NTC bans exclusive deals between cable firms and program providers

The National Telecommunications Commission (NTC) has approved a new set of rules which, among others, prohibits exclusive contracts between cable television (CATV) or direct broadcast satellite operators and their program providers.

Leading CATV operators Sky Cable and Home Cable earlier opposed the new rules, saying that such regulations are beyond the powers of the NTC to enact. The two companies also took note that the NTC had no expertise to conclude that exclusive contracts are anti-competitive.

For his part, former NTC commissioner and Catanduanes Rep. Joseph Santiago welcomed the new regulations, pointing out that these would help promote freer competition among operators.

Santiago noted that prior to the issuance of the new rules, Destiny had complained that Sky Cable and Home Cable’s exclusivity arrangements with foreign program or content providers had resulted in Destiny being discriminated against in the supply of programs or content.

The Star Group in October last year pulled out ESPN, Star Sports, Star Movies, and Star World from Destiny, without citing any particular reason. Destiny suspects this was a result of exclusivity arrangements between Star and Sky/Home now merged under Beyond Cable, the solon said.

"It would be in the best interest of subscribers for the industry to hopefully continue to revolve around two large operators – Beyond Cable and rival Destiny Cable Inc. – instead of just one dominant operator (Beyond Cable). Surely, we would not want subscribers to be at the mercy of a single dominant and unrivaled operator," Santiago emphasized.

Destiny Cable welcomed the new rules. "The NTC will now be tested for its resolve," Destiny president David Lim earlier said. The existing contract between Sky/Home and Star Group may be inspected for any exclusivity agreement.

In its new circular, the NTC said that exclusive contracts between CATV/DBS operators and program content/providers, including discrimination in the supply of programs or content, are presumed to be anti-competitive and contrary to sound public policy, thus are prohibited.

However, any operator seeking to execute an exclusive contract with a program/content provider may get approval from the NTC after showing that the contract is not anti-competitive, nor violative of sound public policy, or that such exclusive agreement serves the public interest. Otherwise, the NTC will void only the exclusivity clauses and not the entire contract.

The new rules likewise provide that existing contracts between the operators and content providers may be reviewed by the NTC to determine whether there is exclusivity between the parties, upon the petition of any interested party or at the instance of the commission.

Failure on the part of the operator to show that such contract, if found to be exclusive in nature, is not anti-competitive, shall cause the NTC to void the exclusivity clauses.

In determining whether permission should be granted to the petitioning operator, the NTC will take into account, among other things, the duration of the exclusive contract as its effect on the development of competition and program distribution, on investment in the CATV/DBS industry, and on diversity of programming.

The prohibition on exclusive contracts and the requirement of NTC approval of such contracts shall automatically expire 10 years from the effectivity of the circular unless expressly extended, after public notice and consultation, by the NTC on the ground that the prohibition is still necessary to promote competition in the CATV/DBS market, diversity in the distribution of programs/content, and/or to protect public interest and welfare.

The cable TV industry meanwhile succeeded in their bid to have the NTC strike out a provision contained in the draft governing broadcast must-carry rules, which the sector claimed should be covered by separate rules.