FCC closes loophole that has allowed cable TV operators to withhold programs from rivals

FCC closes loophole in cable program access rules

WASHINGTON — Cable TV companies will no longer be able to use a federal loophole to withhold sports networks and other popular programming that they own from satellite providers and other rivals.

The Federal Communications Commission voted 4-to-1 on Wednesday to close the so-called “terrestrial loophole” in a 1992 federal cable law.

Under that law, a cable TV provider must let competitors carry any channel it owns if satellite connections are used to transmit the channel to the individual cable systems around the country. Until now, the provision didn’t apply when cable operators sent programming over land-based networks instead.

Satellite providers and phone companies that offer subscription TV services complain that big cable operators have exploited that quirk in the law to deny them access to must-have programming, particularly regional sports networks.

Cable companies have been using the loophole to keep San Diego Padres games off AT&T Inc.’s U-Verse video service and Philadelphia sports teams off DirecTV Inc. and Echostar Corp.’s Dish Network satellite systems, for instance.

“Consumers who want to switch video providers should not have to give up their favorite team in the process,” said FCC Chairman Julius Genachowski.

That sentiment was echoed Wednesday by the cable industry’s key competitors.

“The FCC gave sports fans a reason to tailgate today by adopting rules to bring sports programming to more video providers,” AT&T Senior Vice President Bob Quinn said in a blog post. “Ultimately, this means consumers will have more choices in how and from who they receive programming they want.”

DirecTV called the FCC vote a “big win for consumers and fair competition in the marketplace.”

Satellite and phone companies are hoping to gain access to cable-owned sports programming in a number of big metropolitan markets.

In San Diego, Cox Communications Inc. currently withholds Padres games from competitors including AT&T’s U-Verse, DirecTV and Dish Network.

In the New York region, Cablevision Systems Corp. won’t let U-Verse or Verizon’s FiOS video service carry the high-definition version of its Madison Square Garden networks, which show the games of the New York Knicks, Rangers and Islanders and the New Jersey Devils. Cablevision owns Madison Square Garden along with the Knicks and Rangers.

And in Philadelphia, Comcast Corp. does not provide its satellite competitors with access to its SportsNet Philadelphia channel, which carries games by the Philadelphia Flyers, Phillies and Sixers. Comcast, which has a controlling interest in the Sixers and Flyers, does provide the channel to Verizon and RCN Corp., which offers competing cable services in some markets.

The FCC’s new rules establish a formal process that allows satellite operators, phone companies and other competitors to file a complaint if they cannot get access to critical cable-owned programming that they need to compete. The new rules also allow competitors to seek a “standstill” order that would prevent cable companies from pulling their programming during contract-renewal negotiations if a dispute leads to a complaint with the FCC.

The one dissenting FCC vote came from Robert McDowell, one of agency’s two Republicans. He said the commission does not have the authority to close the loophole.

Cablevision said the new rules do not mean that it will automatically have to make its high-definition sports programming available to AT&T and Verizon. In a statement, Cablevision said if the phone companies file a complaint, it could prove that any troubles they have competing have nothing to do with the sports channels.

Comcast, Cox and the National Cable & Telecommunications Association, an industry trade group, had no comment Wednesday on the new FCC rules. But in the past, cable companies have argued that the terrestrial loophole helped them differentiate their offerings in a highly competitive business.

Time Warner Cable Inc. does not use the terrestrial loophole to withhold programming from competitors.