Comcast Suit Hits Cap

Comcast is taking the Federal Communications Commission to court over the agency's decision to prevent any cable company from serving more than 30% of the nation's total pay TV subscribers.

Comcast — the largest U.S. cable company with about 27% market share — filed an appeal in the U.S. Court of Appeals for the D.C. Circuit on March 12, asking that the 30% limit be set aside as “arbitrary, capricious, and an abuse of discretion.”

The action was foretold in December, when the Philadelphia-based cable operator promised to wage a court battle after the FCC adopted the cap.

Enforcement of the 30% cap would prevent Comcast from acquiring Time Warner Cable's 13.3 million subscribers, to the extent Comcast wanted to add bulk to better compete with AT&T and Verizon Communications in voice, video and high-speed data markets.

In 2001, a three-judge panel of the D.C. Circuit struck down an identical 30% cap, which is intended to prevent one cable company or a few of them from exercising make-or-break power over cable networks looking to maintain or initiate distribution.

In its court filing, Comcast said revival of the 30% cap violated the court's 2001 ruling and the First Amendment.

The FCC voted 3-2 in December to adopt the 30% cap at the urging of FCC chairman Kevin Martin, who needed the votes of the agency's two Democrats to prevail.

Martin has barraged cable with regulation since taking office almost three years ago, in response to cable's refusal to accede to a Martin demand: the a la carte sale of cable channels.

During Martin's tenure, the cable industry has now either initiated or joined nine cases now pending in a federal court of appeals.

The ninth case — to overturn the FCC's ruling to slash cable leased-access rates by 75% — was also filed last Wednesday in the U.S. Court of Appeals for the D.C. Circuit by the National Cable & Telecommunications Association.

Under federal law, independent programmers are entitled to lease time on cable systems. Large-capacity cable operators need to set aside 15% of their channels for leased-access programmers.

Leased access hasn't been a raging success because the concept of programmers paying cable providers is at odds with the cable business model of operators paying programmers to license their services.

Two other parties, in addition to the NCTA, have appealed the leased-access rules.

ShopNBC, which sells merchandise to pay-TV viewers, challenged the FCC's decision to prevent home-shopping entities from relying on new leased-access rate structure. ShopNBC filed in the 8th U.S. Circuit Court of Appeals.

The United Church of Christ, based in Cleveland, challenged the FCC's decision not to force cable operators to lease time on a “headend, regional or national basis.”

UCC's appeal also sought to force the FCC “to adopt a 'shot clock' in the event of a dispute over leased access carriage; a shot clock would require the [FCC] to act within 90 days or the complaint will be granted.” The suit did not provide an example of a complaint.

In the months ahead, the number of cable-initiated suits could swell as Martin has several more regulations aimed at cable, including: the forced carriage of more than 500 Class-A TV stations; the unbundling of cable fare at the wholesale level; forced arbitration of program-carriage disputes before a finding of multiple-system operator discrimination; and the forced carriage of multiple digital programming streams offered by some local TV stations.