NTC rules on cable TV

Expect cable television operators to put up the fight of their lives next week as the National Telecommunications Commission (NTC) begins the public hearings on a proposed circular that will require prior government approval of contracts entered into between these local operators and foreign program providers.

The draft NTC circular basically aims to discourage exclusivity agreements between local cable operators and foreign program providers and to prevent the latter from wielding so much power over the Philippine cable TV industry.

Gerry Ramiro, spokesperson for and legal counsel of Beyond Cable (the holding company of Sky Cable and Home Cable), believes that the proposed circular is unconstitutional since it will impair existing contracts already entered into between the cable operator and the program provider.

He likewise points out that this is not a valid regulation since NTC’s power on the matter is too broad and sweeping.

Philippine Cable Television Association (PCTA) president Manny Dabao agrees that the NTC draft circular is unconstitutional and leaves too much to the discretion of the regulator. He adds that many of the items in the proposed MC are unenforceable.

He does not believe that the NTC, with its lawyers and engineers, is in a position to determine whether a particular business practice is anti-competitive or not. He likewise insists that if the NTC is going to ban exclusivity in programs among cable tv operators, then the same regulation should be imposed on TV stations.

Many believe that the circular stemmed from that recent incident involving Destiny Cable when the Star Group, which distributes ESPN, Star Sports, Star World, Star Movies, etc., pulled the plug on the Elena Lim (yes, of the Solid Group)-owned cable company. Destiny suspects that the Star Group entered into some sort of exclusive agreement with Sky Cable and Home Cable, but of course, nobody will confirm this. What Star Group has told the NTC earlier was that the pull out from Destiny was for purely business reasons (sources from Star Group say that Destiny was underreporting the number of subscribers which serves as basis for the fees which Star collects).

Whether Destiny admits it or not, Star Group’s exit almost spelled the end for Metro Manila’s third biggest cable tv operator. Both Destiny and the NTC felt that it was time to stop foreign program providers from deciding which cable TV firm should live and which should die.

In the draft memorandum circular, the NTC explains that there must be free and fair competition in the cable TV market in order to give subscribers a wide variety of choices, adding that ente-ring into exclusive contracts could inhibit the development of competition in the market.

It says that as a general rule, exclusive contracts or any behavior that is tantamount to exclusivity between cable TV and program providers are deemed to be anti-competitive and contrary to sound public policy, unless otherwise authorized by the NTC.

The NTC will require all cable operators to submit their contracts with program providers within 30 days from the effectivity of the circular. The commission will then have 30 days to review the contract. If it does not act on this, it would mean that the contract is approved.

When exclusive contracts are submitted, it will direct the parties to the contract to file a petition for approval. They would have to submit proof that the exclusive agreement does not hinder free competition. The NTC’s criteria for approving a contract includes the effect on competition and program distribution in the cable TV market, on investment in the cable industry, on diversity of programs available in the market and the duration of the contract. If the parties fail to prove this, they must come up with a new contract

The new rules likewise will require foreign program providers to have a local agent, to register with the NTC, and to agree to submit to the jurisdiction of the NTC in the resolution of disputes.

The NTC has also included some sort of a rider in the proposed cable regulation circular when it inserted provisions on the matter of carriage of free-to-air programs.

It says that when a TV broadcast signal is required to be carried by a cable operator, the signal must be without degradation in quality and within the channel number the broadcast station is transmitting unless not technically feasible. Shouldn’t this matter have been the subject of a separate circular?

The intention of the NTC may be pure. But I don’t believe that business contracts need prior approval by the government, even if the purpose is to protect public interest as NTC claims it is.

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