Cable TV operators score NTC circular

Cable television operators have branded as unconstitutional a proposed circular by the National Telecommunications Commission (NTC) that will prohibit CATV companies from entering into exclusive contracts with program or content providers.

In a position paper submitted during yesterday’s NTC public hearing, the Philippine Cable Television Association (PCTA) also pointed out that in promulgating the draft rules, the commission is acting in excess of its jurisdiction since the rules expand the meaning and in effect amend the laws which it seeks to implement.

The draft NTC memorandum circular entitled "Implementing Rules and Regulations Governing Community Antenna Television and Direct Broadcast Satellite System to Promote Competition in the Sector," aims to discourage exclusivity agreements between local cable operators and foreign program providers.

Many believe that the circular stemmed from that recent incident when the Star Group, which distributes ESPN, Star Sports, Star World, Star Movies, etc., pulled the plug on Destiny Cable. The latter suspects the Star Group entered into some sort of exclusive agreement with Sky Cable and Home Cable.

The PCTA noted that while three laws (Act 3846, Act 146 and EOI 205) were cited as the basis for the proposed IRR, said laws made no statement defining competition, particularly in the cable TV (CATV) industry. "There were no prohibitions against monopoly, exclusivity agreements, and provisions for penalties. It is axiomatic that the IRR should merely provide for the details of the policies enunciated in said laws. The draft IRR should be within the authority, scope and purview of said laws,"it said.

The group emphasized that while it is for the promotion of free and healthy competition among its members, it does not subscribe to the assumption that the conclusion of exclusive contracts between CATV operators and content providers is anti-competitive and therefore contrary to sound public policy.

"This is a sweeping statement without any basis, either in law, jurisprudence, ethical business practice or any other economic consideration. Exclusivity per se is not monopolistic or a tool in restraint of trade," it added.

Under the draft rules, the NTC is also given expanded powers to scrutinize contracts between cable operators and content providers and determine whether they are acceptable or not. The PCTA noted that NTC is being authority not merely to regulate but to indirectly manage the affairs of these companies.

The group also pointed out that the draft IRR is unconstitutional for diminishing the efficacy or impairing the obligations of contracts.

It added that the provision in the IRR requiring the submission of the contracts amounts to class legislation since it singles out the CATV industry, is violative of the equal protection clause under the constitution, and is therefore invalid and unenforceable.