Requirements that cable television systems make a certain amount of channel capacity available for leasing to non-affiliated programmers have been in place since the time when George Orwell predicted that “Big Brother” would control the world – 1984. The leasing rules have never brought about an active leasing marketplace. The FCC is now taking another look at the situation, issuing a Further Notice of Proposed Rulemaking in an old 2007 docket and inviting comments on whether to stir the soup, add ingredients, or maybe even dump out the pot and try some other recipe.
The availability of cable channels for commercial leasing is embodied in Section 612 of the Communications Act (47 USC § 532). In 1992, Congress amended the statute to allow the FCC to regulate leasing rates, which might suggest a desire to prohibit price gouging; but they threw in a little twist by saying that the rates must not adversely affect the cable operator, its financial condition, or its market development. Those words opened the door to legal skirmishes about what it means not to affect financial condition adversely. The rate rules adopted in 1993 were upheld in court, establishing that cable operators can’t be required to make less on leased access than they can make from other uses of a channel. When the FCC revised the rate rules in 2008, cable interests went to work again and won a court stay, based on potential harm caused by low rates and the possibility that leased channels could displace other programming. They also got the Office of Management and Budget (OMB) to take the rather rare step of disapproving several of the provisions based on the burden they imposed on cable operators. Fast forward to today: the 2008 rules remain subject to the judicial stay and without OMB approval, and the old 1993 rules remain in effect.
What’s wrong with the 1993 rules? Well, almost no one could afford to lease channels the way they were priced, so it was pretty clear that if Congress intended to encourage leased access, that goal was not achieved. Also, the FCC’s rate rules specified only maximum permissible rates. Cable operators were permitted to discriminate, offering lower rates to lessees they preferred, and only a few channels had to be made available for leasing; so it was difficult in practice for programmers who were not in favor to lease channel capacity. For example, some people thought that low power TV stations without must-carry rights might be good prospects for leasing channels, but most couldn’t pay the freight. From the point of view of cable operators, however, they were properly not required to lose money, as they are not common carriers; and the law recognized that cable channels are the property of the cable operator, which can steer their use toward content that would likely attract the most viewers.
The FCC now figures that after 10 years of a litigation stalemate, it’s time to scrap the 2008 rules and figure out what it oughtta, shouldda, wouldda do. It asks what the state of the leasing market is today and whether market conditions, including the availability of competitors to cable, indicate that cable leasing still needs to be regulated. The statute is still in place, so channels must be made available for leasing; but the FCC doesn’t have to regulate leasing in detail.