FCC closes cable programming loophole

The Federal Communications Commission Wednesday voted to close a "loophole" that allowed cable operators to withhold local sports programming from competitors.

In a 4-1 vote, the commissioners ended the "terrestrial loophole," which prevents satellite TV providers and new TV providers, such as AT&T and Verizon Communications, from offering some live sports channels in certain areas of the country. These companies say they have had a competitive disadvantage, because they have not been able to offer this content.

Cable companies are required by federal law to offer access to channels that they own to competitors at reasonable rates. But the law only requires them to do this for video feeds that are distributed via satellite. Channels that are transmitted locally on terrestrial cable infrastructure are exempt from the law.

The issue over the loophole has heated up in recent years as phone companies, such as AT&T and Verizon, enter the TV market.

DirecTV and Dish Network have complained for years that they have been shut out from offering local Philadelphia sports because the local channel carrying those games, SportsNet, is owned by Comcast.

And Verizon filed a complaint last year with the FCC arguing that that Cablevision was withholding a high-definition version of a channel in New York that shows New York Knicks and Rangers games. Verizon competes directly with Cablevision for broadband, phone, and TV customers in this region.

Last year, AT&T also filed a complaint against Cox Communications, claiming the cable company refused to sell it access to San Diego Padres games. AT&T argues that Cox, which competes directly with AT&T in parts of San Diego, has made these game available to another cable operator in the same region that does not compete directly with Cox in this market.

The new regulation closes this program access loophole and will force cable operators to sell sports content to competitors.

Verizon applauded the FCC's decision.

"This is a big-time victory for television sports fans," Kathleen Grillo, Verizon's senior vice president of Federal Regulatory affairs, said in a statement. "This ruling means that consumers will no longer have to stick with their incumbent cable provider in order to watch local teams in high definition."

Meanwhile, Cablevision expressed its dissatisfaction with the decision.

"While we find the legal basis for the decision unfounded, we are pleased that the FCC recognized the value of Cablevision's local programming strategy and investments," Cablevision said in a statement. "If the phone companies complain that they are unable to compete, we are confident that we can prove that it is for a variety of reasons, none of which have to do with HD sports programming."

FCC Chairman Julius Genachowski said the commission's actions will promote competition, which ultimately benefits consumers.

"The loophole gives free reign to cable-TV operators to lock up local sports events and other popular programming and withhold them from rival providers," he said in a statement. "Consumers who want to switch video providers shouldn't have to give up their favorite team in the process. Today the commission levels the competitive playing field."

The measure could still be challenged in court. Many experts have questioned the FCC's authority to close the loophole. One of the FCC's Republican commissioners, Robert McDowell, voted against the proposal, stating that he sympathized with his fellow commissioners' intent, but he said he felt the FCC did not have the legal authority to interpret the regulation as it has in this order.

"The order oversteps the language and structure [of the statute]," he said in his written dissent.

Update, 3:20 p.m. PST: Added comment from Cablevision.