Courtesy Washington Post

(December 16, 2009) The Federal Communications Commission is moving to prevent cable operators from withholding local sports broadcasts from other television providers, including satellite and telecom companies.

The FCC's media bureau is scheduled to circulate an order Wednesday for vote by all five commissioners, an FCC official said.

If approved, cable rivals would be able to gain access to all sorts of programming that previously has been off-limits. Dish Network, for example, would no longer be locked out of Philadelphia sports games owned by Comcast. AT&T's U-verse customers could get access to San Diego Padres games that it complains Cox is withholding from competitors. And Verizon FiOs could obtain the rights to show high-definition sports events at Madison Square Garden.

Cable companies have been able to withhold such programming because of a gap in regulations known as the "terrestrial loophole."

The 1992 Cable Act required that operators make any programming available to competitors -- as long as it was transmitted by satellite feed. At the time, satellite feeds were considered the prime way cable companies would collect content. The cable companies, however, began transmitting their local sports shows via cable lines -- otherwise known as terrestrial feeds -- and argued that such programs were exempt from the rules.

"In today's dynamic marketplace in which consumers have multiple choices for a video service, exclusive distribution of programming can be a pro-competitive tool that offers an incentive for companies to develop unique services that differentiate their offerings and provide a greater value for consumers," said Brian Dietz, a spokesman for cable trade group the National Cable & Telecommunications Association. "Exclusivity allows competing providers to invest in new services that have dramatically changed the marketplace."

The order comes before the FCC begins its review of Comcast's merger with NBC Universal. Ben Scott, policy director of public interest group Free Press, said the timing shows that the agency wants to take the contentious issue of the terrestrial loophole off the table ahead of the merger review, showing the FCC is willing to be tough in its scrutiny of the $30 billion mega entertainment merger.

"If they did deal with this in the merger, it would be Comcast-specific only and not the entire industry," Scott said. Dish Network chief executive Charlie Ergen brought up the terrestrial loophole when discussing his concerns that Comcast's merger with NBC could give the nation's largest cable operator too much control over television content.

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