The Federal Communications Commission yesterday issued rules that direct cable operators to provide a viewable signal for every must-carry channel after the digital transition for their own analog customers; and extended for another five years the ban of exclusive contracts between vertically integrated programmers and cable operators.

The must-carry decision gives operators a choice "to either: (1) carry the digital signal in analog format, or (2) carry the signal only in digital format, provided that all subscribers have the necessary equipment to view the broadcast content."

As a practical matter, cable operators can either transmit at least two versions (analog and digital) of every must-carry channel, incurring expense and consuming precious bandwidth, or buy a converter or new set-top for each and every one of their analog customers, also incurring expense.

Approximately 35 percent of all television homes, or approximately 40 million households, are analog-only cable subscribers.

The new rules conform to a proposal made by the NCTA, whose members acceded to dual-carriage for three years after the transition.

Smaller operators – and only those with plants of 522 MHz or less – have the option to apply for a waiver, but The American Cable Association reiterated that its members still will be hard hit: “The new carriage obligations now make it more difficult for operators of small systems to stay in business… Some very small systems will have no choice but to shut down because their small subscriber bases cannot support the costly equipment mandated by this order.”

The Commission remains open to ways to minimize any economic impact on small cable operators while still complying with the statutory requirements for carriage of local TV stations.

The second order, the FCC said, is meant to ensure competitive multichannel video programming distributors (MVPDs) continue to have access to essential programming by extending the ban of exclusive deals between programmers and MSOs. This keeps a company such as Comcast or Time Warner from denying access to channels they own to rival service providers.

The FCC said it will continue to review the related issue of program “tying” – when a programmer “ties” a popular network channel to a set of others, forcing the operator to broadcast additional channels the operator – and its subscribers – might not want.