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Wednesday, January 20, 2010
FCC Ends Cable's 'Terrestrial Loophole' Used to Prevent Sports Programming Blockage

The Federal Communications Commission took a major step to curb the power of cable operators to block sports programming access to rival telephone and satellite operators, a practice that has long irritated sports viewers. This policy, known as the "terrestrial loophole" was permitted until this order. The FCC took the action, according to the Wall Street Journal, after firms like Verizon, Direct TV and Dish Network, complained that the cable operators improperly blocked their broadcasts of local teams they either own outright or have rights to broadcast) which the Commission, in its 4-1 decision, concluded violated anti-discrimination provisions of section 628 of the Communications Act. Section 628 requires cable operators to act in the public interest and engage in "unfair acts" against satellite operators, including discrimination in the prices, terms and sale of cable programming to those operators.

The FCC's order, all 87 pages in length, rejects the claims of exclusivity by cable operators of certain programming that gives them an competitive advantage over their rivals. Challenges are likely on both administrative law and constitutional grounds. In its report, the FCC, anticipating such litigation, took note that the restrictions are content-neutral and subject to intermediate scrutiny under Time-Warner v. FCC, 93 F. 3f 957 (D.C. Cir. 1996). Although I have only skimmed the order, it has all the makings of a repeat of the litigation over the must-carry rules that made two Supreme Court appearances in the 1990s. Stay tuned.


Cable Competition Report shows that cable operators still have 85 percent of those consumers who subscribe to multichannel video programming. The Commission believes that, as competition to cable and choice in the video programming marketplace develop, consumers will have access to more services and that prices will be controlled by competition.

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