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Cable Technology Feature Article

January 20, 2009

In Last Move as Chairman, FCC's Martin Proposes Fines Against Cable Operators

By Susan J. Campbell, TMCnet Contributing Editor

The FCC (News - Alert) has come under fire as of late for its failure to properly prepare for the analog to digital conversion. Bent on ensuring it is not just in defense mode, the organization has also targeted those cable operators who have failed to provide complete answers to questions concerning their own move.

Letters were sent out in October by the FCC requesting a significant amount of data from operators, including highly sensitive pricing terms in programming contracts. The operators were given 14 calendar days to respond. Some cable operators argued that the time was insufficient, especially since the FCC was asking for data as far back as 2006.

FCC Chairman Kevin Martin said in a November statement: "Obviously we always end up evaluating the specifics of what people end up providing, but I think that companies that did not provide sufficient answers would be subject to the commission's enforcement actions... That includes fines."

Ted Hearn reported yesterday in Multichannel News that Martin has proposed to fine as many as nine cable companies $25,000 each for their failure to fully respond to the FCC’s investigation. Issued on Monday, the fines may be appealed to the FCC's commissioners and later in federal court.

The following cable operators are included in the proposed fines: Bright House Networks, Cablevision Systems (News - Alert) Corp, Charter Communications, Comcast Corp., Cox Communications, Harron Communications, Midcontinent Communications, Suddenlink Communications and Time Warner (News - Alert) Cable.

In a letter Martin sent Monday to Senate Commerce Committee chairman Jay Rockefeller (D-W.Va.) to announce the fines, he stated, "Misconduct of this type exhibits contempt for the FCC's authority and threatens to compromise the FCC's ability to adequately investigate violations of its rules.”

Violations included those committed by Cablevision, which failed to give subscribers in Randolph, New Jersey the required 30 days notice before moving A&E, Animal Planet and E! to digital. The company was also fined for not providing 30 days notice as dictated by FCC rules.

The biggest offender was Time Warner, fined at $130,000 due to channel changes made in Hawaii to launch switch digital video technology. The FCC found fault in this move as consumers with CableCard-enabled TVs needed to lease a set-top to see all channels that were available before the rollout.

Martin singled out those cable operators that moved analog channels to digital, requiring that consumers lease set-top boxes to maintain access to migrated channels. He noted that consumers should have been offered reduced rates for analog-only viewing when channels were lost and boxes were not leased.

John Eggerton noted in a Broadcasting & Cable piece that Martin claimed that cable rates have doubled while rates for other services have decreased in the same period of time.

"When cable operators migrate analog channels to a digital tier, consumers are forced to pay more if they wish to continue watching the same channels," wrote Martin in his letter to Rockefeller.

"Or, consumers may continue to pay the same amount to watch fewer channels. This is not the type of consumer choice that the Communications Act envisions. The commission has taken this issue seriously and I hope that Congress will as well," he added.

This move to fine cable operators is a last stand for Martin as he is scheduled to resign the FCC today.
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Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan's articles, please visit her columnist page.

Edited by Michelle Robart