December 3, 2008 / 9:18 PM / 11 years ago

UPDATE 1-FCC to consider free Internet, cable issues

(Adds details on Cablevision proposal, consumer comments)

By Kim Dixon

WASHINGTON, Dec 3 (Reuters) - U.S. communications regulators will consider a controversial spectrum auction plan for free Internet and new rules governing disputes between cable operators and programmers at their December meeting, the agency’s chairman said on Wednesday.

Federal Communications Commission Chairman Kevin Martin is proposing that the agency auction off some airwaves, with a mandate that 25 percent be set aside for free Internet.

To address concerns that finding the financing to build out the spectrum in a tough economic environment would be challenging, the plan includes a provision requiring the winning bidder to meet benchmarks by five years, or have the spectrum reclaimed by the agency.

“It will be use it or lose it,” said Martin, a Republican whose chairmanship will likely end when the Obama administration takes office next month.

The plan also contains a provision to be voted on by the five-member FCC that any spectrum portion reclaimed be opened up for unlicensed use.

Martin, as he has done in the past, dismissed the concerns of Deutsche Telekom AG’s (DTEGn.DE) T-Mobile cellphone unit that the free Internet component would lead to interference with its adjacent spectrum, for which it paid $4.2 billion.

He said more protection to prevent technical interference are in place now than there were for a nearly $20 billion auction earlier this year, won in large part by Verizon Wireless and AT&T Inc (T.N). Verizon Wireless is owned by Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L).

The plan also contains a controversial mandatory filter requirement for customers under the age of 18 years old, to address concerns about children getting access to pornography on the Internet.

Free speech advocates say that provision would surely be challenged in court.

A separate auction plan for a different slice of the spectrum, with a requirement that it be used in coordination with public safety officials, did not make it onto the December agenda.

Martin said there was no consensus among the commissioners on how to move forward with that plan.


The cable rules to be considered come as the FCC arbitrates several disputes between cable companies Time Warner Cable Inc TWC.N and Comcast Corp (CMCSA.O), and content programmers such as NFL Networks.

The disputes involve what tier of service a content provider such as NFL Networks gets on a cable system and whether there is discrimination in that process based on other content the cable operator controls.

The proposal would set up a resolution process for such disputes, giving the FCC six months to evaluate the claims and setting legal standards for when a programmer can reasonably claim discrimination by a cable company.

Consumers groups lauded that idea.

“The FCC’s proposed guidelines will accelerate a clear and evenhanded resolution of disputes between cable companies and TV programmers — this reform should mean more diverse programming and lower prices for consumers,” said Joel Kelsey, a policy analyst for Consumers Union.

The FCC is also seeking comment on a proposal from Cablevision Systems Corp CVC.N related to contracts between broadcasters, other content providers and cable companies.

It would bar broadcasters and other content providers from demanding that cable or satellite companies put them on a certain tier, or reach a minimum number of subscribers, in exchange for being carried by the cable company.

Cable programmers say these requirements from broadcasters contribute to higher prices for consumers. (Editing by Gerald E. McCormick and Andre Grenon)

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