Cable TV firms rap proposed rules

The country’s biggest cable television operators have branded as unconstitutional the proposed rules of the National Telecommunications Commission (NTC) that seek to regulate, among other things, programming contracts between CATV operators and content providers.

In a position paper submitted to the NTC, Sky Cable (Central CATV Inc.) and Pilipino Cable Corp. noted that the proposed circular that authorizes the NTC to effectively disapprove existing programming agreements impairs the obligation of contracts which is prohibited under the Constitution. Home Cable, in its separate position paper, raised the same argument.

Sky Cable, Home Cable, and Pilipino Cable account for 75 to 80 percent of the cable TV market.

The draft circular, according to Sky Cable general counsel Gerardo Ramiro, unduly grants the NTC the power to review supposed exclusivity provisions in existing contracts entered into by a CATV operator and a program provider. Also, in order for a program contract to be valid, both existing and future contracts have to be submitted for the review and approval of the NTC.

Ramiro noted that the purpose of the non-impairment clause of the Constitution is to safeguard the integrity of valid contractual agreements against unwarranted interference by the State. "As a rule, these agreements should be respected and not tampered by subsequent laws that will change the intention of the parties or modify their rights and obligations. On this ground alone, we believe that the proposed circular is legally infirm," he said.

He added that the NTC has no jurisdiction and authority to declare as contrary to public policy exclusive contracts between CATV operators and program providers. Ramiro explained that nowhere in RA 3846 and EO No. 205 which gave the NTC the authority to regulate and supervise the operations of CATV systems is there an indication of legislative intent that such contracts are contrary to public policy.

"The NTC, which merely exercises a delegated authority, cannot supply such intention where there is none in the law that it seeks to implement. The NTC cannot prohibit exclusive contracts in the absence of any legislative authority," he said.

Ramiro pointed out that there is no clear basis showing that such exclusive contracts will result in an anti-competitive CATV industry and that exclusive contracts contribute to a monopoly. "The power of the subscriber to choose his operator is not restrained by an exclusivity contract between the program provider and CATV operator. In the present over-built situation in the industry, there are still many operators offering a wide variety of programs and content," he explained.

He emphasized that there is no showing that exclusive contracts with content providers give CATV operators the power to exclude competitors from the field, adding that operators should be resourceful in seeking these program providers and developing the market for these programs, instead of just narrowing the market of content providers to one or two existing one.

NTC’s decision to prohibit exclusivity arrangements is said to have been triggered by the Star Group’s decision to pullout from Destiny Cable popular programs such as ESPN, Star Sports, Star World, and Star Movies. Destiny suspects that the Star Group entered into an exclusive contract with Sky Cable and Home Cable.