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Small Systems Want More From Martin…

The Federal Communications Commission (FCC) chairman's proposal for small operators ahead of the digital TV transition just won't cut it, according to three MSOs -- Charter Communications Inc. , Mediacom Communications Corp. , and Suddenlink Communications .

In a letter submitted to the FCC late last month, those ops stated a case that Kevin Martin and the rest of the FCC should also consider rules that apply to systems with fewer than 5,000 subscribers "or some other threshold deemed suitable," as well as systems that remain "all analog, regardless of technical bandwidth."

In case you've forgotten, Martin is proposing some relief for some cash- and bandwidth-strapped operators. Namely, he's willing to give some breaks when it comes to dual must-carry and high-definition carriage obligations for systems that are built out to 552 MHz or less ("upgraded" systems have 750 MHz or more of bandwidth). (See Martin: Give Small Ops a Break and Martin Proposes HD Relief Plan.)

The FCC has not issued an official ruling on the matter yet, but MSOs are starting to apply pressure about a subscriber-level component that the American Cable Association (ACA) and National Cable & Telecommunications Association (NCTA) already have been lobbying for. (See Small Cable Lobby Asks for DTV Exemption and McSlarrow Backs the Little Guys .)

So, what's the basis of the latest argument by this trio of operators? The argument still centers on money... a disproportionate amount that, the MSOs claim, will have to be spent for upgrades and then passed on to a small pool of customers. "The digital transition exacts an unusually high cost on small systems," they claimed.

Charter highlights an all-analog system on Tangier Island, Va., which has a healthy 750 MHz to serve just 33 subscribers. Mediacom points to a similar system in Kansas with just 53 subs. They claim it would cost as much as $4,000 to rebuild those systems to digital, which would translate to an increase of $20 per customer per month.

And what of upgraded digital systems that serve a small batch of subs? They claim it's also cost-prohibitive to simulcast analog and digital in those situations, as well, and will hit customer checkbooks pretty hard.

They echoed a claim that it costs about $54,000 per headend to prepare systems for simulcasting analog and digital video signals. While that might not sound like a huge chunk of change for an operator that's bringing in revenues by the millions per quarter, those costs would have to be passed on to only a small pool of customers is in the range of $10 to $20 per month per sub.

"The cost of digital simulcasting cannot be justified or sustained in such small markets," the MSOs argued.

Likewise, they held that additional relief for systems with small sub numbers should be warranted because the FCC cut a DTV transition break for the two satellite TV giants: DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH) (See DBS Catches a Break.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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