Often known as multichannel video programming distributors (MVPDs), cable companies are subject to much more lenient regulations than broadcast stations. This is because they do not occupy part of the publicly owned spectrum and thus do not need to work with the Federal Communications Commission (FCC), which imposes certain rules in exchange for providing exclusive licenses to broadcast stations. Instead, cable companies charge monthly fees to subscribers and provide their own hardware. Obscenity laws apply to cable companies as they do to all forms of media, but they are otherwise largely free from government content restrictions.
However, FCC rules govern the relationship between cable companies and broadcast stations. Every three years, commercial broadcast stations must choose between must-carry and retransmission consent systems. Under a must-carry system, a broadcast station can require a cable company in its market to carry its signal. Under the retransmission consent system, the cable company retransmits the broadcast station signal while often paying compensation to the broadcast station. (The must-carry system does not involve paying compensation.)
The number of channels that a cable operator must allocate to local broadcast stations depends on its total number of channels. If a cable operator has 12 or fewer channels, it must allocate three of those channels to local commercial broadcast stations and one channel to a local non-commercial educational broadcast station. Cable operators with 13 or more channels must allocate one-third of their channels to local commercial broadcast stations. If a cable operator has 13-36 channels, it must allocate one to three channels to local non-commercial educational broadcast stations. If a cable operator has more than 36 channels, it generally must meet any requests by local non-commercial educational broadcast stations to carry their signals.
Calculating the Carriage Quota
Broadcast stations that participate in the must-carry system and broadcast stations with retransmission consent agreements both count toward the carriage quota.
If a broadcast station chooses the must-carry system, it usually receives a preferred channel number from the cable operator. Non-commercial broadcast stations must use this system. The cable operator and the broadcast station can agree on the channel in the cable system that will carry the station. However, a commercial broadcast station also can ask the cable operator to provide any of the following channel numbers:
The channel number that the station uses for over-the-air broadcasting
The channel number that the station used on January 1, 1992
The channel number that the station used on July 19, 1985
Retransmission Consent Agreements
The retransmission consent system echoes a long-standing rule governing broadcast stations that used content from other broadcast stations. The FCC required them to get prior consent before showing the borrowed content. While cable operators originally were not subject to this rule, the FCC eventually applied the rule to them to protect broadcasting.
Negotiating a retransmission consent agreement can take time. During the negotiation period, the cable operator cannot carry the signal of the broadcast station. It will put the signal on its system after the agreement is reached. Any agreement lasts for only three years, after which the broadcast station can decide again whether to use the retransmission consent system or shift to the must-carry system. (The dual framework started in 1993.)
In some cases, the broadcast station and the cable operator might not be able to complete a retransmission consent agreement. However, the FCC usually cannot intervene in these cases. As long as the cable operator is complying with FCC carriage quotas, it is not obliged to carry a specific broadcast station.
Notification to Subscribers
Under FCC rules, cable operators must inform their subscribers about any change in the broadcast stations that they carry 30 days in advance.