The FCC yesterday issued an order imposing a $2.25 Million fine on a set of companies that operated a system that retransmitted TV signals to households in large housing units in the Houston area.  The system had paid retransmission consent fees to the TV stations, then stopped doing so, claiming that it was changing so as to operate as a Master Antenna Television System (MATV).  MATV systems are exempt from paying retransmission consent fees under certain defined circumstances.  This exemption was adopted for apartment complexes and other large residential dwelling units to allow residents to receive over-the-air television so as to not force all of the residents to have an antenna in their own residential units, which might not be feasible or optimal for TV reception.  The problem in yesterday’s case, according to the FCC decision, was that this company did not in fact act as an MATV system, but instead continued to deliver its programming to the dwelling units by means of its fiber connection to a single headend, where TV programs were bundled with traditional cable network programming.  According to the decision, the system continued to transmit TV signals through its fiber network for as much as 208 days after the expiration of the retransmission consent agreements with the TV stations whose signals it was carrying.

FCC rules require that cable systems and other MVPDs (multichannel video programming distributors) receive the consent of TV stations before retransmitting their signals.  The exception for MATV systems is a limited one. It provides that the signals of TV stations be made available to the residents of the dwelling units that are served “without charge and at the subscribers (sic) option” and that the receiving device be either owned by the subscriber or building owner, or “available for their purchase upon the termination of service.”  The Commission further faulted the service for apparently having continued to deliver TV programming to subscribers by its fiber service from its headend, even after installing master antennas at the buildings in which the subscribers lived.  Simply having the antennas available was not enough to excuse the system from the retransmission consent obligations when the actual signals were sent by fiber. 

In an argument reminiscent of the Aereo case, the service had also argued that its technology exempted it from having to pay retransmission consent fees.  The Commission rejected the argument that the fiber system did not transmit the “signals” of the TV stations.  The service contended that the fiber simply transmits light, not signals.  The Commission concluded that it is the content, not the form of that content, which comprises the “signal” for which consent is necessary.

The fine was computed by multiplying the $7000 base fine for retransmitting a signal without consent times the number of days that the retransmission occurred in the last year, times the number of stations involved – reaching a total of $16,425,000 – and then adjusting it down (“notwithstanding the presence of aggravating factors”) to the $2.25 Million figure based on the relatively small size of the companies involved.  The large fine, and the FCC’s rejection of various arguments by the operator who sought a reduction in the amount of the fine, demonstrates the degree of concern about these violations expressed by the FCC.  As in Aereo, it also demonstrates that TV operators are serious in enforcing their rights when subscription systems try to make money off of their signals without paying for the rights to retransmit those signals.