging that 
an exclusive contract, or practice, activity or arrangement tantamount 
to an exclusive contract, with respect to areas served by a cable 
operator violates Section 628(b) of the Communications Act of 1934, as 
amended, and Section 76.1001(a) of the Commission's Rules, or Section 
628(c)(2)(B) of the Communications Act of 1934, as amended, and Section 
76.1002(b) of the Commission's Rules. The proposed rule specifies the 
requirements for the petition for exclusivity, provides that a 
competing multichannel video programming distributor affected by the 
proposed exclusivity may file an opposition to the petition for 
exclusivity within thirty (30) days of the date on which the petition 
is placed on public notice, and provides that the petitioner may file a 
response within ten (10) days of receipt of any formal opposition.
    If adopted, 47 CFR 76.1002(c)(7) would provide that, to the extent 
the exclusive contract prohibition is relaxed, a cable operator, 
satellite cable programming vendor in which a cable operator has an 
attributable interest, or satellite broadcast programming vendor in 
which a cable operator has an attributable interest seeking to remove 
the prohibition on exclusive contracts and practices, activities or 
arrangements tantamount to an exclusive contract set forth in Section 
76.1002(c)(2) of the Commission's Rules may submit a ``Petition for 
Sunset'' to the Commission. If the Commission finds that the 
prohibition is not necessary to preserve and protect competition and 
diversity in the distribution of video programming, then the 
prohibition set forth in Section 76.1002(c)(2) of the Commission's 
Rules shall no longer apply in the geographic area specified in the 
decision of the Commission. The proposed rule specifies the 
requirements for the petition for sunset, provides that a competing 
multichannel video programming distributor or other interested party 
affected by the petition for sunset may file an opposition to the 
petition within forty-five (45) days of the date on which the petition 
is placed on public notice, and provides that the petitioner may file a 
response within fifteen (15) days of receipt of any formal opposition.
    If adopted, 47 CFR 76.1003(e)(1) would provide that a cable 
operator, satellite cable programming vendor, or satellite broadcast 
programming vendor upon which a program access complaint is served 
shall answer within forty-five (45) days of service of the complaint if 
the complaint alleges a violation of Section 628(b) of the 
Communications Act of 1934, as amended, or Section 76.1001(a) of the 
Commission's rules. In addition, to the extent the exclusive contract 
prohibition sunsets or is relaxed, an increase in the number of 
complaints alleging a violation of Section 628(b) of the Communications 
Act of 1934, as amended, or Section 76.1001(a) of the Commission's 
rules is expected.
    The Commission is seeking OMB approval for the proposed information 
collection requirements. All other remaining existing information 
collection requirements would stay as they are, and the various burden 
estimates would be revised to reflect the new and revised rules noted 
above.

Summary of the Notice of Proposed Rulemaking

I. Introduction

    We issue this Notice of Proposed Rulemaking (``NPRM'') to seek 
comment on (i) whether to retain, sunset, or relax one of the several 
protections afforded to multichannel video programming distributors 
(``MVPDs'') by the program access rules--the prohibition on exclusive 
contracts involving satellite-delivered, cable-affiliated programming; 
and (ii) potential revisions to our program access rules to better 
address alleged violations, including potentially discriminatory volume 
discounts and uniform price increases. This NPRM promotes the goals of 
Executive Order 13579 and the Commission's plan adopted thereto, 
whereby the Commission analyzes rules that may be outmoded, 
ineffective, insufficient, or excessively burdensome and determines 
whether any such regulations should be modified, streamlined, expanded, 
or repealed.
    2. In areas served by a cable operator, Section 628(c)(2)(D) of the 
Communications Act of 1934, as amended (the ``Act''), generally 
prohibits exclusive contracts for satellite cable programming or 
satellite broadcast programming between any cable operator and any 
cable-affiliated programming vendor (the ``exclusive contract 
prohibition'').\1\ The exclusive contract prohibition applies to all 
satellite-delivered, cable-affiliated programming and presumes that an 
exclusive contract will cause competitive harm in every case, 
regardless of the type of programming at issue. The exclusive contract 
prohibition applies only to programming which is delivered via 
satellite; it does not apply to programming which is delivered via

[[Page 24304]]

terrestrial facilities.\2\ In January 2010, the Commission adopted 
rules providing for the processing of complaints alleging that an 
``unfair act'' involving terrestrially delivered, cable-affiliated 
programming violates Section 628(b) of the Act. Thus, while an 
exclusive contract involving satellite-delivered, cable-affiliated 
programming is generally prohibited, an exclusive contract involving 
terrestrially delivered, cable-affiliated programming is permitted 
unless the Commission finds in response to a complaint that it violates 
Section 628(b) of the Act.
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    \1\ See 47 U.S.C. 548(c)(2)(D). An exclusive contract for 
satellite cable programming or satellite broadcast programming 
between a cable operator and a cable-affiliated programming vendor 
that provides satellite-delivered programming would violate Section 
628(c)(2)(D) even if the cable operator that is a party to the 
contract is not affiliated with the cable-affiliated programming 
vendor that is a party to the contract. See Implementation of the 
Cable Television Consumer Protection and Competition Act of 1992--
Development of Competition and Diversity in Video Programming 
Distribution: Section 628(c)(5) of the Communications Act: Sunset of 
Exclusive Contract Prohibition, Report and Order, 22 FCC Rcd 17791, 
17840-41, paras. 70-72 (2007) (``2007 Extension Order''), aff'd sub 
nom. Cablevision Sys. Corp. et al. v. FCC, 597 F.3d 1306, 1314-15 
(D.C. Cir. 2010) (``Cablevision I''); see also Cable Horizontal and 
Vertical Ownership Limits, Further Notice of Proposed Rulemaking, 23 
FCC Rcd 2134, 2195-96, para. 145 (2008).
    \2\ In this NPRM, we refer to ``satellite cable programming'' 
and ``satellite broadcast programming'' collectively as ``satellite-
delivered programming.''
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    3. In Section 628(c)(5) of the Act, Congress provided that the 
exclusive contract prohibition would cease to be effective on October 
5, 2002, unless the Commission found that it ``continues to be 
necessary to preserve and protect competition and diversity in the 
distribution of video programming.'' In June 2002, the Commission found 
that the exclusive contract prohibition continued to be necessary to 
preserve and protect competition and diversity and retained the 
exclusive contract prohibition for five years, until October 5, 2007. 
The Commission provided that, during the year before the expiration of 
the five-year extension, it would conduct a second review to determine 
whether the exclusive contract prohibition continued to be necessary to 
preserve and protect competition and diversity in the distribution of 
video programming. After conducting such a review, the Commission in 
September 2007 concluded that the exclusive contract prohibition was 
still necessary, and it retained the prohibition for five more years, 
until October 5, 2012. The Commission again provided that, during the 
year before the expiration of the five-year extension, it would conduct 
a third review to determine whether the exclusive contract prohibition 
continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.
    4. Accordingly, in this NPRM, we initiate the third review of the 
necessity of the exclusive contract prohibition. Below, we present 
certain data on the current state of competition in the video 
distribution market and the video programming market, and we invite 
commenters to submit more recent data or empirical analyses. We seek 
comment on whether current conditions in the video marketplace support 
retaining, sunsetting, or relaxing the exclusive contract prohibition. 
To the extent that the data do not support retaining the exclusive 
contract prohibition as it exists today, we seek comment on whether we 
can preserve and protect competition in the video distribution market 
by either:
    <bullet> Sunsetting the exclusive contract prohibition in its 
entirety and instead relying solely on existing protections provided by 
the program access rules that will not sunset: (i) The case-by-case 
consideration of exclusive contracts pursuant to Section 628(b) of the 
Act; (ii) the prohibition on discrimination in Section 628(c)(2)(B) of 
the Act; and (iii) the prohibition on undue or improper influence in 
Section 628(c)(2)(A) of the Act; or
    <bullet> Relaxing the exclusive contract prohibition by (i) 
establishing a process whereby a cable operator or satellite-delivered, 
cable-affiliated programmer can seek to remove the prohibition on a 
market-by-market basis based on the extent of competition in the 
market; (ii) retaining the prohibition only for satellite-delivered, 
cable-affiliated Regional Sports Networks (``RSNs'') and any other 
satellite-delivered, cable-affiliated programming that the record here 
establishes as being important for competition and non-replicable and 
having no good substitutes; and/or (iii) other ways commenters propose.

We seek comment also on (i) how to implement a sunset (complete or 
partial) to minimize any potential disruption to consumers; (ii) the 
First Amendment implications of the alternatives discussed herein; 
(iii) the costs and benefits of the alternatives discussed herein; and 
(iv) the impact of a sunset on existing merger conditions.
    5. In addition, we seek comment below on potential improvements to 
the program access rules to better address potential violations. With 
the exception of certain procedural revisions and the previous 
extensions of the exclusive contract prohibition, the program access 
rules have remained largely unchanged in the almost two decades since 
the Commission originally adopted them in 1993. We seek comment on, 
among other things, whether our rules adequately address potentially 
discriminatory volume discounts and uniform price increases and, if 
not, how these rules should be revised to address these concerns.

II. Background

A. Program Access Protections

    6. Congress adopted the program access provisions as part of the 
Cable Television Consumer Protection and Competition Act of 1992 
(``1992 Cable Act''). Congress was concerned that, in order to compete 
effectively, new market entrants would need access to satellite-
delivered, cable-affiliated programming. At that time, Congress found 
that increased horizontal concentration of cable operators and 
extensive vertical integration \3\ created an imbalance of power, both 
between cable operators and program vendors and between incumbent cable 
operators and their multichannel competitors. As a result of this 
imbalance of power, Congress determined that the development of 
competition among MVPDs was limited and consumer choice was restricted. 
Congress concluded that cable-affiliated programmers had the incentive 
and ability to favor their affiliated cable operators over other, 
unaffiliated, MVPDs with the effect that competition and diversity in 
the distribution of video programming would not be preserved and 
protected.
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    \3\ Vertical integration means the combined ownership of cable 
systems and suppliers of cable programming.
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    7. The program access provisions afford several protections to 
MVPDs in their efforts to compete in the video distribution market. 
Sections 628(b), 628(c)(1), and 628(d) of the Act grant the Commission 
broad authority to prohibit ``unfair acts'' of cable operators, 
satellite cable programming vendors in which a cable operator has an 
attributable interest, and satellite broadcast programming vendors that 
have the ``purpose or effect'' of ``hinder[ing] significantly or 
prevent[ing]'' any MVPD from providing ``satellite cable programming or 
satellite broadcast programming to subscribers or consumers.'' \4\ In 
addition to this broad grant of authority, Congress in Section 
628(c)(2) of the Act required the Commission to adopt specific 
regulations to specify particular conduct that is prohibited by Section 
628(b), i.e., certain unfair acts involving satellite-delivered, cable-
affiliated programming. In contrast to Section 628(b), the unfair acts 
listed in Section 628(c)(2) pertaining to satellite-delivered 
programming are presumed to harm competition in every case, and MVPDs 
alleging such unfair acts are not required to demonstrate harm. First, 
Section 628(c)(2)(A) requires the Commission to prohibit efforts by 
cable operators to unduly influence the decision of cable-affiliated 
programming vendors that provide satellite-delivered programming to 
sell their programming to competitors (``undue influence'').

[[Page 24305]]

Second, Section 628(c)(2)(B) requires the Commission to prohibit 
discrimination among MVPDs by cable-affiliated programming vendors that 
provide satellite-delivered programming in the prices, terms, and 
conditions for sale of programming (``discrimination''). Third, 
Sections 628(c)(2)(C)-(D) require the Commission to prohibit exclusive 
contracts between cable operators and cable-affiliated programming 
vendors that provide satellite-delivered programming, subject to 
certain exceptions. In this proceeding, our focus is on the protection 
provided under Section 628(c)(2)(D), although we discuss the other 
statutory protections to the extent they bear on our consideration of 
whether to allow the exclusive contract provision to sunset.
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    \4\ Throughout this NPRM, we use the term ``unfair act'' as 
shorthand for the phrase ``unfair methods of competition or unfair 
or deceptive acts or practices.'' 47 U.S.C. 548(b); see 47 CFR 
76.1001.
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B. Enactment of the Exclusive Contract Prohibition With a Sunset 
Provision

    8. In the 1992 Cable Act, Congress drew a distinction between 
exclusive contracts for satellite-delivered, cable-affiliated 
programming in areas not served by a cable operator as of October 5, 
1992 (``unserved areas'') and areas served by a cable operator as of 
that date (``served areas''). In unserved areas, Congress adopted a per 
se prohibition on exclusive contracts between cable operators and 
satellite-delivered, cable-affiliated programmers. In served areas, 
however, the prohibition on exclusive contracts is not absolute; 
rather, an exclusive contract is permissible if the Commission 
determines that it ``is in the public interest.'' Congress thus 
recognized that, in served areas, some exclusive contracts may serve 
the public interest by providing offsetting benefits to the video 
programming market or assisting in the development of competition among 
MVPDs. To enforce or enter into an exclusive contract in a served area, 
a cable operator or a satellite-delivered, cable-affiliated programmer 
must submit a ``Petition for Exclusivity'' to the Commission for 
approval.\5\
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    \5\ See 47 CFR 76.1002(c)(5). Ten Petitions for Exclusivity have 
been filed since enactment of the 1992 Cable Act. Of these 
petitions, two were granted, three were denied, and five were 
dismissed at the request of the parties. See New England Cable News 
Channel, Memorandum Opinion and Order, 9 FCC Rcd 3231 (1994) 
(granting exclusivity petition); Time Warner Cable, Memorandum 
Opinion and Order, 9 FCC Rcd 3221 (1994) (denying exclusivity 
petition for Courtroom Television (``Court TV'')); Outdoor Life 
Network and Speedvision Network, Memorandum Opinion and Order, 13 
FCC Rcd 12226 (CSB 1998) (denying exclusivity petition for the 
Outdoor Life Network (``OLN'') and Speedvision Network 
(``Speedvision'')); Cablevision Industries Corp. and Sci-Fi Channel, 
Memorandum Opinion and Order, 10 FCC Rcd 9786 (CSB 1995) (denying 
exclusivity petition for the Sci-Fi Channel); NewsChannel, 
Memorandum Opinion and Order, 10 FCC Rcd 691 (CSB 1994) (granting 
exclusivity petition).
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    9. In addition to this prior approval process, Congress also 
recognized that exclusivity can be a legitimate business practice where 
there is sufficient competition. Accordingly, in Section 628(c)(5), 
Congress provided that the exclusive contract prohibition in served 
areas:

    Shall cease to be effective 10 years after the date of enactment 
of this section, unless the Commission finds, in a proceeding 
conducted during the last year of such 10-year period, that such 
prohibition continues to be necessary to preserve and protect 
competition and diversity in the distribution of video programming.

The 1992 Cable Act was enacted on October 5, 1992. Accordingly, the 
``sunset provision'' of Section 628(c)(5) would have triggered the 
expiration of the exclusive contract prohibition on October 5, 2002, 
absent a Commission finding that the prohibition remained necessary to 
preserve and protect competition and diversity in the distribution of 
video programming.

C. 2002 Extension of the Exclusive Contract Prohibition

    10. In October 2001, approximately a year before the initial 
expiration of the exclusive contract prohibition, the Commission sought 
comment on whether the exclusive contract prohibition remained 
necessary to preserve and protect competition and diversity in the 
distribution of video programming. Ultimately, the Commission concluded 
that the prohibition remained ``necessary.'' The Commission explained 
that, based on marketplace conditions at the time, cable-affiliated 
programmers retained the incentive and ability to withhold programming 
from unaffiliated MVPDs with the effect that competition and diversity 
in the distribution of video programming would be impaired without the 
prohibition. The Commission found as follows:

    The competitive landscape of the market for the distribution of 
multichannel video programming has changed for the better since 
1992. The number of MVPDs that compete with cable and the number of 
subscribers served by those MVPDs have increased significantly. We 
find, however, that the concern on which Congress based the program 
access provisions--that in the absence of regulation, vertically 
integrated programmers have the ability and incentive to favor 
affiliated cable operators over nonaffiliated cable operators and 
programming distributors using other technologies such that 
competition and diversity in the distribution of video programming 
would not be preserved and protected--persists in the current 
marketplace.

    11. Accordingly, the Commission extended the exclusive contract 
prohibition for five years (i.e., through October 5, 2007). The 
Commission provided that, during the year before the expiration of the 
five-year extension of the exclusive contract prohibition, it would 
conduct another review to determine whether the exclusive contract 
prohibition continued to be necessary to preserve and protect 
competition and diversity in distribution of video programming.

D. 2007 Extension of the Exclusive Contract Prohibition and D.C. 
Circuit Decision

    12. In February 2007, the Commission again sought comment on 
whether the prohibition remained necessary to preserve and protect 
competition and diversity in the distribution of video programming. For 
a second time, the Commission concluded that the prohibition remained 
``necessary.''
    13. The Commission conducted its analysis of the exclusive contract 
prohibition in five parts. First, in considering the applicable 
standard of review, the Commission determined that it may use its 
predictive judgment, economic theory, and specific factual evidence in 
determining whether, ``in the absence of the prohibition, competition 
and diversity in the distribution of video programming would not be 
preserved and protected.'' If such an inquiry is answered in the 
affirmative, then the Commission concluded that it must extend the 
exclusive contract prohibition. Second, the Commission examined the 
changes that had occurred in the video programming and distribution 
markets since 2002, and it found that, while there had been some 
procompetitive trends, the concerns on which Congress based the program 
access provisions persisted in the marketplace. Third, the Commission 
examined the incentive and ability of cable-affiliated programmers to 
favor their affiliated cable operators over competitive MVPDs with the 
effect that competition and diversity in the distribution of video 
programming would not be preserved and protected.\6\ The Commission 
determined that this incentive and ability existed with the effect that 
the exclusive contract prohibition remained necessary to preserve and 
protect

[[Page 24306]]

competition and diversity in the distribution of video programming. The 
Commission recognized, however, ``that Congress intended for the 
exclusive contract prohibition to sunset at a point when market 
conditions warrant'' and specifically ``caution[ed] competitive MVPDs 
to take any steps they deem appropriate to prepare for the eventual 
sunset of the prohibition, including further investments in their own 
programming.'' Fourth, the Commission considered commenters' arguments 
that the exclusive contract prohibition is both overinclusive and 
underinclusive with respect to the types of programming and MVPDs it 
covers, and the Commission declined either to narrow or broaden the 
prohibition. Fifth, the Commission considered the appropriate length of 
time for an extension of the exclusive contract prohibition, and it 
again concluded that the prohibition should be extended for five years.
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    \6\ For purposes of this NPRM, the term ``competitive MVPD'' 
refers to MVPDs that compete with incumbent cable operators in the 
video distribution market, such as DBS operators and wireline video 
providers.
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    14. Accordingly, the Commission extended the exclusive contract 
prohibition for five years (i.e., until October 5, 2012). As in 2002, 
the Commission provided that, during the year before the expiration of 
the five-year extension of the exclusive contract prohibition (i.e., 
between October 2011 and October 2012), it would conduct a third review 
to determine whether the exclusive contract prohibition continues to be 
necessary to preserve and protect competition and diversity in the 
distribution of video programming.
    15. Cablevision Systems Corporation (``Cablevision'') and Comcast 
Corporation (``Comcast'') (Cablevision and Comcast, collectively, the 
``Petitioners'') filed petitions for review of the 2007 Extension Order 
with the D.C. Circuit. The D.C. Circuit addressed Petitioners' 
objections to three conclusions that the Commission reached in the 2007 
Extension Order. First, Petitioners objected to the Commission's 
interpretation of the term ``necessary'' as used in the sunset 
provision as requiring the exclusive contract prohibition to continue 
``if, in the absence of the prohibition, competition and diversity in 
the distribution of video programming would not be preserved and 
protected.'' The D.C. Circuit found that the term ``necessary'' is 
``not language of plain meaning'' and that the Commission's 
interpretation was ``well within the Commission's discretion'' under 
Chevron. Second, Petitioners contended that ``the Commission did not 
rely on substantial evidence when it concluded that vertically 
integrated cable companies would enter into competition-harming 
exclusive contracts if the exclusivity prohibition were allowed to 
lapse.'' The D.C. Circuit disagreed, finding that the Commission relied 
on substantial evidence and stating that ``conclusions based on [the 
Commission's] predictive judgment and technical analysis are just the 
type of conclusions that warrant deference from this Court.'' While 
there had been substantial changes in the MVPD market since 1992, the 
court described the transformation as a ``mixed picture'' and deferred 
to the Commission's analysis, which concluded that vertically 
integrated cable companies retained a substantial ability and incentive 
to withhold ``must have'' programming. Finally, Petitioners objected to 
the Commission's failure to narrow the exclusive contract prohibition 
to apply only to certain types of cable companies or certain types of 
programming. The D.C. Circuit found that the Commission's decision to 
refrain from narrowing the exclusive contract prohibition was not 
arbitrary and capricious, but rather was a reasonable decision ``to 
adhere to Congress's statutory design.''
    16. While the D.C. Circuit affirmed the 2007 Extension Order, it 
also provided some comment on the Commission's subsequent review of the 
exclusive contract prohibition. Specifically, the D.C. Circuit stated 
as follows:

    We anticipate that cable's dominance in the MVPD market will 
have diminished still more by the time the Commission next reviews 
the prohibition, and expect that at that time the Commission will 
weigh heavily Congress's intention that the exclusive contract 
prohibition will eventually sunset. Petitioners are correct in 
pointing out that the MVPD market has changed drastically since 
1992. We expect that if the market continues to evolve at such a 
rapid pace, the Commission will soon be able to conclude that the 
[exclusive contract] prohibition is no longer necessary to preserve 
and protect competition and diversity in the distribution of video 
programming.

E. TWC/Time Warner and Comcast/NBCU Transactions

    17. Since the 2007 Extension Order, two transactions have had a 
particular impact on the video distribution market and the video 
programming market: (i) The separation of Time Warner Cable Inc. 
(``TWC''; a cable operator) from Time Warner Inc. (``Time Warner''; an 
owner of satellite-delivered, national programming networks); \7\ and 
(ii) the joint venture between Comcast (a vertically integrated cable 
operator) and NBC Universal, Inc. (``NBCU''; an owner of broadcast 
stations and satellite-delivered, national programming networks).\8\
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    \7\ See Applications for Consent to the Assignment and/or 
Transfer of Control of Licenses, Time Warner Inc., Assignor/
Transferor, and Time Warner Cable Inc., Assignee/Transferree, 
Memorandum Opinion and Order, 24 FCC Rcd 879 (MB, WCB, WTB, IB, 
2009) (``Time Warner Order'').
    \8\ See Applications of Comcast Corporation, General Electric 
Company and NBC Universal, Inc. For Consent to Assign Licenses and 
Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC 
Rcd 4238 (2011) (``Comcast/NBCU Order'').
---------------------------------------------------------------------------

    18. In the Time Warner Order, the Media, Wireline Competition, 
Wireless Telecommunications, and International Bureaus (the 
``Bureaus'') granted the applications for the assignment and transfer 
of control of certain Commission licenses and authorizations from Time 
Warner to TWC. Before the transaction, Time Warner controlled TWC, but 
after their separation, Time Warner no longer has an ownership interest 
in TWC or its subsidiary licensees. As a result of the transaction, 
Time Warner's programming networks are no longer affiliated with TWC, 
thus reducing the number of satellite-delivered, national programming 
networks that are cable-affiliated. The Bureaus found that the 
transaction would benefit the public interest by lessening the extent 
to which TWC is vertically integrated and by eliminating Time Warner's 
vertical integration. In declining to adopt a condition applying the 
program access rules to Time Warner post-transaction, the Commission 
explained that the underlying premise of the program access rules would 
no longer apply because Time Warner and TWC would no longer have the 
incentive and ability to discriminate in favor of each other. If an 
MVPD believed that Time Warner or TWC violated the program access rules 
while they were vertically integrated, however, the Commission stated 
that the program access complaint process would provide an avenue for 
relief.
    19. In contrast, another recent transaction has led to an increased 
number of satellite-delivered, national programming networks that are 
cable-affiliated. In the Comcast/NBCU Order, the Commission granted the 
application of Comcast, General Electric Company (``GE''), and NBCU to 
assign and transfer control of broadcast, satellite, and other radio 
licenses from GE to Comcast. The transaction created a joint venture 
(``Comcast-NBCU'') combining NBCU's broadcast, cable programming, 
online content, movie studio, and other businesses with some of 
Comcast's cable programming and online content businesses. Before the 
transaction, both Comcast and NBCU either wholly or partly owned a 
number of satellite-

[[Page 24307]]

delivered, national programming networks. As a result of the 
transaction, programming networks that were previously affiliated with 
NBCU became affiliated with the joint venture, thus increasing the 
number of satellite-delivered, national programming networks that are 
cable-affiliated.
    20. In evaluating post-transaction MVPD access to Comcast-NBCU 
programming, the Commission concluded that the transaction ``creates 
the possibility that Comcast-NBCU, either temporarily or permanently, 
will block Comcast's video distribution rivals from access to the video 
programming content the [joint venture] would come to control or raise 
programming costs to its video distribution rivals.'' The Commission 
found the joint venture would ``have the power to implement an 
exclusionary strategy,'' and that ``successful exclusion * * * of video 
distribution rivals would likely harm competition by allowing Comcast 
to obtain or (to the extent it may already possess it) maintain market 
power.'' Additionally, the Commission concluded that an 
``anticompetitive exclusionary program access strategy would often be 
profitable for Comcast.'' Accordingly, the Commission imposed 
conditions designed to ameliorate the potential harms, including a 
baseball-style arbitration condition that allows an aggrieved MVPD to 
submit a dispute with Comcast-NBCU over the terms and conditions of 
carriage of programming to commercial arbitration.

III. Discussion

A. Exclusive Contract Prohibition

    21. We seek comment on whether to retain, sunset, or relax the 
exclusive contract prohibition.\9\ Our discussion of this issue below 
proceeds in ten main parts. First, we present relevant data for 
assessing whether to retain, sunset, or relax the exclusive contract 
prohibition, and we invite commenters to submit more recent data or 
empirical analyses. Second, we ask commenters to assess whether these 
data, as updated and supplemented by commenters, support either 
retaining, sunsetting, or relaxing the exclusive contract prohibition. 
Third, we seek comment on how each of these three options (i.e., 
retaining, sunsetting, or relaxing the exclusive contract prohibition) 
will impact the creation of new national, regional, and local 
programming. Fourth, to the extent that the data do not support 
retaining the exclusive contract prohibition as it exists today, we 
seek comment on whether we can nonetheless preserve and protect 
competition in the video distribution market by either (i) sunsetting 
the prohibition in its entirety and relying solely on existing 
protections provided by the program access rules that will not sunset; 
or (ii) relaxing the exclusive contract prohibition, such as through 
removal of the prohibition on a market-by-market basis based on the 
extent of competition in the market or by retaining the prohibition 
only for satellite-delivered, cable-affiliated RSNs and other 
satellite-delivered, cable-affiliated ``must have'' programming. Fifth, 
we seek input on how a sunset (complete or partial) of the exclusive 
contract prohibition will impact consumers, and how to implement a 
sunset to minimize any potential disruption to consumers. Sixth, we ask 
commenters to assess whether and how each of the three options comports 
with the First Amendment. Seventh, we ask commenters to consider the 
costs and benefits associated with each of the three options. Eighth, 
to the extent the exclusive contract prohibition sunsets (wholly or 
partially), we propose to eliminate existing restrictions on exclusive 
subdistribution agreements between cable operators and satellite-
delivered, cable-affiliated programmers. Ninth, we propose that any 
amendments we adopt herein to our rules pertaining to exclusive 
contracts between cable operators and satellite-delivered, cable-
affiliated programmers in served areas will apply equally to existing 
rules pertaining to exclusive contracts involving common carriers and 
Open Video Systems (``OVS'') in served areas. Finally, we seek comment 
on how conditions adopted in previous merger orders may be impacted if 
the exclusive contract prohibition were to sunset (wholly or 
partially).
---------------------------------------------------------------------------

    \9\ Because the Commission seeks comment on alternative 
approaches to the exclusive contract prohibition--retaining, 
sunsetting, or relaxing (either through market-based petitions or 
retaining a prohibition for regional sports networks)--the Proposed 
Rules attached hereto include potential rule amendments based on 
each of these alternatives.
---------------------------------------------------------------------------

1. Relevant Data in Considering a Sunset of the Exclusive Contract 
Prohibition
    22. In evaluating whether the exclusive contract prohibition 
``continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming,'' the Commission 
has previously examined data on the status of competition in the video 
programming market and the video distribution market. Specifically, in 
the 2007 Extension Order, the Commission examined ``the changes that 
[had] occurred in the programming and distribution markets since 2002 
when the Commission last reviewed whether the exclusive contract 
prohibition continued to be necessary to preserve and protect 
competition.'' The Commission examined data relating to (i) the number 
of MVPD subscribers nationwide and in regional markets attributable to 
each category of MVPD, including cable operators, as well as the extent 
of regional clustering by cable operators; \10\ (ii) the number of 
satellite-delivered, national programming networks and the percentage 
of such networks that are cable-affiliated; and (iii) the number of 
regional programming networks and the percentage of such networks that 
are cable-affiliated. We believe it is appropriate to consider similar 
data in determining whether the exclusive contract prohibition remains 
necessary today. We also seek comment on whether our assessment of the 
exclusivity prohibition should consider data concerning other types of 
``satellite cable programming.''
---------------------------------------------------------------------------

    \10\ ``Clustering'' refers to ``an increase over time in the 
number of cable subscribers and homes passed by a single MSO in 
particular markets (accomplished via internal growth as well as by 
acquisitions).'' 2007 Extension Order, 22 FCC Rcd at 17831, para. 
56.
---------------------------------------------------------------------------

    23. In an effort to aid such an evaluation, we have prepared the 
tables in Appendices A through C of the NPRM, which contain data from 
previously released Commission documents as well as other sources. 
Appendices A through C are available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0320/FCC-12-30A1.pdf. The first 
column of data, entitled ``1st Annual Report,'' focuses on data from 
the 1st Annual Report on video competition.\11\ The second column of 
data, entitled ``2002 Extension,'' focuses on data from the 2002 
Extension Order.\12\ The third column of data, entitled ``2007 
Extension,'' focuses on data from the 2007 Extension Order.\13\ The 
fourth and

[[Page 24308]]

final column of data, entitled ``Most Recent,'' focuses on the most 
recent data available. We believe that considering data from these four 
time periods will enable us to view the evolution of the video 
distribution and video programming markets over time. We invite 
commenters to submit more recent data in each of the categories 
identified, as well as data regarding the extent of regional clustering 
of cable operators, and any additional data the Commission should 
consider in its review.
---------------------------------------------------------------------------

    \11\ Implementation of Section 19 of the Cable Television 
Consumer Protection and Competition Act of 1992: Annual Assessment 
of the Status of Competition in the Market for the Delivery of Video 
Programming, First Report, 9 FCC Rcd 7442 (1994) (``1st Annual 
Report'') (containing data as of 1994).
    \12\ Implementation of the Cable Television Consumer Protection 
and Competition Act of 1992--Development of Competition and 
Diversity in Video Programming Distribution: Section 628(c)(5) of 
the Communications Act: Sunset of Exclusive Contract Prohibition, 
Report and Order, 17 FCC Rcd 12124 (2002) (``2002 Extension Order'') 
(citing data from the Annual Assessment of the Status of Competition 
in the Market for the Delivery of Video Programming, Eighth Annual 
Report, 17 FCC Rcd 1244 (2002) (containing data as of June 2001) 
(``8th Annual Report'')).
    \13\ See 2007 Extension Order, 22 FCC Rcd 17791 (citing data 
from the Annual Assessment of the Status of Competition in the 
Market for the Delivery of Video Programming, Twelfth Annual Report, 
21 FCC Rcd 2503 (2006) (containing data as of June 2005) (``12th 
Annual Report'')).
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a. Nationwide and Regional MVPD Subscribership
    24. In past reviews of the exclusive contract prohibition, the 
Commission has assessed the percentage of MVPD subscribers nationwide 
that are attributable to each category of MVPD, including cable 
operators. The data in Appendix A indicate that the percentage of MVPD 
subscribers nationwide attributable to cable operators has declined 
over time, with the current percentage at approximately 58.5 percent, a 
decrease of 8.5 percentage points since the 2007 Extension Order. On a 
regional basis, the market share held by cable operators in Designated 
Market Areas (``DMAs'') varies considerably, from a high in the 80 
percent range to a low in the 20 percent range.
    25. We seek comment on the extent to which we should consider 
online distributors of video programming in our analysis. The 
Commission recently stated that online distributors of video 
programming ``offer a tangible opportunity to bring customers 
substantial benefits'' and that they ``can provide and promote more 
programming choices, viewing flexibility, technological innovation and 
lower prices.'' While the Commission concluded that consumers today do 
not perceive online distributors as a substitute for traditional MVPD 
service, it stated that online distributors are a ``potential 
competitive threat'' and that they ``must have a similar array of 
programming'' if they are to ``fully compete against a traditional 
MVPD.'' In addition, in connection with the Commission's forthcoming 
14th Annual Report on video competition, the Commission sought comment 
on the emergence of online video distributors.\14\ In light of possible 
cord-cutting and cord-shaving trends, we ask commenters to provide 
information regarding the effect that online distributors have had, or 
may have, on nationwide and regional MVPD subscription rates. Our task 
under Section 628(c)(5) is to determine whether the exclusive contract 
prohibition is necessary to preserve and protect ``competition,'' not 
competitors. Thus, to the extent that we conclude that competition in 
the video distribution market and the video programming market is 
currently sufficient to warrant sunsetting or relaxing the exclusive 
contract prohibition, how, if at all, should the emergence of a new 
category of potential competitor that could benefit from the exclusive 
contract prohibition impact our analysis?
---------------------------------------------------------------------------

    \14\ See Annual Assessment of the Status of Competition in the 
Market for the Delivery of Video Programming, Further Notice of 
Inquiry, 26 FCC Rcd 14091, 14112-13, paras. 52-55 (2011) (``Further 
Notice for the 14th Report'').
---------------------------------------------------------------------------

b. Satellite-Delivered, Cable-Affiliated, National Programming Networks
    26. In past reviews of the exclusive contract prohibition, the 
Commission has assessed the percentage of satellite-delivered, national 
programming networks that are cable-affiliated and the number of cable-
affiliated networks that are among the Top 20 satellite-delivered, 
national programming networks as ranked by either subscribership or 
prime time ratings. The data in Appendix B indicate that, since the 
2007 Extension Order, (i) the percentage of satellite-delivered, 
national programming networks that are cable-affiliated has declined 
from 22 percent to approximately 14.4 percent; (ii) the number of 
cable-affiliated networks among the Top 20 satellite-delivered, 
national programming networks as ranked by subscribership has increased 
from six to seven; and (iii) the number of cable-affiliated networks 
among the Top 20 satellite-delivered, national programming networks as 
ranked by average prime time ratings has remained at seven. We note 
that the calculation of the percentage of satellite-delivered, national 
programming networks that are cable-affiliated is based on our estimate 
of a total of 800 satellite-delivered, national programming networks 
available to MVPDs today.\15\ We seek comment on the reasonableness of 
this estimate and how, if at all, it should be revised. We also note 
that these data include satellite-delivered, national programming 
networks affiliated with Comcast, many of which (i.e., the ``Comcast-
controlled networks'') are subject to program access conditions adopted 
in the Comcast/NBCU Order and will continue to be subject to these 
conditions for six more years (until January 2018, assuming they are 
not modified earlier in response to a petition) even if the exclusive 
contract prohibition were to sunset.\16\ If the

[[Page 24309]]

Comcast-controlled networks are excluded, the data in Appendix B 
indicate that, since the 2007 Extension Order, (i) the percentage of 
satellite-delivered, national programming networks that are cable-
affiliated has declined from 22 percent to approximately 11 percent; 
(ii) the number of cable-affiliated networks among the Top 20 
satellite-delivered, national programming networks as ranked by 
subscribership has remained at six; and (iii) the number of cable-
affiliated networks among the Top 20 satellite-delivered, national 
programming networks as ranked by average prime time ratings has fallen 
from seven to five. We seek comment on whether and how to account for 
different versions of the same network in our analysis. For example, to 
the extent a particular network is available in standard definition 
(``SD''), high definition (``HD''), 3D, and video-on-demand (``VOD''), 
should this be counted as four different networks for purposes of our 
analysis? If so, and if both cable-affiliated and unaffiliated networks 
are treated similarly, how will this impact the percentage of networks 
that are cable-affiliated?
---------------------------------------------------------------------------

    \15\ In the 2007 Extension Order, the Commission found that 22 
percent of satellite-delivered, national programming networks were 
affiliated with cable operators. See 2007 Extension Order, 22 FCC 
Rcd at 17802-03, para. 18. This percentage was based on a total of 
531 satellite-delivered, national programming networks, as stated in 
the 12th Annual Report. See 12th Annual Report, 21 FCC Rcd at 2509-
10, para. 21 and 2575, para. 157 (containing data as of June 2005). 
For purposes of the analysis in this NPRM, we increase this figure 
to 800 based on two factors. First, since 2005, we estimate that 
approximately 150 high-definition versions of networks previously 
provided only in standard definition have been launched. See SNL 
Kagan, High-Definition Cable Networks Getting More Carriage, Feb. 
17, 2009; NCTA, Cable Networks, available at http://www.ncta.com/Organizations.aspx? type=orgtyp2&contentId=2907. Second, we estimate 
a net addition of approximately 100 networks, reflecting the 
increase over time in the number of national programming networks. 
See 2007 Extension Order, 22 FCC Rcd at 17836-37, para. 64 (noting 
the increase in national programming networks over time); Annual 
Assessment of the Status of Competition in the Market for the 
Delivery of Video Programming, Thirteenth Annual Report, 24 FCC Rcd 
542, 550, para. 20 (2009) (``13th Annual Report'') (noting an 
increase of 34 programming networks between June 2005 and June 
2006); id. at 731-36, Table C-4 (listing planned networks); SNL 
Kagan, Economics of Basic Cable Networks (2011 Edition), at 27 
(listing cable networks launched after 2005).
    \16\ See Comcast/NBCU Order, 26 FCC Rcd at 4358, Appendix A, 
Condition II. The program access conditions reflected in Condition 
II apply to ``C-NBCU Programmers,'' which are defined as ``Comcast, 
C-NBCU, their Affiliates and any entity for which Comcast or C-NBCU 
manages or controls the licensing of Video Programming and/or any 
local broadcast television station on whose behalf Comcast or NBCU 
negotiates retransmission consent.'' Id. at 4356, Appendix A, 
Definitions. An ``Affiliate'' of any person means ``any person 
directly or indirectly controlling, controlled by, or under common 
control with, such person at the time at which the determination of 
affiliation is being made.'' Id. at 4355, Appendix A, Definitions. 
The issue of whether a particular cable network qualifies as a ``C-
NBCU Programmer'' subject to these conditions is a fact-specific 
determination. For purposes of the estimates in this NPRM, and with 
the exception of the iN DEMAND networks discussed below, we assume 
that any network in which Comcast or NBCU holds a 50 percent or 
greater interest is a ``C-NBCU Programmer'' subject to these 
conditions. See Appendix B, Table 2 and Appendix C, Table 2 
(available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0320/FCC-12-30A1.pdf). We refer to these networks as 
``Comcast-controlled networks.'' We refer to other networks in which 
Comcast or NBCU holds a less than 50 percent interest as ``Comcast-
affiliated networks,'' which we assume for purposes of the estimates 
in this NPRM are not ``C-NBCU Programmers'' subject to the program 
access conditions adopted in the Comcast/NBCU Order, but are subject 
to the program access rules, including the exclusive contract 
prohibition. See id. Although Comcast has stated that it has a 53.7 
percent interest in iN DEMAND, it has also stated that it ``cannot 
control decisionmaking at iN DEMAND.'' See Application of General 
Electric and Comcast, MB Docket No. 10-56 (Jan. 28, 2010), at 20 
(stating that Comcast has a 53.7 percent interest in iN DEMAND) 
(``GE/Comcast/NBCU Application''); Letter from Michael H. Hammer, 
Counsel for Comcast, to Marlene H. Dortch, FCC, MB Docket No. 10-56 
(Oct. 22, 2010), at 2 n.5. Accordingly, for purposes of the 
estimates in this NPRM, we consider the iN DEMAND networks to be 
``Comcast-affiliated'' networks, and not ``Comcast-controlled'' 
networks subject to the program access conditions adopted in the 
Comcast/NBCU Order. Nothing in this NPRM should be read to state or 
imply any position as to whether any particular network qualifies or 
does not qualify as a ``C-NBCU Programmer.''
---------------------------------------------------------------------------

c. Satellite-Delivered, Cable-Affiliated, Regional Programming Networks
    27. In addition to national programming networks, the Commission in 
past reviews of the exclusive contract prohibition has assessed the 
extent to which regional programming networks are cable-affiliated. As 
an initial matter, we note that some regional networks may be 
terrestrially delivered and therefore not subject to the exclusive 
contract prohibition applicable to satellite-delivered, cable-
affiliated programming. The data in Appendix C pertaining to regional 
networks do not distinguish between terrestrially delivered and 
satellite-delivered networks. We ask commenters to provide data 
regarding which cable-affiliated, regional programming networks, 
including RSNs, are satellite-delivered and which are terrestrially 
delivered.
    28. For purposes of our analysis, we distinguish between RSNs and 
other regional networks. The Commission has previously held that RSNs 
have no good substitutes, are important for competition, and are non-
replicable. As set forth in Appendix C, recent data indicate that the 
number of RSNs that are cable-affiliated has increased from 18 to 31 
(not including HD versions) since the 2007 Extension Order, and the 
percentage of all RSNs that are cable-affiliated has increased from 46 
percent to approximately 52.3 percent. Are there networks that satisfy 
the Commission's definition of an RSN that are not included in the list 
of RSNs in Appendix C, such as certain local and regional networks that 
show NCAA Division I college football and basketball games? Should we 
include these and other similar networks, including unaffiliated 
networks, in our list of RSNs in Appendix C? In addition, are there 
networks included in the list of RSNs in Appendix C that do not satisfy 
the Commission's definition of an RSN? For example, do networks such as 
the Big Ten Network, PAC-12 Network, and The Mtn.--Mountain West Sports 
Network, which show NCAA Division I college football and basketball 
games of a particular college conference but not necessarily those of a 
particular team, satisfy the Commission's definition of an RSN? As 
required by this definition, do these and similar networks (i) 
distribute programming in ``a limited geographic region'' and (ii) 
carry the minimum amount of covered programming for an individual 
sports team.
    29. We note that the figures in Appendix C include RSNs that are 
affiliated with Comcast, many of which are subject to program access 
conditions adopted in the Comcast/NBCU Order and which will continue to 
be subject to these conditions for six more years (until January 2018, 
assuming they are not modified earlier in response to a petition) even 
if the exclusive contract prohibition were to sunset. If the Comcast-
controlled RSNs are excluded, the data in Appendix C indicate that the 
number of RSNs that are cable-affiliated has increased from 18 to 22 
(not including HD versions) since the 2007 Extension Order, and the 
percentage of RSNs that are cable-affiliated has decreased slightly 
from 46 percent to approximately 44.1 percent. With respect to non-RSN 
regional programming, we ask commenters to provide recent data on the 
number of these networks and the percentage of them that are cable-
affiliated.
d. Other Types of Cable-Affiliated ``Satellite Cable Programming''
    30. While the Commission in past reviews of the exclusive contract 
prohibition has considered linear and VOD programming networks, we also 
seek comment on whether there are other types of ``satellite cable 
programming'' or ``satellite broadcast programming'' that we should 
consider in assessing the exclusive contract prohibition. The Act 
defines ``satellite cable programming'' as (i) ``video programming'' 
(ii) which is ``transmitted via satellite'' and (iii) which is 
``primarily intended for the direct receipt by cable operators for 
their retransmission to cable subscribers.'' The Act defines ``video 
programming'' as ``programming provided by, or generally considered 
comparable to programming provided by, a television broadcast 
station.'' Are cable operators affiliated with forms of ``video 
programming'' that meet the other two requirements of the definition of 
``satellite cable programming,'' but that are not necessarily 
considered programming ``networks''? For example, to the extent that 
cable operators own or are affiliated with film libraries and other 
content, to what extent does this content qualify as ``satellite cable 
programming''? If so, how should this factor into our consideration of 
the exclusive contract prohibition?
2. Assessing Whether the Data Support Retaining, Sunsetting, or 
Relaxing the Exclusive Contract Prohibition
    31. We seek comment on whether the data set forth herein, as 
updated and supplemented by commenters, support retaining, sunsetting, 
or relaxing the exclusive contract prohibition. In addition to the 
specific questions stated herein, we seek comment on any new trends in 
the industry or any other issues that are relevant to our determination 
of whether the status of the MVPD marketplace today supports the sunset 
of the exclusive contract prohibition. We specifically seek comment on 
the effect of the development of online video on the marketplace. We 
also request information on the impact of the Comcast/NBCU and TWC/Time 
Warner transactions on the MVPD marketplace. To what extent, if any, 
should these transactions inform our analysis of whether to retain, 
sunset, or relax the exclusive contract prohibition? What other recent 
developments in the MVPD market since our 2007 review should we 
consider in deciding whether to retain, sunset, or relax the exclusive 
contract prohibition?

[[Page 24310]]

    32. In analyzing whether the exclusive contract prohibition remains 
necessary, the Commission has stated that it will ``assess whether, in 
the absence of the exclusive contract prohibition, vertically 
integrated programmers would have the ability and incentive to favor 
their affiliated cable operators over nonaffiliated competitive MVPDs 
and, if so, whether such behavior would result in a failure to protect 
and preserve competition and diversity in the distribution of video 
programming.'' Accordingly, in light of the data noted above and as 
updated and supplemented by commenters, we seek comment on whether 
cable-affiliated programmers would have the ability and incentive to 
favor their affiliated cable operators absent the exclusive contract 
prohibition in today's marketplace with the effect that competition and 
diversity in the distribution of video programming would not be 
preserved and protected. How has the exclusive contract prohibition 
impacted the general state of competition among MVPDs in the video 
distribution market? How would a sunset or relaxation of the exclusive 
contract prohibition affect consumers and competition in the video 
distribution market, and how would a sunset or relaxation affect the 
potential entry of new competitors in the market? Is there any basis 
for treating satellite-delivered, cable-affiliated programming and 
terrestrially delivered, cable-affiliated programming differently with 
respect to the exclusive contract prohibition? Are there differences 
between satellite-delivered programming and terrestrially delivered 
programming that would result in cable operators having a greater 
ability and incentive to favor affiliates providing satellite-delivered 
programming that warrants extension of the exclusive contract 
prohibition? To the extent the data support retaining the exclusive 
contract prohibition as it exists today, we seek comment on the 
appropriate length of an extension. Should the sunset date be five 
years from the current sunset date (i.e., until October 5, 2017), 
consistent with the two prior five-year extensions?
a. Ability
    33. In assessing whether cable-affiliated programmers have the 
``ability'' to favor their affiliated cable operators with the effect 
that competition and diversity in the distribution of video programming 
would not be preserved and protected, the Commission has explained that 
it considers whether satellite-delivered, cable-affiliated programming 
remains programming that is necessary for competition and for which 
there are no good substitutes. In the 2007 Extension Order, the 
Commission found that there were no good substitutes for certain 
satellite-delivered, cable-affiliated programming, and that such 
programming remained necessary for viable competition in the video 
distribution market. Accordingly, the Commission concluded that cable-
affiliated programmers retained ``the ability to favor their affiliated 
cable operators over competitive MVPDs such that competition and 
diversity in the distribution of video programming would not be 
preserved and protected absent the rule.'' In reaching this conclusion, 
the Commission explained that ``[w]hat is most significant to our 
analysis is not the percentage of total available programming that is 
vertically integrated with cable operators, but rather the popularity 
of the programming that is vertically integrated and how the inability 
of competitive MVPDs to access this programming will affect the 
preservation and protection of competition in the video distribution 
marketplace.'' Moreover, the Commission acknowledged that ``there 
exists a continuum of vertically integrated programming, `ranging from 
services for which there may be substitutes (the absence of which from 
a rival MVPD's program lineup would have little impact), to those for 
which there are imperfect substitutes, to those for which there are no 
close substitutes at all (the absence of which from a rival MVPD's 
program lineup would have a substantial negative impact).' ''
    34. We seek comment on whether competitive MVPDs' access to 
satellite-delivered, cable-affiliated programming remains necessary 
today to preserve and protect competition in the video distribution 
marketplace. Is there any basis to depart from the Commission's 
conclusion in the 2007 Extension Order that satellite-delivered, cable-
affiliated programming remains necessary for viable competition in the 
video distribution market? We seek comment on whether and how the 
continued decline in the number and percentage of national programming 
networks that are cable-affiliated should impact our analysis, if at 
all. Despite a similar decline between the 2002 Extension Order and the 
2007 Extension Order, the Commission in the 2007 Extension Order 
nonetheless found that ``cable-affiliated programming continues to 
represent some of the most popular and significant programming 
available today'' and that ``vertically integrated programming, if 
denied to cable's competitors, would adversely affect competition in 
the video distribution market.'' Is this also true today, considering 
that the data in Appendices B and C indicate that, since the 2007 
Extension Order, (i) the percentage of satellite-delivered, national 
programming networks that are cable-affiliated has declined from 22 
percent to approximately 14.4 percent; (ii) the number of cable-
affiliated networks among the Top 20 satellite-delivered, national 
programming networks as ranked by subscribership has increased from six 
to seven; (iii) the number of cable-affiliated networks among the Top 
20 satellite-delivered, national programming networks as ranked by 
average prime time ratings has remained at seven; and (iv) the number 
of cable-affiliated RSNs has increased from 18 to 31 (not including HD 
versions)?
    35. To what extent should we consider Comcast-controlled networks 
in our review of the exclusive contract prohibition? Because these 
networks will continue to be subject to program access conditions 
adopted in the Comcast/NBCU Order for six more years (until January 
2018, assuming they are not modified earlier in response to a petition) 
even if the exclusive contract prohibition were to sunset, is there any 
basis to consider them in assessing whether to retain, sunset, or relax 
the exclusive contract prohibition? With the Comcast-controlled 
networks excluded, the data in Appendices B and C indicate that, since 
the 2007 Extension Order, (i) the number of cable-affiliated networks 
among the Top 20 satellite-delivered, national programming networks as 
ranked by subscribership has remained at six; (ii) the number of cable-
affiliated networks among the Top 20 satellite-delivered, national 
programming networks as ranked by average prime time ratings has fallen 
from seven to five; and (iii) the number of cable-affiliated RSNs has 
increased from 18 to 21 (not including HD versions). With the Comcast-
controlled networks excluded from the analysis, is it still accurate to 
characterize cable-affiliated programming as ``some of the most popular 
and significant programming available today,'' the absence of which 
from an MVPD's offering would ``adversely affect competition in the 
video distribution market.'' Rather than focusing on the number and 
percentage of networks that are cable-affiliated, is it more critical 
to assess the extent to which cable-affiliated programming remains 
popular and without substitutes? We note that, in the Comcast-NBCU 
Order, the Commission

[[Page 24311]]

found that the ``the loss of Comcast-NBCU programming * * * would harm 
rival video distributors, reducing their ability or incentive to 
compete with Comcast for subscribers'' and that ``[t]his is 
particularly true for marquee programming, which includes a broad 
portfolio of national cable programming in addition to RSN and local 
broadcast programming; such programming is important to Comcast's 
competitors and without good substitutes from other sources.'' Is there 
any basis to reach a different conclusion with respect to satellite-
delivered programming affiliated with other cable operators?
    36. We ask commenters contending that access to certain satellite-
delivered, cable-affiliated programming remains necessary to preserve 
and protect competition in the video distribution market to present 
reliable, empirical data supporting their positions, rather than merely 
labeling such programming as ``must have.'' While the Commission has 
recognized that some satellite-delivered, cable-affiliated programming 
has substitutes and that exclusive contracts involving such programming 
are unlikely to impact competition, are there certain categories of 
programming, such as RSNs, that we can presume have no close 
substitutes and that are necessary for competition? Does the wide 
variation in the importance and substitutability of satellite-
delivered, cable-affiliated programming call for a case-by-case or 
categorical assessment of programming, rather than a broad rule that 
applies to all programming equally?
    37. We also seek comment on whether a sunset of the exclusive 
contract prohibition would result in increased vertical integration in 
the video marketplace. If cable operators are permitted to enter into 
exclusive contracts with satellite-delivered, cable-affiliated 
programmers, will this result in the acquisition of existing 
programming networks by cable operators, thereby increasing vertical 
integration? How can we accurately predict any such expected increase 
as we assess whether to retain, sunset, or relax the exclusive contract 
prohibition? Are cable operators more likely to acquire established 
networks that provide popular and non-substitutable programming, rather 
than creating new networks or investing in fledgling networks? Are 
there certain categories of programming networks that are more likely 
to be acquired or launched by cable operators? For example, we note 
that TWC recently announced that it will launch two RSNs in 2012 
featuring the games of the Los Angeles Lakers, including the first 
Spanish-language RSN. Are cable operators expected to make further 
investments in RSNs in the future, especially if the exclusive contract 
prohibition were to sunset?
b. Incentive
    38. In evaluating whether vertically integrated programmers retain 
the incentive to favor their affiliated cable operators over 
competitive MVPDs, the Commission analyzes ``whether there continues to 
be an economic rationale for vertically integrated programmers to 
engage in exclusive agreements with cable operators that will cause [] 
anticompetitive harms.'' The Commission has explained that, if a 
vertically integrated cable operator withholds programming from 
competitors, it can recoup profits lost at the upstream level (i.e., 
lost licensing fees and advertising revenues) by increasing the number 
of subscribers of its downstream MVPD division. The Commission 
explained that, particularly ``where competitive MVPDs are limited in 
their market share, a cable-affiliated programmer will be able to 
recoup a substantial amount, if not all, of the revenues foregone by 
pursuing a withholding strategy.'' Moreover, in the 2007 Extension 
Order, the Commission provided an empirical analysis demonstrating that 
the profitability of withholding increases as the number of television 
households passed by a vertically integrated cable operator increases 
in a given market area, such as through clustering.
    39. The Commission concluded in the 2007 Extension Order that 
market developments since 2002 did not yet support the lifting of the 
exclusive contract prohibition, but ``there nevertheless may come a 
point when these developments will be sufficient to allow the 
prohibition to sunset.'' Similarly, in upholding the 2007 Extension 
Order, the D.C. Circuit stated its expectation that, if the market 
continued evolving rapidly, the Commission could soon allow the 
exclusive contract prohibition to sunset, which Congress intended to 
occur at some point. We seek comment on whether now, almost five years 
since the most recent extension of the exclusive contract prohibition, 
we have reached such a point.
    40. As set forth in Appendix A, the percentage of MVPD subscribers 
nationwide attributable to cable operators has fallen since 2007, from 
an estimated 67 percent to approximately 58.5 percent today. Is there a 
certain market share threshold that, if reached, will render it 
unlikely for satellite-delivered, cable-affiliated programmers to 
withhold national networks from competitive MVPDs? We ask commenters to 
provide empirical analyses to support their positions. Has the decline 
in cable market share benefited consumers, such as through lower 
prices, or in some other way? If not, does that suggest that the level 
of competition in the video distribution market has not reached a point 
where the exclusive contract prohibition should sunset, or is the price 
of cable offerings determined by other factors?
    41. We also seek comment on how the current state of cable system 
clusters and cable market share in regional markets should affect our 
decision on whether to retain, sunset, or relax the exclusive contract 
prohibition. On a regional basis, the market share held by cable 
operators in DMAs varies considerably, from a high in the 80 percent 
range to a low in the 20 percent range. In some major markets, such as 
New York, Philadelphia, and Boston, the share of MVPD subscribers 
attributable to cable operators far exceeds the national cable market 
share of 67 percent deemed significant in the 2007 Extension Order. In 
other DMAs, such as Dallas, Denver, and Phoenix, data indicate that the 
share of MVPD subscribers attributable to cable operators is below 50 
percent. How should this variation in regional market shares impact our 
analysis? Does this wide variation in cable market share on a regional 
and local basis call for a more granular assessment of the continued 
need for an exclusive contract prohibition in individual markets, 
rather than a broad rule that applies to all markets equally?
    42. The Commission stated in the 2002 Extension Order that 
``clustering, accompanied by an increase in vertically integrated 
regional programming networks affiliated with cable MSOs that control 
system clusters, will increase the incentive of cable operators to 
practice anticompetitive foreclosure of access to vertically integrated 
programming.'' We seek comment on whether this conclusion remains valid 
today. In the 2007 Extension Order, the Commission found that the cable 
industry had continued to form regional clusters since the 2002 
Extension Order. We note that a decrease in the amount of regional 
clustering could decrease the market share of individual cable 
operators within the footprints of regional programming, which would 
create fewer opportunities to implement exclusive arrangements. Has the 
amount of regional clustering increased or decreased since the 2007 
Extension Order? We seek comment on whether events since the 2007 
Extension Order mitigate or exacerbate the impact of

[[Page 24312]]

clustering. In the 2007 Extension Order, the Commission provided an 
empirical analysis demonstrating that the profitability of withholding 
increases as the number of television households passed by a vertically 
integrated cable operator increases in a given market area, such as 
through clustering. The analysis examined two vertically integrated 
cable operators on a DMA-by-DMA basis. Taking account of various 
factors, including the characteristics of the affiliated RSN and the 
profitability figures of the vertically integrated cable operator 
examined, the analysis identified multiple DMAs in which withholding 
would be profitable. In those DMAs, the homes passed by the vertically 
integrated cable operator as a percentage of television households 
ranged from 60-80 percent. We seek comment on this analysis and 
whether, based on current data, it continues to support retaining an 
exclusive contract prohibition, particularly in those markets where a 
vertically integrated cable operator passes a significant number of 
television households. We also note that the Commission in the 2007 
Extension Order performed an analysis that concluded that withholding 
of some nationally distributed programming networks could be profitable 
if as little as 1.9 percent of non-cable subscribers were to switch to 
cable as a result of the withholding. We seek comment on this analysis 
and whether, based on current data, it continues to support retaining 
an exclusive contract prohibition for national programming networks.
    43. Has the current state of horizontal consolidation in the cable 
industry increased or decreased incentives for anticompetitive 
foreclosure of access to vertically integrated programming? We note 
that the data in Appendix A indicate that the percentage of MVPD 
subscribers receiving their video programming from one of the four 
largest vertically integrated cable MSOs has decreased from between 54 
and 56.75 percent as stated in the 2007 Extension Order to 
approximately 42.8 percent today. What impact, if any, does this have 
on our review of the exclusive contract prohibition?
3. Impact on the Video Programming Market
    44. We seek comment on how retaining, sunsetting, or relaxing the 
exclusive contract prohibition would impact the creation of new 
national, regional, and local programming and which of these options is 
most likely to increase programming diversity. What effect has the 
exclusive contract prohibition had on the incentives of incumbent cable 
operators to develop and produce video programming? Are incumbent cable 
operators less willing to invest in programming because they cannot 
enter into exclusive contracts and therefore must share their 
programming investment with their competitors? In the 2007 Extension 
Order, the Commission concluded that the extension of the exclusive 
contract prohibition would not create a disincentive for the creation 
of new programming. In support of this finding, the Commission noted 
that, despite the exclusive contract prohibition, the number of 
programming networks, including cable-affiliated networks, had 
increased since 1994. Is there any basis to conclude that the number of 
video programming networks, including cable-affiliated networks, would 
be even greater today if the exclusive contract prohibition had sunset 
earlier? Since the 2007 extension of the exclusive contract 
prohibition, has there been an increase or decrease in the development, 
promotion, and launch of new video programming services by incumbent 
cable operators? Would a sunset of the exclusive contract prohibition 
entice incumbent cable operators to invest in and launch new 
programming networks to compete with established networks, leading to 
greater diversity in the video programming market, or are incumbent 
cable operators more likely to acquire these established networks?
    45. What effect has the exclusive contract prohibition had on the 
incentives of competitive MVPDs and non-MVPD-affiliated programmers to 
develop and produce video programming? In the 2007 Extension Order, the 
Commission noted evidence that some competitive MVPDs had begun to 
invest in their own video programming, despite their ability to access 
satellite-delivered, cable-affiliated programming as a result of the 
exclusive contract prohibition. To what extent have competitive MVPDs 
invested in their own video programming? In the 2007 Extension Order, 
the Commission ``caution[ed] competitive MVPDs to take any steps they 
deem appropriate to prepare for the eventual sunset of the prohibition, 
including further investments in their own programming.'' Have 
competitive MVPDs made further investments in their own programming 
since that time? If the exclusive contract prohibition were to sunset 
(wholly or partially), would competitive MVPDs be likely to increase 
their investment in video programming in order to ensure that they have 
a robust offering of programming to counteract any exclusive deals that 
incumbent cable operators might enter into with their affiliated 
programmers? We note that certain competitive MVPDs are currently 
subject to the exclusive contract prohibition, such as those that are 
cable operators or common carriers that provide video programming 
directly to subscribers. Has the exclusive contract prohibition caused 
these competitive MVPDs to be less willing to invest in programming 
because they must share their programming investment with their 
competitors? Would a sunset of the exclusive contract prohibition 
entice these competitive MVPDs to invest in and launch new programming 
networks? Do competitive MVPDs have the resources to invest in creating 
their own video programming? If not, to the extent that certain 
satellite-delivered, cable-affiliated programming is withheld from 
competitive MVPDs, is it likely that non-MVPD-affiliated programming 
vendors will fill the void by creating competing programming to license 
to competitive MVPDs, thereby leading to even greater diversity in the 
video programming market? Are there certain categories of programming 
that cannot be replicated by either competitive MVPDs or non-MVPD-
affiliated programming vendors? In the 2010 Program Access Order, the 
Commission stated:

    If particular programming is replicable, our policies should 
encourage MVPDs or others to create competing programming, rather 
than relying on the efforts of others, thereby encouraging 
investment and innovation in programming and adding to the diversity 
of programming in the marketplace. Conversely, when programming is 
non-replicable and valuable to consumers, such as regional sports 
programming, no amount of investment can duplicate the unique 
attributes of such programming, and denial of access to such 
programming can significantly hinder an MVPD from competing in the 
marketplace.\17\

    \17\ See Review of the Commission's Program Access Rules and 
Examination of Programming Tying Arrangements, First Report and 
Order, 25 FCC Rcd 746, 750-51, para. 9 (2010) (``2010 Program Access 
Order''), affirmed in part and vacated in part sub nom. Cablevision 
Sys. Corp. et al. v. FCC, 649 F.3d 695 (D.C. Cir. 2011) 
(``Cablevision II'').

While the Commission found that RSNs are non-replicable, it concluded 
that local news and local community or educational programming is 
``readily replicable programming.'' We seek comment on how the 
distinction between replicable and non-replicable content should impact 
our review of the exclusive contract prohibition.

[[Page 24313]]

4. Alternatives to Retaining the Exclusive Contract Prohibition as It 
Exists Today
    46. As discussed in further detail below, to the extent the data do 
not support retaining the exclusive contract prohibition as it exists 
today, we seek comment on whether we can nonetheless preserve and 
protect competition in the video distribution market either by (i) 
sunsetting the prohibition in its entirety and relying solely on 
existing protections provided by the program access rules that will not 
sunset; or (ii) relaxing the exclusive contract prohibition, such as 
through removal of the prohibition on a market-by-market basis based on 
the extent of competition in the market or by retaining the prohibition 
only for satellite-delivered, cable-affiliated RSNs and other 
satellite-delivered, cable-affiliated ``must have'' programming.
a. Sunsetting the Exclusive Contract Prohibition in Its Entirety and 
Relying Solely on Existing Protections
    47. As discussed above, the exclusive contract prohibition is just 
one of several protections that the program access rules afford to 
competitive MVPDs in their efforts to compete in the video distribution 
market. Even if the exclusive contract prohibition were to sunset 
(wholly or partially), these other existing protections will remain in 
effect. We seek comment on whether these existing protections are 
sufficient to preserve and protect competition in the video 
distribution market if the exclusive contract prohibition were to 
sunset and whether any additional safeguards should be adopted.
(i) Section 628(b) Complaints
    48. The Act and the Commission's existing rules allow for the 
filing of complaints alleging a violation of Section 628(b) of the Act 
and Section 76.1001(a) of the Commission's rules. These provisions 
require a complainant to establish three elements in order to 
demonstrate a violation: (i) The defendant is one of the three entities 
covered by these provisions (i.e., a cable operator, a satellite cable 
programming vendor in which a cable operator has an attributable 
interest, or a satellite broadcast programming vendor); (ii) the 
defendant has engaged in an ``unfair act''; and (iii) the ``purpose or 
effect'' of the unfair act is to ``significantly hinder or prevent'' an 
MVPD from providing satellite cable programming or satellite broadcast 
programming to subscribers or consumers. Even if the exclusive contract 
prohibition were to sunset (wholly or partially), an MVPD would still 
have the option to file a complaint with the Commission alleging that 
an exclusive contract between a cable operator and a satellite-
delivered, cable-affiliated programmer involving satellite-delivered, 
cable-affiliated programming violates these provisions. We note that 
the Commission currently considers allegedly ``unfair acts'' involving 
terrestrially delivered, cable-affiliated programming on a case-by-case 
basis pursuant to Section 628(b) of the Act and Section 76.1001(a) of 
the Commission's rules. Applying these provisions, the Commission 
recently found that the withholding of terrestrially delivered, cable-
affiliated RSNs from certain MVPDs in the New York, Buffalo, and 
Hartford/New Haven DMAs violated these provisions. We seek comment 
regarding whether there are any justifications for applying different 
rules and procedures to satellite-delivered, cable-affiliated 
programming than those that apply to terrestrially delivered, cable-
affiliated programming.
    49. The Commission previously concluded that Section 628(b) was not 
an adequate substitute for the prohibition on exclusive contracts under 
Section 628(c)(2)(D). Among other things, the Commission noted that 
Section 628(b) ``carries with it an added burden'' to demonstrate that 
the ``purpose or effect'' of the ``unfair act'' is to ``significantly 
hinder or prevent'' an MVPD from providing programming. We seek comment 
on the costs and benefits of moving from a broad, prophylactic 
prohibition on exclusive contracts involving satellite-delivered, 
cable-affiliated programming to reliance instead on a case-by-case 
process, including Section 628(b) complaints. To what extent would a 
case-by-case process be more costly for competitive MVPDs than the 
current prohibition on exclusive contracts? What would be the benefits 
of eliminating the prohibition on exclusive contracts involving 
satellite-delivered, cable-affiliated programming? Would these benefits 
outweigh the costs of a case-by-case process?
(a) Case-by-Case Complaint Process
    50. We note that a case-by-case complaint process alleging a 
violation of Section 628(b) would differ from the current prohibition 
on exclusive contracts in Section 628(c)(2)(D) in several important 
respects. First, under the current exclusive contract prohibition, all 
exclusive contracts between a cable operator and a satellite-delivered, 
cable-affiliated programmer pertaining to satellite-delivered, cable-
affiliated programming are considered categorically ``unfair.'' If the 
exclusive contract prohibition were to sunset (wholly or partially), 
however, exclusive contracts would no longer always be presumed 
``unfair.'' Rather, a complainant would have the burden to establish 
that the exclusive contract at issue is ``unfair'' based on the facts 
and circumstances presented. Second, under the current exclusive 
contract prohibition, all exclusive contracts between a cable operator 
and a satellite-delivered, cable-affiliated programmer pertaining to 
satellite-delivered, cable-affiliated programming are presumed to harm 
competition, and competitive MVPDs alleging a prohibited exclusive 
contract are not required to demonstrate harm. In alleging that an 
exclusive contract violates Section 628(b), however, a complainant 
would have the burden of proving that the exclusive contract has the 
``purpose or effect'' of ``significantly hindering or preventing'' the 
MVPD from providing satellite cable programming or satellite broadcast 
programming. Third, the current exclusive contract prohibition forbids 
all exclusive contracts between a cable operator and a satellite-
delivered, cable-affiliated programmer pertaining to satellite-
delivered, cable-affiliated programming, unless a cable operator or 
programmer can satisfy its burden of demonstrating that an exclusive 
contract serves the public interest based on the factors set forth in 
Section 628(c)(4) of the Act and Section 76.1002(c)(4) of the 
Commission's rules. If the exclusive contract prohibition were to 
sunset (wholly or partially), however, the situation would be reversed. 
That is, such exclusive contracts would be permitted, unless an MVPD 
could carry its burden of demonstrating that the exclusive contract 
violates Section 628(b) (or, potentially, Section 628(c)(2)(B)). We 
seek comment on the above interpretations of Section 628(b) as it 
pertains to exclusive contracts involving satellite-delivered, cable-
affiliated programming, particularly the practical implications for 
competitive MVPDs, cable operators, and satellite-delivered, cable-
affiliated programmers.
(b) Extending Rules and Policies Adopted for Section 628(b) Complaints 
Involving Terrestrially Delivered, Cable-Affiliated Programming to 
Section 628(b) Complaints Challenging Exclusive Contracts Involving 
Satellite-Delivered, Cable-Affiliated Programming
    51. The Commission in the 2010 Program Access Order adopted a case-
by-case complaint process to address unfair acts involving 
terrestrially delivered, cable-affiliated programming

[[Page 24314]]

that allegedly violate Section 628(b). In doing so, the Commission 
adopted rules and policies that would appear to be equally appropriate 
for complaints alleging that an exclusive contract involving satellite-
delivered, cable-affiliated programming violates Section 628(b). 
Accordingly, if the exclusive contract prohibition were to sunset 
(wholly or partially), we propose to apply these same rules and 
policies to such complaints.
    52. First, the Commission declined to adopt specific evidentiary 
requirements with respect to proof that the defendant's alleged 
activities violated Section 628(b). Among other things, the Commission 
explained that the evidence required to satisfy this burden will vary 
based on the facts and circumstances of each case and may depend on, 
among other things, whether the complainant is a new entrant or an 
established competitor and whether the programming the complainant 
seeks to access is new or existing programming. In addition, the 
Commission provided the following illustrative examples of evidence 
that litigants might consider providing: (i) An appropriately crafted 
regression analysis that estimates what the complainant's market share 
in the MVPD market would be if it had access to the programming and how 
that compares to its actual market share; or (ii) statistically 
reliable survey data indicating the likelihood that customers would 
choose not to subscribe to or not to switch to an MVPD that did not 
carry the withheld programming. The Commission also explained that the 
discovery process will enable parties to obtain additional evidence. If 
the exclusive contract prohibition were to sunset (wholly or 
partially), we propose to apply the same requirements to complaints 
alleging that an exclusive contract involving satellite-delivered, 
cable-affiliated programming violates Section 628(b).
    53. Second, the Commission found that one category of programming, 
RSNs, was shown by both Commission precedent and record evidence to be 
very likely to be both non-replicable and highly valued by consumers. 
Rather than requiring litigants and the Commission staff to undertake 
repetitive examinations of this RSN precedent and the relevant 
historical evidence, the Commission instead allowed complainants to 
invoke a rebuttable presumption that an ``unfair act'' involving a 
terrestrially delivered, cable-affiliated RSN has the purpose or effect 
set forth in Section 628(b). The D.C. Circuit upheld the Commission's 
decision to establish a rebuttable presumption of ``significant 
hindrance'' for ``unfair acts'' involving terrestrially delivered, 
cable-affiliated RSNs under both First Amendment and Administrative 
Procedure Act (``APA'') review. Accordingly, to the extent the 
exclusive contract prohibition were to sunset (wholly or partially) and 
we do not retain an exclusive contract prohibition for satellite-
delivered, cable-affiliated RSNs, should we similarly adopt a 
rebuttable presumption of ``significant hindrance'' under Section 
628(b) for exclusive contracts involving satellite-delivered, cable-
affiliated RSNs? If so, we propose to define the term ``RSN'' in the 
same way the Commission defined that term in the 2010 Program Access 
Order. Is there any basis to have a rebuttable presumption of 
``significant hindrance'' for terrestrially delivered, cable-affiliated 
RSNs, but not when these networks are satellite-delivered? Are there 
any other categories of satellite-delivered, cable-affiliated 
programming that can be deemed ``must have'' and for which we should 
establish a rebuttable presumption of ``significant hindrance''? We 
note that the Commission in the Comcast-NBCU Order concluded that 
``certain national cable programming networks produce programming that 
is more widely viewed and commands higher advertising revenue than 
certain broadcast or RSN programming.'' Are there other types of 
satellite-delivered, cable-affiliated programming besides RSNs that 
have no good substitutes, are important for competition, and are non-
replicable, as the Commission has found with respect to RSNs? To the 
extent that commenters contend that there are, we ask that they provide 
reliable, empirical data supporting their positions, rather than merely 
labeling such programming as ``must have.'' In addition, we request 
commenters to provide a rational and workable definition of such 
programming that can be applied objectively.
    54. Third, the Commission concluded that HD programming is growing 
in significance to consumers and that consumers do not consider the SD 
version of a particular channel to be an adequate substitute for the HD 
version due to the different technical characteristics and sometimes 
different content. Accordingly, the Commission determined that it would 
analyze the HD version of a network separately from the SD version of 
similar content for purposes of determining whether an ``unfair act'' 
has the purpose or effect set forth in Section 628(b). Thus, the fact 
that a respondent provides the SD version of a network to the 
complainant will not alone be sufficient to refute the complainant's 
showing that lack of access to the HD version has the purpose or effect 
set forth in Section 628(b). Similarly, in cases involving an RSN, 
withholding the HD feed is rebuttably presumed to cause ``significant 
hindrance'' even if an SD version of the network is made available to 
competitors. The D.C. Circuit upheld the Commission's decision on this 
issue under both First Amendment and APA review. To the extent the 
exclusive contract prohibition were to sunset (wholly or partially), we 
believe the same requirements should apply to complaints alleging that 
an exclusive contract involving satellite-delivered, cable-affiliated 
programming violates Section 628(b). We seek comment on this proposal.
(c) Additional Rules for Complaints Challenging Exclusive Contracts 
Involving Satellite-Delivered, Cable-Affiliated Programming
    55. To the extent the exclusive contract prohibition were to sunset 
(wholly or partially), we seek comment on ways to reduce burdens on 
both complainants and defendants in connection with complaints alleging 
that an exclusive contract involving satellite-delivered, cable-
affiliated programming violates Section 628(b) (or, potentially, 
Section 628(c)(2)(B)). We acknowledge that a case-by-case complaint 
process for addressing exclusive contracts involving satellite-
delivered, cable-affiliated, national programming networks may impose 
some burdens for litigants and the Commission, especially in comparison 
to the current broad, prophylactic prohibition. For example, although 
several MVPDs could join as complainants, the showing in the complaint 
and any subsequent ruling on the complaint (either grant or denial) 
will be limited to the complainants. Other competitive MVPDs that are 
not parties to the complaint would have to file their own complaint and 
demonstrate how the exclusive contract at issue is ``unfair'' and has 
``significantly hindered'' them from providing programming. Given the 
number of competitive MVPDs nationwide that might seek access to a 
satellite-delivered, cable-affiliated, national programming network 
that is subject to an exclusive contract with cable operators, the 
number of such complaints involving just one national network could be 
significant.
    56. We seek comment on how to reduce these potential burdens for 
both complainants and defendants. For example, rather than requiring 
litigants and the Commission staff to undertake

[[Page 24315]]

repetitive examinations of the same network, we seek comment on whether 
the Commission could establish a rebuttable presumption that, once a 
complainant succeeds in demonstrating that an exclusive contract 
involving a satellite-delivered, cable-affiliated programming network 
violates Section 628(b) (or, potentially, Section 628(c)(2)(B)), any 
other exclusive contract involving the same network violates Section 
628(b) (or Section 628(c)(2)(B)). We seek comment on whether adoption 
of such a rebuttable presumption is rational. For example, in the event 
the Commission finds that an exclusive contract violates Section 628(b) 
(or Section 628(c)(2)(B)) in response to a complaint brought by a 
small, fledgling MVPD, is it rational to assume that the Commission is 
likely to reach the same conclusion when the complaint is brought by a 
large, established MVPD?
    57. We also seek comment on whether there would be any benefit to 
retaining post-sunset our existing process whereby a cable operator or 
a satellite-delivered, cable-affiliated programmer may file a Petition 
for Exclusivity seeking Commission approval for an exclusive contract 
involving satellite-delivered, cable-affiliated programming by 
demonstrating that the arrangement serves the public interest based on 
the factors set forth in Section 628(c)(4) of the Act and Section 
76.1002(c)(4) of the Commission's rules. While a cable operator post-
sunset would be permitted generally to enter into an exclusive contract 
with a satellite-delivered, cable-affiliated programming network 
without receiving prior Commission approval, we propose that the grant 
of a Petition for Exclusivity would immunize such an exclusive contract 
from potential complaints alleging a violation of Section 628(b), as 
well as Section 628(c)(2)(B). We further propose that, to the extent we 
were to deny a Petition for Exclusivity post-sunset, the petitioner 
would not be precluded from entering into or enforcing the exclusive 
contract subject to the petition. Rather, denial of a Petition for 
Exclusivity post-sunset would mean that the exclusive contract at issue 
may not be permissible in all cases if challenged pursuant to Section 
628(b) or, potentially, Section 628(c)(2)(B). We seek comment on the 
costs and benefits of retaining this petition process after a sunset, 
especially whether the burdens for the Commission staff and impacted 
parties would outweigh any benefits. We also seek comment on any other 
ways to reduce the potential burdens for both complainants and 
defendants resulting from a case-by-case complaint process.
(ii) Section 628(c)(2)(B) Discrimination Complaints
    58. We believe that discrimination complaints under Section 
628(c)(2)(B) also will provide some protection for competitive MVPDs 
should the exclusive contract prohibition sunset (wholly or partially). 
Discrimination can take two forms: price discrimination and non-price 
discrimination. Non-price discrimination includes an unreasonable 
refusal to license programming to an MVPD. A refusal to license is 
permissible only if there is a ``legitimate business justification'' 
for the conduct. As discussed below, a refusal to license can take two 
forms. First, a satellite-delivered, cable-affiliated programmer may 
refuse to license its programming to all MVPDs in a market except for 
one (such as its affiliated cable operator), thereby providing the 
affiliated cable operator with exclusive access to the programming. 
Second, a satellite-delivered, cable-affiliated programmer may 
selectively refuse to license its programming to certain MVPDs in a 
market (such as a recent entrant) while licensing the programming to 
other MVPDs (such as its affiliated cable operator and DBS operators). 
We seek comment on each of these scenarios below.
(a) Challenging an Exclusive Arrangement as an Unreasonable Refusal to 
License
    59. We seek comment on the interplay between the potential sunset 
of the exclusive contact prohibition in Section 628(c)(2)(D) and the 
continued prohibition on unreasonable refusals to license pursuant to 
Section 628(c)(2)(B). As an initial matter, we note that Section 
628(c)(2)(D) prohibits ``exclusive contracts * * * between a cable 
operator and a satellite cable programming vendor in which a cable 
operator has an attributable interest.'' This language presumes that an 
agreement will exist between the cable operator and the satellite-
delivered, cable-affiliated programmer that would provide the cable 
operator with exclusivity. In the event that a satellite-delivered, 
cable-affiliated programmer unilaterally refuses to license its 
programming to all MVPDs in a market except for one cable operator and 
without any exclusive contract with the cable operator, we believe an 
MVPD can challenge this conduct as an unreasonable refusal to license 
in violation of Section 628(c)(2)(B). While a cable operator would be 
permitted generally to enter into an exclusive contract with the 
satellite-delivered, cable-affiliated programmer in the event of a 
sunset, the scenario presented here does not involve an exclusive 
contract; rather, it involves unilateral action by the satellite-
delivered, cable-affiliated programmer. We seek comment on this 
interpretation. In defending against a complaint, the satellite-
delivered, cable-affiliated programmer would be required to provide a 
``legitimate business justification'' for its conduct.
    60. In the event that a satellite-delivered, cable-affiliated 
programmer and a cable operator enter into an exclusive contract post-
sunset (complete or partial), we seek comment on whether an MVPD can 
challenge this exclusive contract as an unreasonable refusal to license 
in violation of Section 628(c)(2)(B).\18\ We believe that there are 
legitimate arguments for and against this interpretation. We seek 
comment on which of the interpretations set forth below is more 
reasonable and consistent with the goals of Section 628.
---------------------------------------------------------------------------

    \18\ To the extent that we determine that an MVPD can challenge 
an exclusive contract as an unreasonable refusal to license in 
violation of Section 628(c)(2)(B) post-sunset, we seek comment above 
on ways to reduce the potential burdens for both complainants and 
defendants resulting from a case-by-case complaint process. See 
supra paras. 56-57.
---------------------------------------------------------------------------

    61. In favor of interpreting Section 628(c)(2)(B) to allow a 
challenge post-sunset to an exclusive contract as an unreasonable 
refusal to license, we note that Section 628(c)(2)(B)(iv) provides that 
it is not a violation of Section 628(c)(2)(B) for a satellite-
delivered, cable-affiliated programmer to ``enter[] into an exclusive 
contract that is permitted under [Section 628(c)(2)(D)].'' The 
Commission has previously interpreted this language to pertain to only 
those exclusive contracts that have been deemed by the Commission to be 
in the public interest pursuant to the factors set forth in Section 
628(c)(4). This provision is silent regarding exclusive contracts that 
are generally permissible after a sunset pursuant to Section 628(c)(5). 
Does the omission of post-sunset exclusive contracts from both Section 
628(c)(2)(D) and Section 628(c)(2)(B)(iv) mean that Congress intended 
that such contracts might still be challenged as impermissibly 
discriminatory in violation of Section 628(c)(2)(B)? In addition, we 
note that the exclusive contract prohibition in Section 628(c)(2)(D) 
applies to exclusive contracts between a satellite-delivered, cable-
affiliated programmer and a cable operator; it does not apply to 
exclusive contracts between a satellite-delivered, cable-affiliated 
programmer and a DBS

[[Page 24316]]

operator. Both before and after a sunset, however, the decision of a 
satellite-delivered, cable-affiliated programmer to license its 
programming to a DBS operator but not to other MVPDs might be 
challenged as an unreasonable refusal to license pursuant to Section 
628(c)(2)(B). If, post-sunset, an MVPD cannot challenge an exclusive 
arrangement between a satellite-delivered, cable-affiliated programmer 
and a cable operator as an unreasonable refusal to license in violation 
of Section 628(c)(2)(B), would this produce an anomalous result? 
Specifically, in challenging an exclusive contract between a satellite-
delivered, cable-affiliated programmer and a cable operator, an MVPD 
would have to rely on Section 628(b), which places the burden on the 
MVPD to demonstrate that the defendant has engaged in an ``unfair act'' 
that has the ``purpose or effect'' of ``significantly hindering or 
preventing'' the MVPD from providing satellite cable programming or 
satellite broadcast programming to subscribers or consumers. By 
contrast, in challenging an exclusive contract between a satellite-
delivered, cable-affiliated programmer and a DBS operator, an MVPD 
could rely on Section 628(c)(2)(B), which presumes harm in every case 
and places the burden on the satellite-delivered, cable-affiliated 
programmer to provide a ``legitimate business justification'' for its 
conduct. Is there any basis for placing a greater burden on an MVPD in 
challenging an exclusive contract between a satellite-delivered, cable-
affiliated programmer and a cable operator than between a satellite-
delivered, cable-affiliated programmer and a DBS operator?
    62. On the other hand, we note that there are legitimate arguments 
against interpreting Section 628(c)(2)(B) to allow an MVPD to challenge 
an exclusive contract between a satellite-delivered, cable-affiliated 
programmer and a cable operator post-sunset as an unreasonable refusal 
to license. Currently, with the exclusive contract prohibition in 
effect, an exclusive contract between a satellite-delivered, cable-
affiliated programmer and a cable operator is prohibited, unless the 
programmer or cable operator can demonstrate that the exclusive 
contract serves the public interest based on the factors set forth in 
Section 628(c)(4). If, post-sunset, an MVPD can challenge an exclusive 
contract between a satellite-delivered, cable-affiliated programmer and 
a cable operator as an unreasonable refusal to license in violation of 
Section 628(c)(2)(B), the satellite-delivered, cable-affiliated 
programmer would be required to demonstrate a ``legitimate business 
reason'' for its conduct. Is it reasonable to interpret Section 628 to 
provide that, post-sunset, the public interest factors in Section 
628(c)(4) would be replaced with a showing of a ``legitimate business 
reason'' in response to a complaint alleging a violation of Section 
628(c)(2)(B)? We note that two of the public interest factors in 
Section 628(c)(4) focus on competition in the video distribution 
market, allowing a proponent of exclusivity to demonstrate how the 
exclusive contract will not adversely impact competition. In a 
complaint alleging discrimination under Section 628(c)(2)(B), however, 
the alleged discriminatory act is presumed to harm competition in every 
case. Is it reasonable to interpret Section 628 to provide that, pre-
sunset, a satellite-delivered, cable-affiliated programmer or a cable 
operator could make a showing that an exclusive contract would not 
adversely impact competition pursuant to the public interest factors in 
Section 628(c)(4), but, post-sunset, exclusivity is presumed to harm 
competition in every case when challenged pursuant to Section 
628(c)(2)(B)?
    63. In addition to the foregoing, we seek comment on whether the 
legislative history of the 1992 Cable Act supports either of the above 
interpretations. The Senate Report accompanying the 1992 Cable Act 
states that the ``bill does not equate exclusivity with an unreasonable 
refusal to deal.'' This statement might be read to imply that Congress 
considered exclusive contracts and unreasonable refusals to deal to be 
mutually exclusive, with the effect that once a satellite-delivered, 
cable-affiliated programmer enters into an exclusive contract with a 
cable operator post-sunset, the contract cannot be challenged as an 
unreasonable refusal to license pursuant to Section 628(c)(2)(B). 
Another part of the Senate Report, however, states that ``the dominance 
in the market of the distributor obtaining exclusivity should be 
considered in determining whether an exclusive arrangement amounts to 
an unreasonable refusal to deal.'' This statement might be read to 
imply that Congress did not consider exclusive contracts and 
unreasonable refusals to license to be mutually exclusive, with the 
effect that an exclusive contract could be challenged as an 
unreasonable refusal to license pursuant to Section 628(c)(2)(B).
(b) Selective Refusals To License Programming
    64. Notwithstanding the question raised in the previous section of 
whether an MVPD can challenge post-sunset an exclusive arrangement 
between a satellite-delivered, cable-affiliated programmer and a cable 
operator as an unreasonable refusal to license in violation of Section 
628(c)(2)(B), our rules and precedent establish that the discrimination 
provision in Section 628(c)(2)(B) would prevent a satellite-delivered, 
cable-affiliated programmer from licensing its content to MVPD A (such 
as a DBS operator) in a given market area, but to selectively refuse to 
license the content to MVPD B (such as a telco video provider) in the 
same area, absent a legitimate business reason. When a satellite-
delivered, cable-affiliated programmer discriminates among MVPDs in 
this manner, it faces the prospect of a complaint alleging non-price 
discrimination in violation of Section 628(c)(2)(B). As noted above, 
complaints alleging a violation of Section 628(c)(2)(B) do not require 
a showing of harm to the complainant.
    65. We seek comment on whether the right of an MVPD to challenge a 
selective refusal to license as a form of prohibited non-price 
discrimination under Section 628(c)(2)(B) will help to preserve and 
protect competition in the video distribution market if the exclusive 
contract prohibition were to sunset (wholly or partially). As reflected 
in Appendix A, the two DBS operators together have approximately 34 
percent of MVPD subscribers nationwide today. Because a national 
programming network that refuses to license its content to these MVPDs 
will forgo significant licensing fees and advertising revenues, is it 
reasonable to assume that most satellite-delivered, cable-affiliated, 
national programming networks will license their content to DBS 
operators? If they do, we interpret Section 628(c)(2)(B) as permitting 
other competitive MVPDs, such as a telco video provider, to bring non-
price discrimination complaints should these programmers refuse to deal 
with them. How does this analysis change with respect to local and 
regional markets, where cable operators may have an overwhelming share 
of the market or a vertically integrated cable operator may pass a 
large percentage of television households?
    66. The Commission previously concluded that the discrimination 
provision in Section 628(c)(2)(B) is not an adequate substitute for the 
prohibition on exclusive contracts

[[Page 24317]]

under Section 628(c)(2)(D). Among other things, the Commission noted 
that a non-price discrimination complaint requires an MVPD to 
demonstrate that the conduct was ``unreasonable,'' which the Commission 
noted may be difficult to establish. We seek comment on the costs and 
benefits of moving from a broad, prophylactic prohibition on exclusive 
contracts involving satellite-delivered, cable-affiliated programming 
to reliance instead on a case-by-case process, including non-price 
discrimination complaints.
(iii) Section 628(c)(2)(A) Undue Influence Complaints
    67. We seek comment on the extent to which undue influence 
complaints under Section 628(c)(2)(A) may also provide some protection 
for competitive MVPDs should the exclusive contract prohibition sunset 
(wholly or partially). Section 628(c)(2)(A) precludes a cable operator 
that 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 [MVPD].'' The 
Commission has explained that the ``concept of undue influence between 
affiliated firms is closely linked with discriminatory practices and 
exclusive contracting'' and that the prohibition on undue influence 
``can play a supporting role where information is available (such as 
might come from an internal `whistleblower') that evidences `undue 
influence' between affiliated firms to initiate or maintain 
anticompetitive discriminatory pricing, contracting, or product 
withholding.'' The Commission acknowledged that ``such conduct may be 
difficult for the Commission or complainants to establish'' but ``its 
regulation provides a useful support for direct discrimination and 
contracting regulation.'' To what extent, if any, will the prohibition 
on undue influence provide some protection for competitive MVPDs should 
the exclusive contract prohibition sunset? If the exclusive contract 
prohibition were to sunset, then a cable operator would be permitted 
generally to enter into an exclusive contract with a satellite-
delivered, cable-affiliated programming network, although the contract 
may be deemed to violate Section 628(b) (or, potentially, Section 
628(c)(2)(B)) after the conclusion of a complaint proceeding. In the 
event the exclusive contract prohibition sunsets, if a cable operator 
``unduly influences'' a satellite-delivered, cable-affiliated 
programmer to enter into an exclusive contract, would that conduct 
violate Section 628(c)(2)(A) even though the underlying contract would 
be permissible (absent a finding of a violation of Section 628(b) (or, 
potentially, Section 628(c)(2)(B)))? Stated differently, in the event 
of a sunset, can a cable operator ``unduly influence'' a satellite-
delivered, cable-affiliated programmer to enter into an exclusive 
contract only if the underlying contract violates Section 628(b) (or, 
potentially, Section 628(c)(2)(B))?
b. Relaxing the Exclusive Contract Prohibition
    68. Rather than sunsetting the exclusive contract prohibition in 
its entirety and relying solely on existing protections provided by the 
program access rules that will not sunset, we seek comment on whether 
we should instead relax, rather than sunset, the exclusivity 
prohibition in the ways discussed below, or in some other way. We ask 
parties to comment on whether retaining the exclusivity ban in certain 
circumstances would be more effective in preserving and protecting 
competition in the video distribution market than permitting the 
exclusive contract prohibition to sunset entirely. In addition to the 
proposals below, we invite comment on other ways to relax the exclusive 
contract prohibition.
(i) Sunsetting the Exclusive Contract Prohibition on a Market-by-Market 
Basis
    69. We seek comment on whether to establish a process whereby a 
cable operator or satellite-delivered, cable-affiliated programmer can 
file a Petition for Sunset seeking to remove the exclusive contract 
prohibition on a market-by-market basis based on the extent of 
competition in the market.\19\ In the 2002 Extension Order, the 
Commission explained that ``clustering, accompanied by an increase in 
vertically integrated regional programming networks affiliated with 
cable MSOs that control system clusters, will increase the incentive of 
cable operators to practice anticompetitive foreclosure of access to 
vertically integrated programming.'' Moreover, as noted above, the 
market share held by cable operators in DMAs varies considerably, from 
a high in the 80 percent range to a low in the 20 percent range. As the 
Commission has explained previously, particularly ``where competitive 
MVPDs are limited in their market share, a cable-affiliated programmer 
will be able to recoup a substantial amount, if not all, of the 
revenues foregone by pursuing a withholding strategy.'' Moreover, in 
the 2007 Extension Order, the Commission provided an empirical analysis 
demonstrating that the profitability of withholding increases as the 
number of television households passed by a vertically integrated cable 
operator increases in a given market area, such as through clustering. 
Accordingly, a cable-affiliated programmer will have an increased 
incentive to enter into exclusive contracts with cable operators in 
those areas where the market share of competitive MVPDs is 
comparatively low or where its affiliated cable operator passes a large 
percentage of television households or where both circumstances are 
present. If there was not a blanket prohibition on exclusive contracts 
involving satellite-delivered, cable-affiliated programming, would 
incumbent cable operators and cable-affiliated programmers enter into 
exclusive contracts in these markets? If so, does the wide variation in 
cable market share and television households passed by a vertically 
integrated cable operator on a regional and local basis call for a more 
granular assessment of the continued need for an exclusive contract 
prohibition in individual markets, rather than a broad rule that 
applies to all markets equally? Would such a market-by-market 
assessment necessarily be based on a Commission finding that satellite-
delivered, cable-affiliated programming remains necessary for 
competition in the video distribution market? That is, absent such a 
finding, would a market-by-market assessment approach mean that the 
exclusive contract prohibition would sunset only in areas where 
satellite-delivered, cable-affiliated programmers lack an incentive to 
enter into exclusive contracts, regardless of the importance of the 
programming at issue for competition? Is there any basis for 
interpreting the sunset provision in Section 628(c)(5) in this manner, 
which might permit exclusive contracts only when there is little 
possibility such contracts will exist?
---------------------------------------------------------------------------

    \19\ We note that the Commission sought comment on a similar 
proposal in the 2007 Program Access NPRM. See Review of the 
Commission's Program Access Rules and Examination of Programming 
Tying Arrangements, MB Docket No. 07-198, Notice of Proposed 
Rulemaking, 22 FCC Rcd 17791, 17859, para. 114 (2007) (seeking 
comment on whether the Commission can establish a procedure that 
would shorten the term of the exclusive contract prohibition if, 
after two years (i.e., October 5, 2009), a cable operator can show 
competition from new entrant MVPDs has reached a certain penetration 
level in the DMA) (``2007 Program Access NPRM''). We hereby 
incorporate by reference the comments filed in response to this 
proposal.
---------------------------------------------------------------------------

    70. To the extent we establish a process whereby a cable operator 
or

[[Page 24318]]

satellite-delivered, cable-affiliated programmer can petition to remove 
the exclusive contract prohibition on a market-by-market basis, we seek 
comment on the details of this process. First, in assessing whether to 
sunset the exclusive contract prohibition in an individual market, we 
propose to apply the same test set forth in Section 628(c)(5)--i.e., 
whether the prohibition ``continues to be necessary to preserve and 
protect competition and diversity in the distribution of video 
programming.'' Who should bear the burdens of production and persuasion 
in demonstrating that the exclusive contract prohibition either does or 
does not meet this test in an individual market? While a petitioner (in 
this case, the cable operator or satellite-delivered, cable-affiliated 
programmer) might normally bear these burdens, Congress established 
that the exclusive contract prohibition would sunset unless it 
continues to be necessary pursuant to this test. The Commission has 
explained that Section 628(c)(5) thus ``creates a presumption that the 
rule will sunset'' unless it continues to be necessary. Does this call 
for a regime where, in response to a petition seeking to remove the 
prohibition in an individual market, the burden of production shifts to 
competitive MVPDs and other interested parties to put forth evidence 
demonstrating that the prohibition continues to be necessary? To 
provide guidance to impacted parties, should we establish a specific 
benchmark which, if met, would establish a rebuttable presumption that 
the market is not sufficiently competitive to allow the exclusive 
contract prohibition to sunset? For example, should the market be 
rebuttably presumed to not be sufficiently competitive to allow the 
exclusive contract prohibition to sunset if the market share held by 
competitive MVPDs is below a certain threshold or television households 
passed by a vertically integrated cable operator is above a certain 
threshold? We ask commenters to provide support for any proposed 
threshold. Should we instead apply the test set forth in Section 
628(c)(5) on an entirely case-by-case basis, considering all of the 
facts and circumstances presented, without establishing a specific 
benchmark? Second, how should we define the ``market'' for purposes of 
these petitions? Should we establish a specific market size for purpose 
of the petitions (such as DMA, county, or franchise area) or should we 
allow petitioners to seek a sunset of the exclusive contract 
prohibition for any size market they choose? Third, we seek comment on 
procedural deadlines. Given the likely fact-intensive nature of these 
petitions, we propose to establish a pleading cycle that is identical 
to the one established for complaints involving terrestrially 
delivered, cable-affiliated programming. Specifically, we propose to 
establish a 45-day opposition period and a 15-day reply period. Fourth, 
to the extent that the exclusive contract prohibition has not been 
removed in an individual market, we propose to retain our existing 
rules and procedures whereby a cable operator or a satellite-delivered, 
cable-affiliated programmer can seek prior Commission approval to enter 
into an exclusive contract by demonstrating that the arrangement 
satisfies the factors set forth in Section 628(c)(4) of the Act and 
Section 76.1002(c)(4) of the Commission's rules. Fifth, we seek comment 
on whether to adopt a sunset date for the exclusive contract 
prohibition, thereby eliminating the need for further market-based 
petitions, subject to a review by the Commission in the year prior to 
the sunset date. Should the sunset date be five years from the current 
sunset date (i.e., until October 5, 2017), consistent with the two 
prior five-year extensions?
    71. We also seek comment on the practical effect of sunsetting the 
exclusive contract prohibition on a market-by-market basis. For 
example, to the extent that certain competitive MVPDs, such as DBS 
providers, market their service on a nationwide basis, how will the 
sunset of the exclusive contract prohibition in individual markets 
impact their marketing efforts? For example, if a certain satellite-
delivered, cable-affiliated programming network is available to DBS 
customers in some markets, but not in others due to exclusive contracts 
with cable operators, how burdensome will it be for DBS providers to 
inform subscribers and potential customers of the limited availability 
of this programming and to implement the selective availability of the 
programming? In addition to this potential concern, we seek comment on 
the other costs and benefits of moving from a broad, prophylactic 
prohibition on exclusive contracts involving satellite-delivered, 
cable-affiliated programming throughout the nation to reliance instead 
on a market-by-market assessment.
(ii) Retaining an Exclusive Contract Prohibition for Satellite-
Delivered, Cable-Affiliated RSNs and Other Satellite-Delivered, Cable-
Affiliated ``Must Have'' Programming
    72. We seek comment on whether we should retain an exclusive 
contract prohibition for satellite-delivered, cable-affiliated RSNs and 
other satellite-delivered, cable-affiliated ``must have'' programming. 
The Commission has previously explained that RSNs have no good 
substitutes, are important for competition, and are non-replicable. 
Moreover, in his dissenting opinion to the D.C. Circuit decision 
affirming the 2007 Extension Order, Judge Kavanaugh articulated the 
following explanation for why a ban on exclusive contracts for RSNs may 
be appropriate:

    I would leave open the possibility that the Government might 
still impose a prospective ban on some exclusive agreements between 
video programming distributors and affiliated regional video 
programming networks, particularly regional sports networks. That is 
because the upstream market in which video programming distributors 
contract with regional networks is less competitive than the 
national market * * *. [M]arket share and other relevant factors in 
certain areas may dictate tolerance of a narrow exclusivity ban. 
Situations where a highly desirable ``must have'' regional sports 
network is controlled by one video programming distributor might 
justify a targeted restraint on such regional exclusivity 
arrangements. I need not definitively address such a possibility in 
this case.

    73. We note, however, that the Commission in the 2010 Program 
Access Order declined to adopt a flat ban on exclusive contracts 
involving terrestrially delivered, cable-affiliated RSNs pursuant to 
Section 628(b) of the Act. Noting empirical evidence that withholding 
of an RSN in one case did not have an impact on competition, the 
Commission declined to adopt a general conclusion regarding RSNs, 
adopting instead a case-by-case approach, albeit with a rebuttable 
presumption that an ``unfair act'' involving a terrestrially delivered, 
cable-affiliated RSN has the purpose or effect set forth in Section 
628(b). The Commission explained that ``case-by-case consideration of 
the impact on competition in the video distribution market is necessary 
to address whether unfair practices significantly hinder competition in 
particular cases.''
    74. Are there legal and/or policy reasons why the Commission may 
want to establish a case-by-case approach for assessing exclusive 
contracts involving terrestrially delivered, cable-affiliated RSNs, but 
to retain an across-the-board prohibition on exclusive contracts 
involving satellite-delivered, cable-affiliated RSNs? We note that, in 
adopting a case-by-case approach for terrestrially delivered, cable-
affiliated RSNs, the Commission was applying and interpreting Section 
628(b) of the Act, which prohibits ``unfair acts'' that have the 
``purpose or effect'' to ``significantly hinder or prevent'' an

[[Page 24319]]

MVPD from providing satellite cable programming or satellite broadcast 
programming to subscribers or consumers. In considering a sunset of the 
exclusive contract prohibition, however, we are applying and 
interpreting Section 628(c)(5) of the Act, which requires the 
Commission to determine whether the exclusive contract prohibition 
``continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.'' Unlike Section 
628(b), the language in Section 628(c)(5) does not require the 
Commission to assess whether particular exclusive contracts are 
``unfair'' or whether they have the ``purpose or effect'' to 
``significantly hinder or prevent'' an MVPD from providing satellite 
cable programming or satellite broadcast programming to subscribers or 
consumers. We note that two vertically integrated cable operators, 
Comcast and Cablevision, previously stated before the D.C. Circuit that 
a partial sunset of the exclusive contract prohibition is a legally 
permissible approach, explaining that ``Section 628(c)(5) grants the 
FCC additional sunsetting authority, and nothing in the statute 
suggests that the FCC must do so on an all-or-nothing basis.'' Does 
this difference in statutory language provide a basis for treating 
satellite-delivered, cable-affiliated RSNs differently from 
terrestrially delivered, cable-affiliated RSNs? In addition, are there 
policy reasons why the Commission may want to retain the exclusivity 
ban as it applies to satellite-delivered, cable-affiliated RSNs? If so, 
we propose to define the term ``RSN'' in the same way the Commission 
defined that term in the 2010 Program Access Order.
    75. To the extent we retain an exclusive contract prohibition for 
satellite-delivered, cable-affiliated RSNs, we propose to retain our 
existing rules and procedures whereby a cable operator or a satellite-
delivered, cable-affiliated programmer can file a Petition for 
Exclusivity seeking prior Commission approval to enter into an 
exclusive contract by demonstrating that the arrangement satisfies the 
factors set forth in Section 628(c)(4) of the Act and Section 
76.1002(c)(4) of the Commission's rules. We seek comment on whether 
this process is sufficient for addressing those instances where an 
exclusive contract pertaining to a satellite-delivered, cable-
affiliated RSN might serve the public interest. We note that, if we 
were to retain an exclusive contract prohibition for only satellite-
delivered, cable-affiliated RSNs, our rules would apply burdens to 
different parties depending on whether or not the programming subject 
to an exclusive contract is an RSN: (i) In the case of satellite-
delivered, cable-affiliated RSNs, exclusive contracts with cable 
operators would be generally prohibited, unless a cable operator or RSN 
can satisfy its burden of demonstrating that an exclusive contract 
serves the public interest based on the factors set forth in Section 
628(c)(4) of the Act and Section 76.1002(c)(4) of the Commission's 
rules; and (ii) in the case of all other satellite-delivered, cable-
affiliated programming, exclusive contracts with cable operators would 
be generally permitted, unless an MVPD can satisfy its burden of 
demonstrating that the exclusive contract violates Section 628(b) of 
the Act and Section 76.1001(a) of the Commission's rules (or, 
potentially, Section 628(c)(2)(B) of the Act and Section 76.1002(b) of 
the Commission's rules). Given the Commission precedent and relevant 
historical evidence pertaining to the importance of RSNs for 
competition, as well as their non-substitutability and non-
replicability, we believe there is a sufficient basis for drawing this 
distinction between RSN and non-RSN programming. We seek comment on 
this view.
    76. Are there any other categories of satellite-delivered, cable-
affiliated programming besides RSNs that can be deemed ``must have'' 
and for which we should retain the exclusivity prohibition? We note 
that the Commission in the Comcast-NBCU Order concluded that ``certain 
national cable programming networks produce programming that is more 
widely viewed and commands higher advertising revenue than certain 
broadcast or RSN programming.'' Are there other types of satellite-
delivered, cable-affiliated programming besides RSNs that have no good 
substitutes, are important for competition, and are non-replicable, as 
the Commission has found with respect to RSNs? To the extent that 
commenters contend that there are, we ask that they provide reliable, 
empirical data supporting their positions, rather than merely labeling 
such programming as ``must have.'' In addition, we request commenters 
to provide a rational and workable definition of such programming that 
can be applied objectively. We note that in the 2007 Extension Order 
the Commission declined to differentiate between categories of 
programming for purposes of the exclusive contract prohibition for a 
number of legal and policy reasons.\20\ We seek comment on whether any 
of the concerns the Commission expressed in the 2007 Extension Order 
should prevent us from retaining an exclusive contract prohibition for 
satellite-delivered, cable-affiliated RSNs, or potentially other 
satellite-delivered, cable-affiliated ``must have'' programming, given 
the state of the market today.
---------------------------------------------------------------------------

    \20\ These reasons were as follows: (i) Congress did not 
distinguish between different types of satellite-delivered, cable-
affiliated programming in adopting the exclusive contract 
prohibition in Section 628(c)(2)(D) (see 2007 Extension Order, 22 
FCC Rcd at 17839-40, para. 69; see also 2002 Extension Order, 17 FCC 
Rcd at 12156, para. 69); (ii) requests to relieve satellite-
delivered, cable-affiliated programming networks from the exclusive 
contract prohibition can be addressed through individual exclusivity 
petitions satisfying the factors set forth in Section 628(c)(4) (see 
2007 Extension Order, 22 FCC Rcd at 17839-40, para. 69); (iii) no 
commenter provided a rational and workable definition of ``must 
have'' programming that would allow the Commission to apply the 
exclusive contract prohibition to only this type of programming (see 
id.); (iv) the difficulty of developing an objective process of 
general applicability to determine what programming may or may not 
be essential to preserve and protect competition (see id.; see also 
2002 Extension Order, 17 FCC Rcd at 12156, para. 69); and (v) 
distinguishing between different types of satellite-delivered, 
cable-affiliated programming might raise First Amendment concerns 
(see 2007 Extension Order, 22 FCC Rcd at 17839-40, para. 69; see 
also 2002 Extension Order, 17 FCC Rcd at 12156, para. 69).
---------------------------------------------------------------------------

    77. With respect to First Amendment concerns, we note that the 
Commission in the 2010 Program Access Order applied a rebuttable 
presumption of significant hindrance to one category of programming--
terrestrially delivered, cable-affiliated RSNs. The D.C. Circuit 
rejected claims that this was a content-based restriction on speech 
subject to strict scrutiny, explaining that:

    [T]here is absolutely no evidence, nor even any serious 
suggestion, that the Commission issued its regulations to disfavor 
certain messages or ideas. The clear and undisputed evidence shows 
that the Commission established presumptions for RSN programming due 
to that programming's economic characteristics, not to its 
communicative impact. Thus content-neutral, the presumptions are 
subject only to intermediate scrutiny.

In applying intermediate scrutiny, the D.C. Circuit ruled that, 
``[g]iven record evidence demonstrating the significant impact of RSN 
programming withholding, the Commission's presumptions represent a 
narrowly tailored effort to further the important governmental interest 
of increasing competition in video programming.'' Based on the D.C. 
Circuit's decision, we do not believe that retaining an exclusive 
contract prohibition for satellite-delivered, cable-affiliated RSNs

[[Page 24320]]

and other satellite-delivered, cable-affiliated ``must have'' 
programming would run afoul of the First Amendment. We seek comment on 
this view.
    78. To the extent we retain an exclusive contract prohibition for 
satellite-delivered, cable-affiliated RSNs and other satellite-
delivered, cable-affiliated ``must have'' programming, we propose to 
apply the prohibition independently to the SD and HD versions of the 
same network. As discussed above, the Commission has concluded that HD 
programming is growing in significance to consumers and that consumers 
do not consider the SD version of a particular channel to be an 
adequate substitute for the HD version due to the different technical 
characteristics and sometimes different content. Accordingly, the 
Commission has determined that it will analyze the HD version of a 
network separately from the SD version with similar content for 
purposes of determining whether an ``unfair act'' has the purpose or 
effect set forth in Section 628(b). Because this same finding would 
appear to apply to an exclusive contract prohibition, we propose that, 
if a satellite-delivered, cable-affiliated programmer makes the SD 
version of an RSN or other ``must have'' programming available to 
MVPDs, this would not exempt the satellite-delivered, HD version of the 
RSN or other ``must have'' programming from the exclusive contract 
prohibition. We seek comment on this view.
    79. To the extent we retain an exclusive contract prohibition 
pursuant to Section 628(c)(5) only for satellite-delivered, cable-
affiliated RSNs and other satellite-delivered, cable-affiliated ``must 
have'' programming, should we adopt a date when this prohibition will 
sunset, subject to a review by the Commission in the year prior to the 
sunset date? Should the sunset date be five years from the current 
sunset date (i.e., until October 5, 2017), consistent with the two 
prior five-year extensions?
    80. Should we combine the two approaches to partial sunsetting of 
the exclusive contract prohibition, by adopting a market-by-market 
approach and also retaining the prohibition for satellite-delivered, 
cable-affiliated RSNs and other satellite-delivered, cable-affiliated 
``must have'' programming? If so, how should the two approaches 
interrelate? If the exclusive contract prohibition sunsets in a 
specific market, should this sunset also apply to satellite-delivered, 
cable-affiliated RSNs and other satellite-delivered, cable-affiliated 
``must have'' programming? Or, given the critical nature of RSNs and 
other ``must have'' programming for competition, should the exclusive 
contract prohibition for satellite-delivered, cable-affiliated RSNs and 
other satellite-delivered, cable-affiliated ``must have'' programming 
continue to apply even if the exclusive contract prohibition sunsets 
for other satellite-delivered, cable-affiliated programming in the 
market? Should the Commission instead assess whether the exclusive 
contract prohibition should continue to apply to satellite-delivered, 
cable-affiliated RSNs and other satellite-delivered, cable-affiliated 
``must have'' programming on a market-by-market basis, considering all 
of the facts and circumstances presented in the petition?
5. Implementation of a Sunset in a Manner That Minimizes Any Potential 
Disruption for Consumers
    81. Whether we retain, sunset, or relax the exclusive contract 
prohibition, our goal is protect consumers and minimize any potential 
disruption. As an initial matter, as noted above, many Comcast-
affiliated networks are subject to program access conditions adopted in 
the Comcast/NBCU Order and will continue to be subject to these 
conditions for six more years (until January 2018, assuming they are 
not modified earlier in response to a petition). These networks will 
not be impacted by a sunset (complete or partial). With respect to 
other satellite-delivered, cable-affiliated networks, we seek comment 
below on how sunsetting the exclusive contract prohibition (wholly or 
partially) will impact consumers, and whether a phased implementation 
of a sunset is necessary to minimize any potential disruption to 
consumers. As discussed above, to the extent the data do not support 
retaining the exclusive contract prohibition as it exists today, we 
seek comment above on sunsetting or relaxing the prohibition. To the 
extent the prohibition sunsets (wholly or partially), we envision that 
there are at least two possible scenarios with respect to existing 
affiliation agreements. We seek comment on which scenario is more 
likely and if there are any other likely scenarios. First, if the 
exclusive contract prohibition were to sunset, an existing affiliation 
agreement between a cable-affiliated programmer and an MVPD pertaining 
to a satellite-delivered, cable-affiliated programming network might 
allow the programmer to terminate or modify the existing agreement 
immediately on the effective date of the sunset and to instead enter 
into an exclusive contract with a cable operator. Second, even if the 
exclusive contract prohibition were to sunset, an existing affiliation 
agreement might require the satellite-delivered, cable-affiliated 
programmer to continue to provide the programming to the MVPD for the 
duration of the term of the affiliation agreement despite the sunset. 
We seek comment on these alternative scenarios below.
a. Termination or Modification of Affiliation Agreements on the 
Effective Date of the Sunset
    82. To the extent that existing affiliation agreements permit 
satellite-delivered, cable-affiliated programmers to terminate or 
modify the agreements immediately on the effective date of the sunset 
and to instead enter into an exclusive contract with a cable operator, 
is there any basis to expect that many satellite-delivered, cable-
affiliated programmers would terminate or modify existing agreements 
simultaneously and thereby cause significant disruption to consumers by 
depriving them of programming they have come to expect? Are our 
existing rules sufficient to prevent any customer disruption? For 
example, to the extent that a cable-affiliated programmer terminates or 
modifies an existing affiliation agreement with an MVPD pertaining to a 
satellite-delivered, cable-affiliated programming network and instead 
enters into an exclusive arrangement with a cable operator, the MVPD 
could file a complaint alleging a violation of Section 628(b) of the 
Act (and, potentially, Section 628(c)(2)(B) of the Act). While our 
program access rules contain specific procedures for the filing of a 
petition for a standstill along with a program access complaint when 
seeking to renew an existing affiliation agreement, should our 
standstill procedures also apply when an MVPD files a program access 
complaint based on a satellite-delivered, cable-affiliated programmer's 
mid-term termination or modification of an affiliation agreement 
resulting from the sunset? If the standstill petition is granted, the 
price, terms, and other conditions of the existing affiliation 
agreement will remain in place pending resolution of the program access 
complaint, thereby reducing consumer disruption.
    83. Rather than relying on the complaint and standstill process, 
should we instead abrogate provisions of affiliation agreements that 
would allow satellite-delivered, cable-affiliated programmers to 
terminate or modify their existing agreements with MVPDs immediately on 
the effective date of the sunset? We seek comment regarding the 
benefits and burdens of abrogating contractual provisions that 
otherwise would permit a programmer to terminate or modify its existing 
agreement with an unaffiliated MVPD

[[Page 24321]]

immediately upon sunset of the exclusive contract prohibition. We seek 
comment regarding how the abrogation of such contractual provisions 
would be congruous with a possible finding to sunset the exclusive 
contract prohibition. In NCTA v. FCC, the D.C. Circuit upheld the 
Commission's abrogation of existing contracts in the program access 
context. Alternatively, to minimize any potential disruption to 
consumers, should we adopt a phased implementation of the sunset? For 
example, should we provide that, for a period of three years from the 
sunset date, a cable-affiliated programmer cannot enter into an 
exclusive contract with a cable operator for a satellite-delivered, 
cable-affiliated programming network that is an RSN (assuming the 
prohibition is not retained for RSNs) or is ranked within the Top 20 
cable networks as measured by either prime time ratings, average all-
day ratings, or total number of subscribers? Should we adopt a similar 
restriction, for a period of two years from the sunset date, for a 
satellite-delivered, cable-affiliated programming network that is 
ranked within the Top 21-50 cable networks? We seek comment on these 
proposals and any other appropriate ways to minimize any disruption to 
consumers resulting from the sunset in the event that existing 
affiliation agreements permit satellite-delivered, cable-affiliated 
programmers to terminate or modify them on the effective date of the 
sunset.
b. Continued Enforcement of Existing Affiliation Agreements Despite the 
Sunset
    84. To the extent that existing affiliation agreements require 
cable-affiliated programmers to continue to provide satellite-
delivered, cable-affiliated programming networks to MVPDs for the 
duration of the term of the existing agreement despite the sunset of 
the exclusive contract prohibition, we seek comment on the interplay 
between the sunset and the discrimination provision of the program 
access rules. For example, assume that a cable-affiliated programmer 
has existing affiliation agreements for a satellite-delivered, cable-
affiliated programming network with three MVPDs (including one cable 
operator) subject to the following termination dates: December 31, 2012 
(cable operator); December 31, 2013 (MVPD A); December 31, 2014 (MVPD 
B). If the satellite-delivered, cable-affiliated programmer enters into 
an exclusive contract with the cable operator after its current 
agreement expires on December 31, 2012, would the satellite-delivered, 
cable-affiliated programmer be required to make the programming 
available to all MVPDs until after the expiration of the latest-
expiring affiliation agreement with an MVPD other than the cable 
operator that is a party to the exclusive contract? We seek comment on 
whether it would be impermissibly discriminatory in violation of 
Section 628(c)(2)(B) if the satellite-delivered, cable-affiliated 
programmer were to refuse to license the network to MVPD A after 
December 31, 2013, while continuing to provide the programming to MVPD 
B until its agreement expires on December 31, 2014, based on the future 
enforcement of an exclusive contract with the cable operator as of 
January 1, 2015, after the expiration of the agreement with MVPD B. 
While the satellite-delivered, cable-affiliated programmer's 
discriminatory treatment of MVPD A relative to MVPD B and the cable 
operator during the period of December 31, 2013 to December 31, 2014 
might be justified based on a legitimate business reason, is the future 
enforcement of an exclusive contract a legitimate business reason for 
such discriminatory conduct? If not, then the satellite-delivered, 
cable-affiliated programmer would not be permitted to have the 
exclusivity period with the cable operator begin, or to refuse to 
license the programming to other MVPDs, until all affiliation 
agreements with other MVPDs expire. Thus, in this scenario, absent a 
legitimate business reason, the satellite-delivered, cable-affiliated 
programmer would be required to enter into an affiliation agreement 
with MVPD A that terminates no earlier than December 31, 2014 (i.e., 
the expiration of the latest-expiring affiliation agreement with an 
MVPD other than the cable operator that is a party to the exclusive 
contract). We seek comment on this view.
    85. To the extent that affiliation agreements require cable-
affiliated programmers to continue to provide satellite-delivered, 
cable-affiliated programming networks to MVPDs for the duration of the 
term of the existing agreement despite the sunset, does the anti-
discrimination provision of Section 628(c)(2)(B) as described here 
prevent the enforcement of any exclusive contract until the expiration 
of the latest-expiring affiliation agreement with an MVPD other than 
the cable operator that is a party to the exclusive contract? Will this 
limit the immediate impact of the sunset (complete or partial) and help 
to minimize any potential disruption to consumers? What impact, if any, 
does Section 628(c)(2)(B)(iv) have on this discussion? Even if this 
section could be read to immunize post-sunset exclusive contracts from 
being challenged as impermissibly discriminatory in violation of 
Section 628(c)(2)(B), would this provision allow a satellite-delivered, 
cable-affiliated programmer to selectively refuse to license 
programming to certain MVPDs based on future enforcement of an 
exclusive contract, as described here?
6. First Amendment
    86. We ask commenters to consider carefully how the First Amendment 
impacts our review of the exclusive contract prohibition, including the 
proposals to relax the prohibition. As the D.C. Circuit explained in 
rejecting a facial challenge to the constitutionality of the program 
access provisions, these provisions will survive intermediate scrutiny 
if they ``further[] an important or substantial governmental interest; 
if the governmental interest is unrelated to the suppression of free 
expression; and if the incidental restriction on alleged First 
Amendment freedoms is no greater than is essential to the furtherance 
of that interest.'' Given the current state of competition in the video 
programming market and the video distribution market, does the First 
Amendment require the exclusive contract prohibition as it exists today 
to sunset or to be relaxed? Is a prohibition on all exclusive contracts 
in all markets between cable operators and cable-affiliated programmers 
pertaining to satellite-delivered, cable-affiliated programming ``no 
greater than is essential'' to the furtherance of the substantial 
government interest in promoting competition in the MVPD market? Would 
retaining the prohibition only for satellite-delivered, cable-
affiliated RSNs and other satellite-delivered, cable-affiliated ``must 
have'' programming, and/or allowing the prohibition to sunset on a 
market-by-market basis, be a sufficiently tailored approach?
    87. We note that, in rejecting a facial First Amendment challenge 
to the 2010 Program Access Order in which the Commission adopted a 
case-by-case approach for considering unfair acts involving 
terrestrially delivered, cable-affiliated programming, the D.C. Circuit 
explained that, ``[b]y imposing liability only when complainants 
demonstrate that a company's unfair act has `the purpose or effect' of 
`hinder[ing] significantly or * * * prevent[ing]' the provision of 
satellite programming, * * * the Commission's terrestrial programming 
rules specifically target activities where the governmental interest is 
greatest.'' Moreover, the D.C.

[[Page 24322]]

Circuit stated that the Commission, in adopting this case-by-case 
approach, ``has no obligation to establish that vertically integrated 
cable companies retain a stranglehold on competition nationally or that 
all withholding of terrestrially delivered programming negatively 
affects competition.'' Is a case-by-case approach pursuant to Section 
628(b) (and, potentially, Section 628(c)(2)(B)) or a narrowed 
application of the exclusive contract prohibition as discussed above, 
rather than the current broad, prophylactic prohibition, preferable 
under the First Amendment given the competitive environment today? We 
also seek comment on the First Amendment implications of a phased 
implementation of a sunset as discussed above to minimize any potential 
disruption to consumers.
7. Costs and Benefits
    88. In addition to the specific questions noted above, we ask 
commenters to consider generally the costs and benefits associated with 
either retaining, sunsetting, or relaxing the exclusive contract 
prohibition as described herein. We believe that retaining the 
exclusive contract prohibition in its entirety as it exists today will 
result in certain costs, such as unnecessarily restricting 
procompetitive arrangements that in certain instances may foster 
competition in the video distribution market and promote competition 
and diversity in the video programming market. While a case-by-case 
approach, either pursuant to a Section 628(b) complaint (and, 
potentially, a Section 628(c)(2)(B) complaint) or a market-based 
petition, will better enable the Commission to consider the unique 
facts and circumstances presented in each case, this approach will also 
result in certain costs by requiring the affected parties and the 
Commission to expend resources litigating and resolving the complaints 
and petitions. Retaining an exclusive contract prohibition for 
programming that is demonstrated to be important for competition, non-
replicable, and without good substitutes (i.e., satellite-delivered, 
cable-affiliated RSNs and other satellite-delivered, cable-affiliated 
``must have'' programming), may help to reduce these costs by 
eliminating the need to file complaints with respect to this class of 
programming. To the extent possible, we encourage commenters to 
quantify the costs and benefits of the different approaches to the 
exclusive contract prohibition as described herein. Which of the 
approaches would be most beneficial to the public? When would the 
public realize these benefits? Which of these approaches would be least 
burdensome?
8. Subdistribution Agreements
    89. We seek comment on the impact of a sunset (complete or partial) 
of the exclusive contract prohibition on the Commission's rules 
pertaining to exclusive subdistribution agreements. The Commission's 
rules define a subdistribution agreement as ``an arrangement by which a 
local cable operator is given the right by a satellite cable 
programming vendor or satellite broadcast programming vendor to 
distribute the vendor's programming to competing multichannel video 
programming distributors.'' Based on the exclusive contract 
prohibition, the Commission in the 1993 Program Access Order adopted 
certain restrictions on exclusive subdistribution agreements to 
``address any incentives for a subdistributor to refuse to sell to a 
competing MVPD that may be inherent in such rights'' and to ensure 
``appropriate safeguards to limit the potential for anticompetitive 
behavior.'' Specifically, a cable operator engaged in subdistribution 
(i) may not require a competing MVPD to purchase additional or 
unrelated programming as a condition of such subdistribution; (ii) may 
not require a competing MVPD to provide access to private property in 
exchange for access to programming; (iii) may not charge a competing 
MVPD more for programming than the satellite cable programming vendor 
or satellite broadcast programming vendor itself would be permitted to 
charge; and (iv) must respond to a request for access to such 
programming by a competing MVPD within fifteen (15) days of the request 
and, if the request is denied, the competing MVPD must be permitted to 
negotiate directly with the satellite cable programming vendor or 
satellite broadcast programming vendor. We propose to eliminate these 
restrictions to the extent the exclusive contract prohibition sunsets 
and seek comment on this proposal.
9. Common Carriers and Open Video Systems
    90. The Commission's rules contain provisions pertaining to 
exclusive contracts involving common carriers and OVS in served areas 
that mirror the rules applicable to exclusive contracts between cable 
operators and satellite-delivered, cable-affiliated programmers in 
served areas. With respect to common carriers, these rules pertain to 
exclusive contracts between a satellite-delivered, common-carrier-
affiliated programmer and a common carrier or its affiliate that 
provides video programming by any means directly to subscribers. With 
respect to OVS, these rules pertain to exclusive contracts (i) between 
a satellite-delivered, OVS-affiliated programmer and an OVS or its 
affiliate that provides video programming on its OVS; and (ii) between 
a satellite-delivered, cable-affiliated programmer and an OVS video 
programming provider in which a cable operator has an attributable 
interest. We propose that any amendments we adopt herein to our rules 
pertaining to exclusive contracts between cable operators and 
satellite-delivered, cable-affiliated programmers in served areas will 
apply equally to these rules pertaining to common carriers and OVS. We 
also propose to conform the rules pertaining to exclusive 
subdistribution agreements involving OVS to the rules applicable to 
cable operators and seek comment on this proposal.
10. Impact of a Sunset on Existing Merger Conditions
    91. We believe that conditions adopted in two previous merger 
orders may be impacted if the exclusive contract prohibition were to 
sunset (wholly or partially). We seek comment on this impact below.
a. Adelphia Order Merger Conditions
    92. Pursuant to merger conditions adopted in the Adelphia Order, 
certain terrestrially delivered RSNs (``Covered RSNs'') affiliated with 
TWC are currently required to comply with the program access rules 
applicable to satellite-delivered, cable-affiliated programming, 
including the exclusive contract prohibition.\21\ Among other

[[Page 24323]]

things, the conditions state as follows with respect to exclusivity 
(the ``exclusivity conditions''):
---------------------------------------------------------------------------

    \21\ See Applications for Consent to the Assignment and/or 
Transfer of Control of Licenses, Adelphia Communications 
Corporation, Assignors to Time Warner Cable, Inc., Assignees, et 
al., Memorandum Opinion and Order, 21 FCC Rcd 8203, 8274, paras. 
156-157 (2006) (``Adelphia Order'') (requiring terrestrially 
delivered RSNs in which Time Warner has or acquires an attributable 
interest to comply with the program access rules applicable to 
satellite-delivered, cable-affiliated programming, citing 47 CFR 
76.1002), 8276, para. 162, and 8336, Appendix B, sec. B.1 (citing 47 
CFR 76.1002); see also Time Warner Order, 24 FCC Rcd at 893, para. 
26 (approving transaction separating Time Warner from TWC and 
explaining that the Adelphia Order program access conditions will 
continue to apply to TWC post-restructuring but will no longer apply 
to Time Warner). An RSN as defined in the Adelphia Order is ``any 
non-broadcast video programming service that (1) provides live or 
same-day distribution within a limited geographic region of sporting 
events of a sports team that is a member of Major League Baseball, 
the National Basketball Association, the National Football League, 
the National Hockey League, NASCAR, NCAA Division I Football, NCAA 
Division I Basketball and (2) in any year, carries a minimum of 
either 100 hours of programming that meets the criteria of 
subheading 1, or 10% of the regular season games of at least one 
sports team that meets the criteria of subheading 1.'' Adelphia 
Order, 21 FCC Rcd at 8336, Appendix B, sec. A. While these 
conditions originally applied to Comcast as well, they were 
superseded by the Comcast/NBCU Order. See Comcast/NBCU Order, 26 FCC 
Rcd at 4364, Appendix A, Condition VI.

    (i) ``Time Warner [Cable], and [its] existing or future Covered 
RSNs, regardless of the means of delivery, shall not offer any such 
RSN on an exclusive basis to any MVPD, and * * * Time Warner 
[Cable], and [its] Covered RSNs, regardless of the means of 
delivery, are required to make such RSNs available to all MVPDs on a 
non-exclusive basis * * *'';
    (ii) ``Time Warner [Cable] will not enter into an exclusive 
distribution arrangement with any such Covered RSN, regardless of 
the means of delivery''; and
    (iii) ``Th[is] exclusive contracts and practices * * * 
requirement of the program access rules will apply to Time Warner 
[Cable] and [its] Covered RSNs for six years, provided that if the 
program access rules are modified this condition shall be modified 
to conform to any revised rules adopted by the Commission.''

    93. These conditions are scheduled to expire in July 2012. 
Depending on whether and how we revise the exclusive contract 
prohibition, and if we do so before these conditions expire, we may 
need to modify these exclusivity conditions to conform to our revised 
rules. We envision four alternative scenarios. First, to the extent 
that we retain the exclusive contract prohibition in its entirety as it 
exists today, including for RSNs, there will be no need to modify the 
exclusivity conditions because the program access rules will remain the 
same. Second, to the extent that we retain an exclusive contract 
prohibition for satellite-delivered, cable-affiliated RSNs and other 
satellite-delivered, cable-affiliated ``must have'' programming only, 
there will be no need to modify the exclusivity conditions because the 
exclusive contract prohibition will remain the same with respect to 
RSNs. Third, to the extent we establish a process whereby a cable 
operator or satellite-delivered, cable-affiliated programmer can seek 
to remove the exclusive contract prohibition on a market-by-market 
basis, and grant of such a petition includes RSNs, then we would expect 
to modify the exclusivity conditions to provide that Covered RSNs in 
markets covered by such a petition (if granted) will no longer be 
subject to these exclusivity conditions. If the grant of such a 
petition does not include RSNs, however, there will be no need to 
modify the exclusivity conditions because the exclusive contract 
prohibition will remain the same with respect to RSNs. Fourth, to the 
extent we sunset the exclusive contract prohibition in its entirety, 
including for RSNs, then we would expect to modify the exclusivity 
conditions to provide that Covered RSNs will no longer be subject to 
these exclusivity conditions; rather, exclusive contracts for Covered 
RSNs may be assessed on a case-by-case basis in response to a program 
access complaint alleging a violation of Section 628(b) (and, 
potentially, Section 628(c)(2)(B)). We seek comment on this 
interpretation.
b. Liberty Media Order Merger Conditions
    94. Pursuant to merger conditions adopted in the Liberty Media 
Order,\22\ certain programmers affiliated with Liberty Media and 
DIRECTV are subject to the following conditions (the ``exclusivity 
conditions''), among others:


    \22\ Applications for Consent to the Assignment and/or Transfer 
of Control of Licenses, News Corporation. and The DIRECTV Group, 
Inc., Transferors, to Liberty Media Corporation., Transferee, 
Memorandum Opinion and Order, 23 FCC Rcd 3265 (2008) (``Liberty 
Media Order''). The conditions state that the term ``Liberty Media'' 
includes ``any entity or program rights holder in which Liberty 
Media or John Malone holds an attributable interest. Thus, the term 
`Liberty Media' includes Discovery Communications.'' Id. at 3340-41 
n.3. Moreover, the conditions provide that ``Liberty Media and 
DIRECTV are prohibited from acquiring an attributable interest in 
any non-broadcast national or regional programming service while 
these conditions are in effect if the programming service is not 
obligated to abide by such conditions.'' Id.

    (i) ``Liberty Media shall not offer any of its existing or 
future national and regional programming services on an exclusive 
basis to any MVPD. Liberty Media shall continue to make such 
services available to all MVPDs on a non-exclusive basis * * *'';
    (ii) ``DIRECTV will not enter into an exclusive distribution 
arrangement with any Affiliated Program Rights Holder.'';
    (iii) ``As long as Liberty Media holds an attributable interest 
in DIRECTV, DIRECTV will deal with any Affiliated Program Rights 
Holder with respect to programming services the Affiliated Program 
Rights Holder controls as a vertically integrated programmer subject 
to the program access rules.'';
    (iv) ``These conditions will apply to Liberty Media, DIRECTV, 
and any Affiliated Program Rights Holder until the later of a 
determination by the Commission that Liberty Media no longer holds 
an attributable interest in DIRECTV or the Commission's program 
access rules no longer remain in effect (provided that if the 
program access rules are modified these commitments shall be 
modified, as the Commission deems appropriate, to conform to any 
revised rules adopted by the Commission).''

    95. These particular Liberty Media Order conditions differ from 
similar conditions in the Adelphia Order in that (i) they apply not 
only to RSNs, but to both national and regional programming services; 
and (ii) they do not expire after the passage of a certain period of 
time. Depending on whether and how we revise the exclusive contract 
prohibition of the program access rules, we may need to modify these 
exclusivity conditions to conform to our revised rules. First, to the 
extent that we retain the exclusive contract prohibition in its 
entirety as it exists today, there will be no need to modify the 
exclusivity conditions because the program access rules will remain the 
same. Second, to the extent that we retain an exclusive contract 
prohibition for satellite-delivered, cable-affiliated RSNs and other 
satellite-delivered, cable-affiliated ``must have'' programming only, 
there will be no need to modify the exclusivity conditions with respect 
to RSNs and other ``must have'' programming because the exclusive 
contract prohibition will remain the same with respect to such 
programming. With respect to non-RSN programming and other programming 
that is not deemed ``must have,'' however, we would expect to modify 
the exclusivity conditions to provide that exclusive contracts 
involving such programming will no longer be prohibited. To the extent 
any covered non-RSN/non-``must have'' programming is cable-affiliated, 
however, exclusive contracts may be assessed on a case-by-case basis in 
response to a program access complaint alleging a violation of Section 
628(b) (and, potentially, Section 628(c)(2)(B)). Third, to the extent 
we establish a process whereby a cable operator or satellite-delivered, 
cable-affiliated programmer can seek to remove the exclusive contract 
prohibition on a market-by-market basis, and grant of such a petition 
includes satellite-delivered, cable-affiliated RSNs and other 
satellite-delivered, cable-affiliated ``must have'' programming, then 
we would expect to modify the exclusivity conditions to provide that 
exclusive contracts in markets covered by such a petition (if granted) 
will not be prohibited under these conditions. If the grant of such a 
petition does not include satellite-delivered, cable-affiliated RSNs 
and other satellite-delivered, cable-affiliated ``must have'' 
programming, however, there will be no need to modify the exclusivity 
conditions with respect to RSNs and other ``must have'' programming 
because the exclusive contract prohibition will remain the same with 
respect to such programming. Fourth, to the extent we sunset the 
exclusive contract prohibition in its entirety, including for 
satellite-delivered, cable-affiliated RSNs and other satellite-
delivered, cable-affiliated

[[Page 24324]]

``must have'' programming, then we would expect to modify the 
exclusivity conditions to provide that exclusive contracts will not be 
prohibited. Again, however, to the extent any of the covered 
programming is cable-affiliated, exclusive contracts will be assessed 
on a case-by-case basis in response to a program access complaint 
alleging a violation of Section 628(b) (and, potentially, Section 
628(c)(2)(B)). We seek comment on this interpretation.\23\
---------------------------------------------------------------------------

    \23\ In contrast to the Adelphia Order and the Liberty Media 
Order, there is no provision in the Comcast/NBCU Order requiring the 
conditions adopted therein to be modified to conform to changes the 
Commission makes to the program access rules. See Comcast/NBCU 
Order, 26 FCC Rcd at 4381, Appendix A, Condition XX (stating that 
the conditions will remain in effect for seven years, provided that 
the Commission will consider a petition from Comcast/NBCU for 
modification of a condition if they can demonstrate that there has 
been a material change in circumstances, or that the condition has 
proven unduly burdensome, such that the Condition is no longer 
necessary in the public interest). Accordingly, the conditions 
adopted in the Comcast/NBCU Order will not be affected by the rule 
changes adopted in this proceeding.
---------------------------------------------------------------------------

B. Potential Revisions to the Program Access Rules To Better Address 
Alleged Violations

    96. The Commission initially adopted its program access rules in 
1993. Other than the previous extensions of the exclusive contract 
prohibition and certain procedural changes, including the adoption of a 
process for the award of damages, establishing aspirational deadlines 
for the processing of complaints, and implementing party-to-party 
discovery, these rules have remained largely unchanged since this time. 
We seek comment on how our rules can be improved, especially in light 
of marketplace developments and commenters' experience with these rules 
over the past two decades.
1. Procedural Rules
    97. As an initial matter, while our program access procedural rules 
provide a defendant with 20 days after service of a complaint to file 
an answer, the Commission has provided defendants with 45 days from the 
date of service to file an answer to a Section 628(b) complaint 
alleging an ``unfair act'' involving terrestrially delivered, cable-
affiliated programming to ensure that the defendant has adequate time 
to develop a response. The Commission explained that additional time 
was appropriate because, unlike complaints alleging a violation of the 
prohibitions in Section 628(c), a complaint alleging a violation of 
Section 628(b) entails additional factual inquiries, including whether 
the allegedly ``unfair act'' at issue has the purpose or effect set 
forth in Section 628(b). To the extent the exclusive contract 
prohibition were to sunset (wholly or partially), we propose to adopt 
the same 45-day answer period in complaint proceedings alleging that an 
exclusive contract involving satellite-delivered, cable-affiliated 
programming violates Section 628(b). We seek comment on this proposal. 
Because all complaints alleging a violation of Section 628(b) will 
involve the claim that the conduct at issue has the purpose or effect 
set forth in Section 628(b), we propose to amend our rules to provide 
for a 45-day answer period for all complaints alleging a violation of 
Section 628(b). We seek comment on this proposal. Are there any other 
changes we should make to our program access procedural rules to 
accommodate the case-by-case consideration of exclusive contracts 
involving satellite-delivered, cable-affiliated programming under 
Section 628(b)?
2. Volume Discounts
    98. We also seek comment on whether our program access rules 
adequately address potentially discriminatory volume discounts and, if 
not, how these rules should be revised to address these concerns. Some 
MVPDs have expressed concern that cable-affiliated programmers charge 
larger MVPDs less for programming on a per-subscriber basis than 
smaller MVPDs due to volume discounts, which are based on the number of 
subscribers the MVPD serves. As a result, smaller MVPDs claim that they 
are placed at a significant cost disadvantage relative to larger MVPDs. 
Some commenters have claimed that this price differential is not cost-
based because program production and acquisition costs are sunk; 
delivery costs do not vary; and administrative costs are not different. 
According to some commenters, without a basis in cost, this wholesale 
practice amounts to price discrimination.
    99. The anti-discrimination provision in Section 628(c)(2)(B) of 
the Act provides that it is not impermissibly discriminatory for a 
satellite-delivered, cable-affiliated programmer to ``establish[] 
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.'' The Commission's rules provide that:

    Vendors may use volume-related justifications to establish price 
differentials to the extent that such justifications are made 
available to similarly situated distributors on a technology-neutral 
basis. When relying upon standardized volume-related factors that 
are made available to all multichannel video programming 
distributors using all technologies, the vendor may be required to 
demonstrate that such volume discounts are reasonably related to 
direct and legitimate economic benefits reasonably attributable to 
the number of subscribers served by the distributor if questions 
arise about the application of that discount. In such 
demonstrations, vendors will not be required to provide a strict 
cost justification for the structure of such standard volume-related 
factors, but may also identify non-cost economic benefits related to 
increased viewership.

Thus, the Commission's rules contemplate that an MVPD may file a 
program access complaint challenging volume-based pricing in certain 
circumstances. In the Comcast/NBCU Order, the Commission declined to 
adopt a condition that would prohibit Comcast-NBCU from offering 
volume-based discounts for its video programming, finding such a 
prohibition to be unnecessary because ``the specific matter of volume-
based discounts is adequately addressed by the Commission's program 
access rules.''

    100. Despite the concerns expressed by some MVPDs regarding 
allegedly discriminatory volume discounts and the availability of the 
existing complaint process, the Commission has not received program 
access complaints alleging that particular volume discounts violate 
Section 628(c)(2)(B) of the Act. We seek information about specific 
instances of perceived volume discount discrimination, along with 
explanations of why the alleged conduct amounts to a violation of the 
Commission's rules. We seek comment on the reasons for the lack of 
program access complaints alleging discriminatory volume discounts, 
despite the apparent concern among some MVPDs regarding this issue. Do 
our current program access rules and procedures prevent or discourage 
the filing of legitimate complaints pertaining to this issue? Is the 
complaint process too costly and time-consuming with respect to 
complaints alleging price discrimination? If so, we seek comment on how 
we might improve our rules and procedures to avoid impeding the filing 
of legitimate complaints. Are there procedural tools we might use, such 
as establishing rebuttable presumptions, that will expedite the 
complaint process while ensuring fairness to all parties? While the 
Commission has stated that satellite-delivered, cable-affiliated 
programmers may justify volume discounts based on ``non-cost economic 
benefits'' related to

[[Page 24325]]

increased viewership, it has not defined these benefits in the rules. 
Should we continue to consider ``non-cost economic benefits'' on a 
case-by-case basis due to the various factors, such as advertising and 
online and VOD offerings, that can be considered in setting prices? 
Should our rules specifically list those ``non-cost economic benefits'' 
related to increased viewership that might justify volume discounts? If 
so, what non-cost economic benefits should be identified? Should these 
benefits be limited to increased advertising revenues resulting from 
increased viewership? Should satellite-delivered, cable-affiliated 
programmers be required to demonstrate in response to a complaint the 
increase in advertising revenues resulting from licensing programming 
to a larger MVPD and how this increase justifies the volume discount 
provided to the larger MVPD relative to the complainant?
3. Uniform Price Increases
    101. We also seek comment on whether and how we should revise our 
rules to address uniform price increases imposed by satellite-
delivered, cable-affiliated programmers. In previous merger decisions, 
the Commission has discussed the possibility that a vertically 
integrated cable operator could disadvantage its competitors in the 
video distribution market by raising the price of a network to all 
distributors (including itself) to a level greater than that which 
would be charged by a non-vertically integrated supplier. The 
Commission explained that a vertically integrated cable operator might 
employ such a strategy to raise its rivals' costs. Because rival MVPDs 
would have to pay more for the programming, they would likely respond 
either by raising their prices to subscribers, not purchasing the 
programming, or reducing marketing activities. The vertically 
integrated cable operator could then enjoy a competitive advantage, 
because the higher price for the programming that it would pay would be 
an internal transfer that it could disregard when it sets its own 
prices. By forcing its competitors either to pay more for the 
programming and increase their retail rates, or forgo purchasing the 
programming, the vertically integrated cable operator could raise its 
prices to some extent without losing subscribers. The Commission has 
also stated that this strategy of uniform price increases does not 
necessarily violate the anti-discrimination provision of the program 
access rules because the price increases would be applied to all 
distributors equally and thus does not involve discriminatory conduct. 
In previous merger orders, the Commission has sought to address this 
issue by adopting a baseball-style arbitration remedy to maintain the 
pre-integration balance of bargaining power between vertically 
integrated programming networks and rival MVPDs.
    102. We seek comment on whether and how we should revise our rules 
to address uniform price increases imposed by satellite-delivered, 
cable-affiliated programmers. We also seek comment on actual 
experiences of discriminatory uniform price increases. Is there any 
basis to interpret the anti-discrimination provision in Section 
628(c)(2)(B) as applying to uniform price increases? We note that, in 
employment law, a practice that appears facially neutral may 
nonetheless be discriminatory if it has a disparate impact on a certain 
class. While a uniform price increase appears facially neutral in that 
it applies to all MVPDs equally, it has a disparate impact on MVPDs 
that are not affiliated with the cable-affiliated programmer because 
the price increase is not merely an internal transfer for unaffiliated 
MVPDs. To the extent that a uniform price increase is not covered by 
the anti-discrimination provision in Section 628(c)(2)(B), can it be 
addressed on a case-by-case basis in a Section 628(b) complaint 
alleging that a uniform price increase is an ``unfair act'' that has 
the ``purpose or effect'' of ``significantly hindering or preventing'' 
an MVPD from providing satellite cable programming or satellite 
broadcast programming to subscribers or consumers? To the extent that a 
uniform price increase is actionable under Section 628(c)(2)(B) or 
Section 628(b), how can we distinguish an anticompetitive uniform price 
increase intended to raise rivals' costs from a price increase dictated 
by the market?

IV. Procedural Matters

A. Initial Regulatory Flexibility Act Analysis

    103. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (``IRFA'') concerning the possible 
significant economic impact on small entities by the policies and rules 
proposed in the Notice of Proposed Rulemaking (``NPRM''). Written 
public comments are requested on this IRFA. Comments must be identified 
as responses to the IRFA and must be filed by the deadlines for 
comments on the NPRM specified supra. The Commission will send a copy 
of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration (``SBA''). In addition, the NPRM and 
IRFA (or summaries thereof) will be published in the Federal Register.
Need for, and Objectives of, the Proposed Rule Changes
    104. We issue the NPRM to seek comment on (i) whether to retain, 
sunset, or relax one of the several protections afforded to 
multichannel video programming distributors (``MVPDs'') by the program 
access rules--the prohibition on exclusive contracts involving 
satellite-delivered, cable-affiliated programming; and (ii) potential 
revisions to our program access rules to better address alleged 
violations, including potentially discriminatory volume discounts and 
uniform price increases.
    105. In areas served by a cable operator, Section 628(c)(2)(D) of 
the Communications Act of 1934, as amended (the ``Act''), generally 
prohibits exclusive contracts for satellite cable programming or 
satellite broadcast programming between any cable operator and any 
cable-affiliated programming vendor (the ``exclusive contract 
prohibition''). The exclusive contract prohibition applies to all 
satellite-delivered, cable-affiliated programming and presumes that an 
exclusive contract will cause competitive harm in every case, 
regardless of the type of programming at issue. The exclusive contract 
prohibition applies only to programming which is delivered via 
satellite; it does not apply to programming which is delivered via 
terrestrial facilities. In January 2010, the Commission adopted rules 
providing for the processing of complaints alleging that an ``unfair 
act'' involving terrestrially delivered, cable-affiliated programming 
violates Section 628(b) of the Act. Thus, while an exclusive contract 
involving satellite-delivered, cable-affiliated programming is 
generally prohibited, an exclusive contract involving terrestrially 
delivered, cable-affiliated programming is permitted unless the 
Commission finds in response to a complaint that it violates Section 
628(b) of the Act.
    106. In Section 628(c)(5) of the Act, Congress provided that the 
exclusive contract prohibition would cease to be effective on October 
5, 2002, unless the Commission found that it ``continues to be 
necessary to preserve and protect competition and diversity in the 
distribution of video programming.'' In June 2002, the Commission found 
that the exclusive contract prohibition continued to be necessary to 
preserve

[[Page 24326]]

and protect competition and diversity and retained the exclusive 
contract prohibition for five years, until October 5, 2007. The 
Commission provided that, during the year before the expiration of the 
five-year extension, it would conduct a second review to determine 
whether the exclusive contract prohibition continued to be necessary to 
preserve and protect competition and diversity in the distribution of 
video programming. After conducting such a review, the Commission in 
September 2007 concluded that the exclusive contract prohibition was 
still necessary, and it retained the prohibition for five more years, 
until October 5, 2012. The Commission again provided that, during the 
year before the expiration of the five-year extension, it would conduct 
a third review to determine whether the exclusive contract prohibition 
continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.
    107. Accordingly, in this NPRM, we initiate the third review of the 
necessity of the exclusive contract prohibition. In the NPRM, we 
present certain data on the current state of competition in the video 
distribution market and the video programming market, and we invite 
commenters to submit more recent data or empirical analyses. We seek 
comment on whether current conditions in the video marketplace support 
retaining, sunsetting, or relaxing the exclusive contract prohibition. 
To the extent that the data do not support retaining the exclusive 
contract prohibition as it exists today, we seek comment on whether we 
can preserve and protect competition in the video distribution market 
by either:
    <bullet> Sunsetting the exclusive contract prohibition in its 
entirety and instead relying solely on existing protections provided by 
the program access rules that will not sunset: (i) The case-by-case 
consideration of exclusive contracts pursuant to Section 628(b) of the 
Act; (ii) the prohibition on discrimination in Section 628(c)(2)(B) of 
the Act; and (iii) the prohibition on undue or improper influence in 
Section 628(c)(2)(A) of the Act; or
    <bullet> Relaxing the exclusive contract prohibition by (i) 
establishing a process whereby a cable operator or satellite-delivered, 
cable-affiliated programmer can seek to remove the prohibition on a 
market-by-market basis based on the extent of competition in the 
market; (ii) retaining the prohibition only for satellite-delivered, 
cable-affiliated Regional Sports Networks (``RSNs'') and any other 
satellite delivered, cable-affiliated programming that the record here 
establishes as being important for competition and non-replicable and 
having no good substitutes; and/or (iii) other ways commenters propose.

We seek comment also on (i) how to implement a sunset (complete or 
partial) to minimize any potential disruption to consumers; (ii) the 
First Amendment implications of the alternatives discussed herein; 
(iii) the costs and benefits of the alternatives discussed herein; and 
(iv) the impact of a sunset on existing merger conditions.

    108. In addition, we seek comment in the NPRM on potential 
improvements to the program access rules to better address potential 
violations. With the exception of certain procedural revisions and the 
previous extensions of the exclusive contract prohibition, the program 
access rules have remained largely unchanged in the almost two decades 
since the Commission originally adopted them in 1993. We seek comment 
on, among other things, whether our rules adequately address 
potentially discriminatory volume discounts and uniform price increases 
and, if not, how these rules should be revised to address these 
concerns.
Legal Basis
    109. The proposed action is authorized pursuant to Sections 4(i), 
4(j), 303(r), and 628 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 303(r), and 548.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply
    110. The RFA directs agencies to provide a description of, and 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the SBA. Below, we 
provide a description of such small entities, as well as an estimate of 
the number of such small entities, where feasible.
    111. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (``NAICS'') defines ``Wired 
Telecommunications Carriers'' as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.'' The SBA has developed a small 
business size standard for wireline firms within the broad economic 
census category, ``Wired Telecommunications Carriers.'' Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small.
    112. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined above. The 
SBA has developed a small business size standard for this category, 
which is: All such firms having 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus under this category and 
the associated small business size standard, the majority of these 
firms can be considered small.
    113. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers nationwide. Industry data 
indicate that all but ten

[[Page 24327]]

cable operators nationwide are small under this size standard. In 
addition, under the Commission's rules, a ``small system'' is a cable 
system serving 15,000 or fewer subscribers. Industry data indicate 
that, of 6,101 systems nationwide, 4,410 systems have under 10,000 
subscribers, and an additional 258 systems have 10,000-19,999 
subscribers. Thus, under this standard, most cable systems are small.
    114. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that all but nine cable operators nationwide are small 
under this subscriber size standard. We note that the Commission 
neither requests nor collects information on whether cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250 million, and therefore we are unable to estimate more 
accurately the number of cable system operators that would qualify as 
small under this size standard.
    115. Direct Broadcast Satellite (``DBS'') Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS, by exception, is now included in the 
SBA's broad economic census category, ``Wired Telecommunications 
Carriers,'' which was developed for small wireline firms. Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small. Currently, only two entities provide DBS service, which requires 
a great investment of capital for operation: DIRECTV and EchoStar 
Communications Corporation (``EchoStar'') (marketed as the DISH 
Network). Each currently offers subscription services. DIRECTV and 
EchoStar each report annual revenues that are in excess of the 
threshold for a small business. Because DBS service requires 
significant capital, we believe it is unlikely that a small entity as 
defined by the SBA would have the financial wherewithal to become a DBS 
service provider.
    116. Satellite Master Antenna Television (SMATV) Systems, also 
known as Private Cable Operators (PCOs). SMATV systems or PCOs are 
video distribution facilities that use closed transmission paths 
without using any public right-of-way. They acquire video programming 
and distribute it via terrestrial wiring in urban and suburban multiple 
dwelling units such as apartments and condominiums, and commercial 
multiple tenant units such as hotels and office buildings. SMATV 
systems or PCOs are now included in the SBA's broad economic census 
category, ``Wired Telecommunications Carriers,'' which was developed 
for small wireline firms. Under this category, the SBA deems a wireline 
business to be small if it has 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus, under this category 
and the associated small business size standard, the majority of these 
firms can be considered small.
    117. Home Satellite Dish (``HSD'') Service. HSD or the large dish 
segment of the satellite industry is the original satellite-to-home 
service offered to consumers, and involves the home reception of 
signals transmitted by satellites operating generally in the C-band 
frequency. Unlike DBS, which uses small dishes, HSD antennas are 
between four and eight feet in diameter and can receive a wide range of 
unscrambled (free) programming and scrambled programming purchased from 
program packagers that are licensed to facilitate subscribers' receipt 
of video programming. Because HSD provides subscription services, HSD 
falls within the SBA-recognized definition of Wired Telecommunications 
Carriers. The SBA has developed a small business size standard for this 
category, which is: All such firms having 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had employment of 1,000 employees or more. Thus, 
under this category and the associated small business size standard, 
the majority of these firms can be considered small.
    118. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)). In 
connection with the 1996 BRS auction, the Commission established a 
small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar 
years. The BRS auctions resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 met the definition of a small business. BRS also 
includes licensees of stations authorized prior to the auction. At this 
time, we estimate that of the 61 small business BRS auction winners, 48 
remain small business licensees. In addition to the 48 small businesses 
that hold BTA authorizations, there are approximately 392 incumbent BRS 
licensees that are considered small entities. After adding the number 
of small business auction licensees to the number of incumbent 
licensees not already counted, we find that there are currently 
approximately 440 BRS licensees that are defined as small businesses 
under either the SBA or the Commission's rules. In 2009, the Commission 
conducted Auction 86, the sale of 78 licenses in the BRS areas. The 
Commission offered three levels of bidding credits: (i) A bidder with 
attributed average annual gross revenues that exceed $15 million and do 
not exceed $40 million for the preceding three years (small business) 
received a 15 percent discount on its winning bid; (ii) a bidder with 
attributed average annual gross revenues that exceed $3 million and do 
not exceed $15 million for the preceding three years (very small 
business) received a 25 percent discount on its winning bid; and (iii) 
a bidder with attributed average annual gross revenues that do not 
exceed $3 million

[[Page 24328]]

for the preceding three years (entrepreneur) received a 35 percent 
discount on its winning bid. Auction 86 concluded in 2009 with the sale 
of 61 licenses. Of the ten winning bidders, two bidders that claimed 
small business status won 4 licenses; one bidder that claimed very 
small business status won three licenses; and two bidders that claimed 
entrepreneur status won six licenses.
    119. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 1,932 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small.
    120. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 31,428 
common carrier fixed licensees and 79,732 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 120 LMDS licensees, three DEMS 
licensees, and three 24 GHz licensees. The Commission has not yet 
defined a small business with respect to microwave services. For 
purposes of the IRFA, we will use the SBA's definition applicable to 
Wireless Telecommunications Carriers (except satellite)--i.e., an 
entity with no more than 1,500 persons. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007, 
which supersede data contained in the 2002 Census, show that there were 
1,383 firms that operated that year. Of those 1,383, 1,368 had fewer 
than 1000 employees, and 15 firms had 1000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of firms can be considered small. We note that the number 
of firms does not necessarily track the number of licensees. We 
estimate that virtually all of the Fixed Microwave licensees (excluding 
broadcast auxiliary licensees) would qualify as small entities under 
the SBA definition.
    121. Open Video Systems. The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers. The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services, OVS falls within 
the SBA small business size standard covering cable services, which is 
``Wired Telecommunications Carriers.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small. In addition, we note that the Commission has 
certified some OVS operators, with some now providing service. 
Broadband service providers (``BSPs'') are currently the only 
significant holders of OVS certifications or local OVS franchises. The 
Commission does not have financial or employment information regarding 
the entities authorized to provide OVS, some of which may not yet be 
operational. Thus, at least some of the OVS operators may qualify as 
small entities.
    122. Cable and Other Subscription Programming. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating studios and facilities 
for the broadcasting of programs on a subscription or fee basis. * * * 
These establishments produce programming in their own facilities or 
acquire programming from external sources. The programming material is 
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' The SBA has 
developed a small business size standard for this category, which is: 
All such firms having $15 million dollars or less in annual revenues. 
To gauge small business prevalence in the Cable and Other Subscription 
Programming industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 396 firms in this category that operated for the entire 
year. Of that number, 325 operated with annual revenues of $9,999,999 
million dollars or less. Seventy-one (71) operated with annual revenues 
of between $10 million and $100 million or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small.
    123. Small Incumbent Local Exchange Carriers. We have included 
small incumbent local exchange carriers in this present RFA analysis. A 
``small business'' under the RFA is one that, inter alia, meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent local exchange 
carriers are not dominant in their field of operation because any such 
dominance is not ``national'' in scope. We have therefore included 
small incumbent local exchange carriers in this RFA analysis, although 
we emphasize that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    124. Incumbent Local Exchange Carriers (``LECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such

[[Page 24329]]

a business is small if it has 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus, under this category 
and the associated small business size standard, the majority of these 
firms can be considered small.
    125. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. Census 
Bureau data for 2007, which now supersede data from the 2002 Census, 
show that there were 3,188 firms in this category that operated for the 
entire year. Of this total, 3,144 had employment of 999 or fewer, and 
44 firms had employment of 1,000 employees or more. Thus, under this 
category and the associated small business size standard, the majority 
of these firms can be considered small. Consequently, the Commission 
estimates that most providers of competitive local exchange service, 
competitive access providers, ``Shared-Tenant Service Providers,'' and 
``Other Local Service Providers'' are small entities.
    126. Motion Picture and Video Production. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged in producing, or producing and distributing motion 
pictures, videos, television programs, or television commercials.'' We 
note that firms in this category may be engaged in various industries, 
including cable programming. Specific figures are not available 
regarding how many of these firms produce and/or distribute programming 
for cable television. The SBA has developed a small business size 
standard for this category, which is: All such firms having $29.5 
million dollars or less in annual revenues. To gauge small business 
prevalence in the Motion Picture and Video Production industries, the 
Commission relies on data currently available from the U.S. Census for 
the year 2007. Census Bureau data for 2007, which now supersede data 
from the 2002 Census, show that there were 9,095 firms in this category 
that operated for the entire year. Of these, 8995 had annual receipts 
of $24,999,999 or less, and 100 had annual receipts ranging from not 
less that $25,000,000 to $100,000,000 or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small.
    127. Motion Picture and Video Distribution. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in acquiring distribution rights and 
distributing film and video productions to motion picture theaters, 
television networks and stations, and exhibitors.'' We note that firms 
in this category may be engaged in various industries, including cable 
programming. Specific figures are not available regarding how many of 
these firms produce and/or distribute programming for cable television. 
The SBA has developed a small business size standard for this category, 
which is: All such firms having $29.5 million dollars or less in annual 
revenues. To gauge small business prevalence in the Motion Picture and 
Video Distribution industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 450 firms in this category that operated for the entire 
year. Of these, 434 had annual receipts of $24,999,999 or less, and 16 
had annual receipts ranging from not less that $25,000,000 to 
$100,000,000 or more. Thus, under this category and associated small 
business size standard, the majority of firms can be considered small.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    128. Certain proposed rule changes discussed in the NPRM would 
affect reporting, recordkeeping, or other compliance requirements. 
First, even if the exclusive contract prohibition were to sunset 
(wholly or partially), the Commission recognizes that other existing 
protections will remain in effect. Namely, an MVPD would still have the 
option to file a complaint with the Commission alleging that an 
exclusive contract between a cable operator and a satellite-delivered, 
cable-affiliated programmer involving satellite-delivered, cable-
affiliated programming is an unfair act in violation of Section 628(b) 
of the Act and Section 76.1001(a) of the Commission's rules. An MVPD 
may also have the option of filing a discrimination complaint under 
Section 628(c)(2)(B) of the Act, which would provide some protection 
for competitive MVPDs should the exclusive contract prohibition sunset 
(wholly or partially). Further, the NPRM seeks comment on the extent to 
which undue influence complaints under Section 628(c)(2)(A) may also 
provide some protection for competitive MVPDs should the exclusive 
contract prohibition sunset (wholly or partially). Second, rather than 
sunsetting the exclusive contract prohibition in its entirety, the 
Commission seeks comment on whether it should instead relax the 
exclusivity prohibition, such as by establishing a process whereby a 
cable operator or satellite-delivered, cable-affiliated programmer can 
seek to remove the exclusive contract prohibition on a market-by-market 
basis based on the extent of competition in the market. The Commission 
seeks comment on the details of any such process for removing the 
exclusive contract prohibition on a market-by-market basis. Third, the 
Commission proposes to adopt a 45-day answer period in complaint 
proceedings alleging a violation of Section 628(b). Fourth, the NPRM 
seeks comment on how the Commission might improve its rules and 
procedures to avoid impeding the filing of legitimate complaints 
alleging that particular volume discounts violate Section 628(c)(2)(B) 
of the Act. Specifically, the Commission asks whether satellite-
delivered, cable-affiliated programmers should be required to 
demonstrate in response to a complaint the increase in advertising 
revenues resulting from licensing programming to a larger MVPD and how 
this increase justifies the volume discount provided to the larger MVPD 
relative to the complaint.
Steps Taken to Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered
    129. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    130. First, regarding the potential sunset or relaxation of the 
exclusive contract prohibition, the NPRM seeks

[[Page 24330]]

comment on what impact the retention of the exclusive contract 
prohibition has had on the general state of competition among MVPDs in 
the video distribution market. More specifically, the NPRM asks how a 
sunset or relaxation of the exclusive contract prohibition would affect 
competition in the video distribution market, and how a sunset or 
relaxation would affect the potential entry of new competitors in the 
market. The NPRM also seeks comment on how the current state of cable 
system clustering and cable market share in regional markets should 
affect the Commission's decision on whether to retain, sunset, or relax 
the exclusive contract prohibition. Further, it asks whether the 
current state of horizontal consolidation in the cable industry has 
increased or decreased incentives for anticompetitive foreclosure of 
access to vertically integrated programming. The NPRM asks whether 
competitive MVPDs have the resources to invest in creating their own 
video programming. Overall, the Commission's analysis is focused on 
whether the exclusive contract prohibition ``continues to be necessary 
to preserve and protect competition and diversity in the distribution 
of video programming.''
    131. Second, to the extent the exclusive contract prohibition were 
to sunset (wholly or partially), the NPRM seeks comment on ways to 
reduce burdens on both complainants and defendants in connection with 
complaints alleging that an exclusive contract involving satellite-
delivered, cable-affiliated programming violates Section 628(b) (or 
Section 628(c)(2)(B)) of the Act.
    132. Third, regarding the potential changes to our procedural rules 
governing program access complaints, we find that the changes would 
benefit regulated entities, including those that are small entities. 
Specifically, small entities may benefit from the proposed lengthier 
45-day period within which to file an answer. They may also benefit 
from rules addressing potentially discriminatory volume discounts and 
uniform price increases.
Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    133. None.

B. Paperwork Reduction Act

    134. This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, we seek specific comment on how we might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

C. Ex Parte Rules

    135. Permit-But-Disclose. The proceeding this Notice initiates 
shall be treated as a ``permit-but-disclose'' proceeding in accordance 
with the Commission's ex parte rules. Persons making ex parte 
presentations must file a copy of any written presentation or a 
memorandum summarizing any oral presentation within two business days 
after the presentation (unless a different deadline applicable to the 
Sunshine period applies). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentation must (1) list 
all persons attending or otherwise participating in the meeting at 
which the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with rule 1.1206(b). 
In proceedings governed by rule 1.49(f) or for which the Commission has 
made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

D. Filing Requirements

    136. Comments and Replies. Pursuant to Sections 1.415 and 1.419 of 
the Commission's rules, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (``ECFS'').
    <bullet> Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [cir] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes and boxes must be disposed of before 
entering the building.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    137. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. These documents will also be available via ECFS. Documents will 
be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.
    138. People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="395f5a5a0c090d795f5a5a175e564f">[email protected]</a> or call the FCC's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).
    139. Additional Information. For additional information on this

[[Page 24331]]

proceeding, contact David Konczal, <a href="/cdn-cgi/l/email-protection#bffbdec9d6db91f4d0d1dcc5ded3ffd9dcdc91d8d0c9"><span class="__cf_email__" data-cfemail="c387a2b5aaa7ed88acada0b9a2af83a5a0a0eda4acb5">[email protected]</span></a>, or Diana 
Sokolow, <a href="/cdn-cgi/l/email-protection#8acee3ebe4eba4d9e5e1e5e6e5fdcaece9e9a4ede5fc"><span class="__cf_email__" data-cfemail="1a5e737b747b344975717576756d5a7c7979347d756c">[email protected]</span></a>, of the Media Bureau, Policy Division, 
(202) 418-2120.

V. Ordering Clauses

    140. Accordingly, It is ordered that pursuant to the authority 
found in Sections 4(i), 4(j), 303(r), and 628 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 548, this 
Notice of Proposed Rulemaking is adopted.
    141. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.

List of Subjects in 47 CFR Part 76

    Cable television, Reporting and recordkeeping requirements.

Federal Communications Commission.
Sheryl D. Todd,
Deputy Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

    1. The authority citation for Part 76 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572 and 573.

    2. Section 76.1000 is amended by adding paragraph (n) to read as 
follows:


Sec.  76.1000  Definitions.

* * * * *
    (n) Regional Sports Network. The term ``Regional Sports Network'' 
means video programming that:
    (1) Provides live or same-day distribution within a limited 
geographic region of sporting events of a sports team that is a member 
of Major League Baseball, the National Basketball Association, the 
National Football League, the National Hockey League, NASCAR, NCAA 
Division I Football, NCAA Division I Basketball, Liga de B[eacute]isbol 
Profesional de Puerto Rico, Baloncesto Superior Nacional de Puerto 
Rico, Liga Mayor de F[uacute]tbol Nacional de Puerto Rico, and the 
Puerto Rico Islanders of the United Soccer League's First Division; and
    (2) In any year, carries a minimum of either 100 hours of 
programming that meets the criteria of paragraph (n)(1) of this 
section, or 10 percent of the regular season games of at least one 
sports team that meets the criteria of paragraph (n)(1) of this 
section.
    Alternative 1:
    3. Section 76.1002 is amended by revising paragraph (c)(3) and (6) 
to read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (c) * * *
    (3) Specific arrangements: Subdistribution agreements--(i) Unserved 
and served areas. No cable operator shall enter into any 
subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming with a satellite cable 
programming vendor in which a cable operator has an attributable 
interest or a satellite broadcast programming vendor in which a cable 
operator has an attributable interest, with respect to areas served or 
unserved by a cable operator, unless such agreement or arrangement 
complies with the limitations set forth in paragraph (c)(3)(ii) of this 
section.
    (ii) Limitations on subdistribution agreements. No cable operator 
engaged in subdistribution of satellite cable programming or satellite 
broadcast programming may require a competing multichannel video 
programming distributor to
    (A) Purchase additional or unrelated programming as a condition of 
such subdistribution; or
    (B) Provide access to private property in exchange for access to 
programming. In addition, a subdistributor may not charge a competing 
multichannel video programming distributor more for said programming 
than the satellite cable programming vendor or satellite broadcast 
programming vendor itself would be permitted to charge. Any cable 
operator acting as a subdistributor of satellite cable programming or 
satellite broadcast programming must respond to a request for access to 
such programming by a competing multichannel video programming 
distributor within fifteen (15) days of the request. If the request is 
denied, the competing multichannel video programming distributor must 
be permitted to negotiate directly with the satellite cable programming 
vendor or satellite broadcast programming vendor.
* * * * *
    (6) Sunset provision. The prohibition of exclusive contracts set 
forth in paragraph (c)(2) of this section shall cease to be effective 
on October 5, 2017, unless the Commission finds, during a proceeding to 
be conducted during the year preceding such date, that said prohibition 
continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.
* * * * *
    Alternative 2:
    4. Section 76.1002 is amended by removing and reserving paragraph 
(c)(2), revising paragraph (c)(3) through (5), and removing paragraph 
(c)(6) to read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (c) * * *
    (3) Specific arrangements: Subdistribution agreements--(i) Unserved 
areas. No cable operator shall enter into any subdistribution agreement 
or arrangement for satellite cable programming or satellite broadcast 
programming with a satellite cable programming vendor in which a cable 
operator has an attributable interest or a satellite broadcast 
programming vendor in which a cable operator has an attributable 
interest for distribution to persons in areas not served by a cable 
operator as of October 5, 1992 unless such agreement or arrangement 
complies with the limitations set forth in paragraph (c)(3)(ii) of this 
section.
    (ii) Limitations on subdistribution agreements in unserved areas. 
No cable operator engaged in subdistribution of satellite cable 
programming or satellite broadcast programming may require a competing 
multichannel video programming distributor to
    (A) Purchase additional or unrelated programming as a condition of 
such subdistribution; or
    (B) Provide access to private property in exchange for access to 
programming. In addition, a subdistributor may not charge a competing 
multichannel video programming distributor more for said programming 
than the satellite cable programming vendor or satellite broadcast 
programming vendor itself would be permitted to charge. Any cable 
operator acting as a subdistributor of satellite cable programming or 
satellite broadcast programming must respond to a request for access to 
such programming by a competing multichannel video programming 
distributor within fifteen (15) days of the request. If the request is 
denied, the competing multichannel video programming distributor must 
be

[[Page 24332]]

permitted to negotiate directly with the satellite cable programming 
vendor or satellite broadcast programming vendor.
    (4) Public interest determination. In determining whether an 
exclusive contract is in the public interest for purposes of paragraph 
(c)(5) of this section, the Commission will consider each of the 
following factors with respect to the effect of such contract on the 
distribution of video programming in areas that are served by a cable 
operator:
    (i) The effect of such exclusive contract on the development of 
competition in local and national multichannel video programming 
distribution markets;
    (ii) The effect of such exclusive contract on competition from 
multichannel video programming distribution technologies other than 
cable;
    (iii) The effect of such exclusive contract on the attraction of 
capital investment in the production and distribution of new satellite 
cable programming;
    (iv) The effect of such exclusive contract on diversity of 
programming in the multichannel video programming distribution market; 
and
    (v) The duration of the exclusive contract.
    (5) Commission approval required. Any cable operator, satellite 
cable programming vendor in which a cable operator has an attributable 
interest, or satellite broadcast programming vendor in which a cable 
operator has an attributable interest must submit a ``Petition for 
Exclusivity'' to the Commission and receive approval from the 
Commission to preclude the filing of complaints alleging that an 
exclusive contract, or practice, activity or arrangement tantamount to 
an exclusive contract, with respect to areas served by a cable operator 
violates section 628(b) of the Communications Act of 1934, as amended, 
and Sec.  76.1001(a), or section 628(c)(2)(B) of the Communications Act 
of 1934, as amended, and paragraph (b) of this section.
    (i) The petition for exclusivity shall contain those portions of 
the contract relevant to exclusivity, including:
    (A) A description of the programming service;
    (B) The extent and duration of exclusivity proposed; and
    (C) Any other terms or provisions directly related to exclusivity 
or to any of the criteria set forth in paragraph (c)(4) of this 
section. The petition for exclusivity shall also include a statement 
setting forth the petitioner's reasons to support a finding that the 
contract is in the public interest, addressing each of the five factors 
set forth in paragraph (c)(4) of this section.
    (ii) Any competing multichannel video programming distributor 
affected by the proposed exclusivity may file an opposition to the 
petition for exclusivity within thirty (30) days of the date on which 
the petition is placed on public notice, setting forth its reasons to 
support a finding that the contract is not in the public interest under 
the criteria set forth in paragraph (c)(4) of this section. Any such 
formal opposition must be served on petitioner on the same day on which 
it is filed with the Commission.
    (iii) The petitioner may file a response within ten (10) days of 
receipt of any formal opposition. The Commission will then approve or 
deny the petition for exclusivity.
* * * * *
    Alternative 3:
    5. Section 76.1002 is amended by revising paragraph (c)(2) through 
(3) and (5), removing and reserving paragraph (c)(6), and adding 
paragraph (c)(7) to read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (c) * * *
    (2) Served areas. No cable operator shall enter into any exclusive 
contracts, or engage in any practice, activity or arrangement 
tantamount to an exclusive contract, for satellite cable programming or 
satellite broadcast programming with a satellite cable programming 
vendor in which a cable operator has an attributable interest or a 
satellite broadcast programming vendor in which a cable operator has an 
attributable interest, with respect to areas served by a cable 
operator, unless:
    (i) The Commission determines in accordance with paragraph (c)(4) 
of this section that such contract, practice, activity or arrangement 
is in the public interest; or
    (ii) Such contract, practice, activity or arrangement pertains to a 
geographic area for which a petition for sunset has been granted 
pursuant to paragraph (c)(7) of this section.
    (3) Specific arrangements: Subdistribution agreements--(i) Unserved 
and served areas. No cable operator shall enter into any 
subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming with a satellite cable 
programming vendor in which a cable operator has an attributable 
interest or a satellite broadcast programming vendor in which a cable 
operator has an attributable interest, with respect to areas served or 
unserved by a cable operator, unless such agreement or arrangement 
complies with the limitations set forth in paragraph (c)(3)(ii) of this 
section.
    (ii) Limitations on subdistribution agreements. No cable operator 
engaged in subdistribution of satellite cable programming or satellite 
broadcast programming may require a competing multichannel video 
programming distributor to
    (A) Purchase additional or unrelated programming as a condition of 
such subdistribution; or
    (B) Provide access to private property in exchange for access to 
programming. In addition, a subdistributor may not charge a competing 
multichannel video programming distributor more for said programming 
than the satellite cable programming vendor or satellite broadcast 
programming vendor itself would be permitted to charge. Any cable 
operator acting as a subdistributor of satellite cable programming or 
satellite broadcast programming must respond to a request for access to 
such programming by a competing multichannel video programming 
distributor within fifteen (15) days of the request. If the request is 
denied, the competing multichannel video programming distributor must 
be permitted to negotiate directly with the satellite cable programming 
vendor or satellite broadcast programming vendor.
    (iii) Exceptions. Paragraph (c)(3) of this section shall not apply 
in a geographic area where a petition for sunset has been granted 
pursuant to paragraph (c)(7) of this section.
* * * * *
    (5) Commission approval required. (i) Any cable operator, satellite 
cable programming vendor in which a cable operator has an attributable 
interest, or satellite broadcast programming vendor in which a cable 
operator has an attributable interest must submit a ``Petition for 
Exclusivity'' to the Commission and receive approval from the 
Commission:
    (A) Prior to enforcing or entering into an exclusive contract, or 
practice, activity or arrangement tantamount to an exclusive contract, 
subject to paragraph (c)(2) of this section that pertains to a 
geographic area for which a petition for sunset has not been granted 
pursuant to paragraph (c)(7) of this section; and
    (B) To preclude the filing of complaints alleging that an exclusive 
contract, or practice, activity or arrangement tantamount to an 
exclusive contract, with respect to areas served by a cable operator 
violates section 628(b)

[[Page 24333]]

of the Communications Act of 1934, as amended, and Sec.  76.1001(a) of 
this part, or section 628(c)(2)(B) of the Communications Act of 1934, 
as amended, and paragraph (b) of this section.
    (ii) The petition for exclusivity shall contain those portions of 
the contract relevant to exclusivity, including:
    (A) A description of the programming service;
    (B) The extent and duration of exclusivity proposed; and
    (C) Any other terms or provisions directly related to exclusivity 
or to any of the criteria set forth in paragraph (c)(4) of this 
section. The petition for exclusivity shall also include a statement 
setting forth the petitioner's reasons to support a finding that the 
contract is in the public interest, addressing each of the five factors 
set forth in paragraph (c)(4) of this section.
    (iii) Any competing multichannel video programming distributor 
affected by the proposed exclusivity may file an opposition to the 
petition for exclusivity within thirty (30) days of the date on which 
the petition is placed on public notice, setting forth its reasons to 
support a finding that the contract is not in the public interest under 
the criteria set forth in paragraph (c)(4) of this section. Any such 
formal opposition must be served on petitioner on the same day on which 
it is filed with the Commission.
    (iv) The petitioner may file a response within ten (10) days of 
receipt of any formal opposition. The Commission will then approve or 
deny the petition for exclusivity.
* * * * *
    (7) Petition for Sunset. Any cable operator, satellite cable 
programming vendor in which a cable operator has an attributable 
interest, or satellite broadcast programming vendor in which a cable 
operator has an attributable interest seeking to remove the prohibition 
on exclusive contracts and practices, activities or arrangements 
tantamount to an exclusive contract set forth in paragraph (c)(2) of 
this section may submit a ``Petition for Sunset'' to the Commission.
    (i) The petition for sunset shall specify the geographic area for 
which a sunset of the prohibition set forth in paragraph (c)(2) of this 
section is sought and shall include a statement setting forth the 
petitioner's reasons to support a finding that such prohibition is not 
necessary to preserve and protect competition and diversity in the 
distribution of video programming in the geographic area specified.
    (ii) Any competing multichannel video programming distributor or 
other interested party affected by the petition for sunset may file an 
opposition to the petition within forty-five (45) days of the date on 
which the petition is placed on public notice, setting forth its 
reasons to support a finding that such prohibition continues to be 
necessary to preserve and protect competition and diversity in the 
distribution of video programming. Any such formal opposition must be 
served on the petitioner on the same day on which it is filed with the 
Commission.
    (iii) The petitioner may file a response within fifteen (15) days 
of receipt of any formal opposition.
    (iv) If the Commission finds that the prohibition is not necessary 
to preserve and protect competition and diversity in the distribution 
of video programming, then the prohibition set forth in paragraph 
(c)(2) of this section shall no longer apply in the geographic area 
specified in the decision of the Commission.
* * * * *
    Alternative 4:
    6. Section 76.1002 is amended by revising paragraphs (c)(2) (3), 
(5) and (6) to read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (c) * * *
    (2) Served areas. No cable operator shall enter into any exclusive 
contracts, or engage in any practice, activity or arrangement 
tantamount to an exclusive contract, for satellite cable programming or 
satellite broadcast programming that meets the definition of a Regional 
Sports Network as defined in Sec.  76.1000(n) of this part with a 
satellite cable programming vendor in which a cable operator has an 
attributable interest or a satellite broadcast programming vendor in 
which a cable operator has an attributable interest, with respect to 
areas served by a cable operator, unless the Commission determines in 
accordance with paragraph (c)(4) of this section that such contract, 
practice, activity or arrangement is in the public interest.
    (3) Specific arrangements: Subdistribution agreements--(i) Unserved 
areas. No cable operator shall enter into any subdistribution agreement 
or arrangement for satellite cable programming or satellite broadcast 
programming with a satellite cable programming vendor in which a cable 
operator has an attributable interest or a satellite broadcast 
programming vendor in which a cable operator has an attributable 
interest, for distribution to persons in areas not served by a cable 
operator as of October 5, 1992, unless such agreement or arrangement 
complies with the limitations set forth in paragraph (c)(3)(iii) of 
this section.
    (ii) Served areas. No cable operator shall enter into any 
subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming that meets the 
definition of a Regional Sports Network as defined in Sec.  76.1000(n) 
of this part with a satellite cable programming vendor in which a cable 
operator has an attributable interest or a satellite broadcast 
programming vendor in which a cable operator has an attributable 
interest, with respect to areas served by a cable operator, unless such 
agreement or arrangement complies with the limitations set forth in 
paragraph (c)(3)(iii) of this section.
    (iii) Limitations on subdistribution agreements. No cable operator 
engaged in subdistribution of satellite cable programming or satellite 
broadcast programming may require a competing multichannel video 
programming distributor to
    (A) Purchase additional or unrelated programming as a condition of 
such subdistribution; or
    (B) Provide access to private property in exchange for access to 
programming. In addition, a subdistributor may not charge a competing 
multichannel video programming distributor more for said programming 
than the satellite cable programming vendor or satellite broadcast 
programming vendor itself would be permitted to charge. Any cable 
operator acting as a subdistributor of satellite cable programming or 
satellite broadcast programming must respond to a request for access to 
such programming by a competing multichannel video programming 
distributor within fifteen (15) days of the request. If the request is 
denied, the competing multichannel video programming distributor must 
be permitted to negotiate directly with the satellite cable programming 
vendor or satellite broadcast programming vendor.
* * * * *
    (5) Commission approval required. (i) Any cable operator, satellite 
cable programming vendor in which a cable operator has an attributable 
interest, or satellite broadcast programming vendor in which a cable 
operator has an attributable interest must submit a ``Petition for 
Exclusivity'' to the Commission and receive approval from the 
Commission:
    (A) Prior to enforcing or entering into an exclusive contract, or 
practice, activity or arrangement tantamount to an exclusive contract, 
subject to paragraph (c)(2) of this section; and

[[Page 24334]]

    (B) To preclude the filing of complaints alleging that an exclusive 
contract, or practice, activity or arrangement tantamount to an 
exclusive contract, with respect to areas served by a cable operator 
violates section 628(b) of the Communications Act of 1934, as amended, 
and Sec.  76.1001(a) of this part, or section 628(c)(2)(B) of the 
Communications Act of 1934, as amended, and paragraph (b) of this 
section.
    (ii) The petition for exclusivity shall contain those portions of 
the contract relevant to exclusivity, including:
    (A) A description of the programming service;
    (B) The extent and duration of exclusivity proposed; and
    (C) Any other terms or provisions directly related to exclusivity 
or to any of the criteria set forth in paragraph (c)(4) of this 
section. The petition for exclusivity shall also include a statement 
setting forth the petitioner's reasons to support a finding that the 
contract is in the public interest, addressing each of the five factors 
set forth in paragraph (c)(4) of this section.
    (iii) Any competing multichannel video programming distributor 
affected by the proposed exclusivity may file an opposition to the 
petition for exclusivity within thirty (30) days of the date on which 
the petition is placed on public notice, setting forth its reasons to 
support a finding that the contract is not in the public interest under 
the criteria set forth in paragraph (c)(4) of this section. Any such 
formal opposition must be served on petitioner on the same day on which 
it is filed with the Commission.
    (iv) The petitioner may file a response within ten (10) days of 
receipt of any formal opposition. The Commission will then approve or 
deny the petition for exclusivity.
    (6) Sunset provision. The prohibition of exclusive contracts set 
forth in paragraph (c)(2) of this section shall cease to be effective 
on October 5, 2017, unless the Commission finds, during a proceeding to 
be conducted during the year preceding such date, that said prohibition 
continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.
* * * * *
    7. Section 76.1003 is amended by revising paragraph (e)(1) to read 
as follows:


Sec.  76.1003  Program access proceedings.

* * * * *
    (e) Answer. (1) Except as otherwise provided or directed by the 
Commission, any cable operator, satellite cable programming vendor or 
satellite broadcast programming vendor upon which a program access 
complaint is served under this section shall answer within twenty (20) 
days of service of the complaint, provided that the answer shall be 
filed within forty-five (45) days of service of the complaint if the 
complaint alleges a violation of section 628(b) of the Communications 
Act of 1934, as amended, or Sec.  76.1001(a). To the extent that a 
cable operator, satellite cable programming vendor or satellite 
broadcast programming vendor expressly references and relies upon a 
document or documents in asserting a defense or responding to a 
material allegation, such document or documents shall be included as 
part of the answer.
* * * * *
    Alternative 1:
    8. Section 76.1004 is amended by revising paragraph (b) to read as 
follows:


Sec.  76.1004  Applicability of program access rules to common carriers 
and affiliates.

* * * * *
    (b) Sections 76.1002(c)(1) through (3) shall be applied to a common 
carrier or its affiliate that provides video programming by any means 
directly to subscribers as follows: No common carrier or its affiliate 
that provides video programming directly to subscribers shall engage in 
any practice or activity or enter into any understanding or 
arrangement, including exclusive contracts, with a satellite cable 
programming vendor or satellite broadcast programming vendor for 
satellite cable programming or satellite broadcast programming that 
prevents a multichannel video programming distributor from obtaining 
such programming from any satellite cable programming vendor in which a 
common carrier or its affiliate has an attributable interest, or any 
satellite broadcasting vendor in which a common carrier or its 
affiliate has an attributable interest for distribution to persons in 
areas not served by a cable operator as of October 5, 1992.
    Alternative 2:
    9. Section 76.1004 is amended by revising paragraph (b) to read as 
follows:


Sec.  76.1004   Applicability of program access rules to common 
carriers and affiliates.

* * * * *
    (b) Sections 76.1002(c)(1) through (3) shall be applied to a common 
carrier or its affiliate that provides video programming by any means 
directly to subscribers in such a way that such common carrier or its 
affiliate shall be generally restricted from entering into an exclusive 
arrangement for satellite cable programming or satellite broadcast 
programming with a satellite cable programming vendor in which a common 
carrier or its affiliate has an attributable interest or a satellite 
broadcast programming vendor in which a common carrier or its affiliate 
has an attributable interest, unless the arrangement pertains to an 
area served by a cable system as of October 5, 1992, and:
    (1) The Commission determines in accordance with Sec.  
76.1002(c)(4) that such arrangement is in the public interest; or
    (2) Such arrangement pertains to a geographic area for which a 
petition for sunset has been granted pursuant to Sec.  76.1002(c)(7) of 
this part.
    Alternative 3:
    10. Section 76.1004 is amended by revising paragraph (b) to read as 
follows:


Sec.  76.1004   Applicability of program access rules to common 
carriers and affiliates.

* * * * *
    (b) Sections 76.1002(c)(1) through (3) shall be applied to a common 
carrier or its affiliate that provides video programming by any means 
directly to subscribers in such a way that such common carrier or its 
affiliate shall be generally restricted from entering into an exclusive 
arrangement for satellite cable programming or satellite broadcast 
programming that meets the definition of a Regional Sports Network as 
defined in Sec.  76.1000(n) with a satellite cable programming vendor 
in which a common carrier or its affiliate has an attributable interest 
or a satellite broadcast programming vendor in which a common carrier 
or its affiliate has an attributable interest, unless the arrangement 
pertains to an area served by a cable system as of October 5, 1992, and 
the Commission determines in accordance with Sec.  76.1002(c)(4) that 
such arrangement is in the public interest.
    Alternative 1:
    11. Section 76.1507 is amended by removing and reserving paragraph 
(a)(2) and revising paragraphs (a)(3) and (b) to read as follows:


Sec.  76.1507  Competitive access to satellite cable programming.

    (a) * * *
    (3) Section 76.1002(c)(3)(i) through (ii) shall only restrict the 
conduct of an open video system operator, its affiliate that provides 
video programming on its open video system and a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest, as follows: No open video system operator shall 
enter into any subdistribution agreement or arrangement for satellite 
cable

[[Page 24335]]

programming or satellite broadcast programming with a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest or a satellite broadcast programming vendor in 
which an open video system operator has an attributable interest for 
distribution to persons in areas not served by a cable operator as of 
October 5, 1992 unless such agreement or arrangement complies with the 
limitations set forth in Sec.  76.1002(c)(3)(ii).
    (b) No open video system programming provider in which a cable 
operator has an attributable interest shall engage in any practice or 
activity or enter into any understanding or arrangement, including 
exclusive contracts, with a satellite cable programming vendor or 
satellite broadcast programming vendor for satellite cable programming 
or satellite broadcast programming that prevents a multichannel video 
programming distributor from obtaining such programming from any 
satellite cable programming vendor in which a cable operator has an 
attributable interest, or any satellite broadcasting vendor in which a 
cable operator has an attributable interest for distribution to person 
in areas not served by a cable operator as of October 5, 1992.
    Alternative 2:
    12. Section 76.1507 is amended by revising paragraphs (a)(2) and 
(3) and paragraph (b)(2) to read as follows:


Sec.  76.1507  Competitive access to satellite cable programming.

    (a) * * *
    (2) Section 76.1002(c)(2) shall only restrict the conduct of an 
open video system operator, its affiliate that provides video 
programming on its open video system and a satellite cable programming 
vendor in which an open video system operator has an attributable 
interest, as follows: No open video system operator or its affiliate 
that provides video programming on its open video system shall enter 
into any exclusive contracts, or engage in any practice, activity or 
arrangement tantamount to an exclusive contract, for satellite cable 
programming or satellite broadcast programming with a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest or a satellite broadcast programming vendor, 
unless:
    (i) The Commission determines in accordance with Sec.  
76.1002(c)(4) that such a contract, practice, activity or arrangement 
is in the public interest; or
    (ii) Such a contract, practice, activity or arrangement pertains to 
a geographic area for which a petition for sunset has been granted 
pursuant to Sec.  76.1002(c)(7).
    (3) Section 76.1002(c)(3)(i) through (ii) shall only restrict the 
conduct of an open video system operator, its affiliate that provides 
video programming on its open video system and a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest, as follows: No open video system operator shall 
enter into any subdistribution agreement or arrangement for satellite 
cable programming or satellite broadcast programming with a satellite 
cable programming vendor in which an open video system operator has an 
attributable interest or a satellite broadcast programming vendor in 
which an open video system operator has an attributable interest, with 
respect to areas served or unserved by a cable operator, unless such 
agreement or arrangement complies with the limitations set forth in 
Sec.  76.1002(c)(3)(ii), except as provided in Sec.  
76.1002(c)(3)(iii).
    (b) * * *
    (2) Enter into any exclusive contracts, or engage in any practice, 
activity or arrangement tantamount to an exclusive contract, for 
satellite cable programming or satellite broadcast programming with a 
satellite cable programming vendor in which a cable operator has an 
attributable interest or a satellite broadcast programming vendor, 
unless:
    (i) The Commission determines in accordance with Sec.  
76.1002(c)(4) that such a contract, practice, activity or arrangement 
is in the public interest; or
    (ii) Such a contract, practice, activity or arrangement pertains to 
a geographic area for which a petition for sunset has been granted 
pursuant to Sec.  76.1002(c)(7).
    Alternative 3:
    13. Section 76.1507 is amended by revising paragraph (a)(2) through 
(3) and paragraph (b)(2) to read as follows:


Sec.  76.1507   Competitive access to satellite cable programming.

    (a) * * *
    (2) Section 76.1002(c)(2) shall only restrict the conduct of an 
open video system operator, its affiliate that provides video 
programming on its open video system and a satellite cable programming 
vendor in which an open video system operator has an attributable 
interest, as follows: No open video system operator or its affiliate 
that provides video programming on its open video system shall enter 
into any exclusive contracts, or engage in any practice, activity or 
arrangement tantamount to an exclusive contract, for satellite cable 
programming or satellite broadcast programming that meets the 
definition of a Regional Sports Network as defined in Sec.  76.1000(n) 
of this part with a satellite cable programming vendor in which an open 
video system operator has an attributable interest or a satellite 
broadcast programming vendor, unless the Commission determines in 
accordance with Sec.  76.1002(c)(4) that such a contract, practice, 
activity or arrangement is in the public interest.
    (3) Section 76.1002(c)(3)(i) through (ii) shall only restrict the 
conduct of an open video system operator, its affiliate that provides 
video programming on its open video system and a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest, as follows:
    (i) Unserved areas. No open video system operator shall enter into 
any subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming with a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest or a satellite broadcast programming vendor in 
which an open video system operator has an attributable interest for 
distribution to persons in areas not served by a cable operator as of 
October 5, 1992 unless such agreement or arrangement complies with the 
limitations set forth in Sec.  76.1002(c)(3)(iii).
    (ii) Served areas. No open video system operator shall enter into 
any subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming that meets the 
definition of a Regional Sports Network as defined in Sec.  76.1000(n) 
of this part with a satellite cable programming vendor in which an open 
video system operator has an attributable interest or a satellite 
broadcast programming vendor in which an open video system operator has 
an attributable interest, with respect to areas served by a cable 
operator, unless such agreement or arrangement complies with the 
limitations set forth in Sec.  76.1002(c)(3)(iii).
    (b) * * *
    (2) Enter into any exclusive contracts, or engage in any practice, 
activity or arrangement tantamount to an exclusive contract, for 
satellite cable programming or satellite broadcast programming that 
meets the definition of a Regional Sports Network as defined in Sec.  
76.1000(n) of this part with a satellite cable programming vendor in 
which a cable operator has an attributable interest or a satellite 
broadcast programming vendor, unless the Commission determines in

[[Page 24336]]

accordance with Sec.  76.1002(c)(4) that such a contract, practice, 
activity or arrangement is in the public interest.

[FR Doc. 2012-8991 Filed 4-20-12; 8:45 am]
BILLING CODE 6712-01-P


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