News

NATOA Senses Flood of Dereg Bids

7/06/2003 8:00 PM Eastern

Local governments are accusing the cable industry of flooding the Federal Communications Commission with petitions designed to bar cities from regulating basic rates.

But it appears that the flood allegations are all wet.

An FCC spokeswoman said last week that the agency has received about 30 such petitions from cable operators since the beginning of the year, a pace that she said did not seem unusually high.

Action alert

Word that MSOs had "flooded" the FCC with deregulation filings was put out in early May in a members-only "Action Alert" from the National Association of Telecommunications Officers and Advisors. NATOA and cable operators have a long-running battle over the scope of local cable regulation.

The four-page document, recently obtained by Multichannel News, suggested that cable operators' strategy was to bombard the FCC with deregulation petitions and cram them with so much data that local governments would feel intimidated and not attempt to challenge the cable operators.

The NATOA document stated that local franchising authorities (LFAs) should invest the time and money in examining the cable filings because "close examination of the petitions often shows that the filings lack substantial facts and/or credible evidence."

Not coordinated

NATOA executive director Libby Beaty said she didn't have statistics to back claims made in the alert, which said that MSOs were inundating the FCC with deregulation petitions in an attempt to overwhelm local regulators.

"Generally speaking, the observation has been that a number of operators have been filing a large number of requests for effective competition," Beaty said. "We have not been collecting data necessarily."

The National Cable & Telecommunications Association, which represents cable's largest companies, denied involvement in the activity alleged by NATOA.

"In terms of any type of specific, coordinated effort on behalf of the industry, we are not involved or aware of anything," said NCTA spokesman Brian Dietz.

Since last fall, the NCTA and NATOA have been at loggerheads over an NCTA-inspired proposal designed to make it easier for cable operators to escape local rate regulation.

Under federal law, a cable operator is presumed to be not subject to effective competition unless the operator can demonstrate to the FCC that competing pay-TV companies serve more than 15% of households within the franchise area.

NCTA's dereg plan

The NCTA's proposal calls for reversing the presumption in the 44 U.S. states in which direct-broadcast satellite carriers have attained 15% household penetration.

Were the NCTA's proposal adopted, cable companies would be considered subject to effective competition statewide unless the LFA proved the absence of 15% penetration in a relevant franchise area.

"My sense is that the industry as a whole has been seeking nationwide effective competition and this is just par for the course," Beaty said, referring to the NCTA's proposal.

The FCC is reviewing the NCTA's proposal. Without disclosing his position, FCC Media Bureau chief Kenneth Ferree indicated at last month's National Show in Chicago that the NCTA's proposal had some merit.

The FCC adopted the presumption that cable companies were not subject to effective competition in the early 1990s before DBS had entered the market.

When the FCC determines a cable operator is subject to effective competition, local governments may no longer regulate rates for basic programming, equipment and installations.

Not a rate hedge

The cable operator is no longer required to offer a uniform rate structure or prohibited from requiring subscriber purchase of expanded basic before the purchase of premium or pay-per-view services.

In comments filed with the FCC last fall, NATOA said none of these regulations should be removed in markets where only one cable operator is present because DBS competition has failed to keep cable rates from rising. Only head-to-head competition from a second cable company produces reasonable cable rates, NATOA said.

NATOA said the FCC should adopt a rule that would exclude DBS subscribers from the 15% test in any market with one cable company.

"I don't think DBS offers comparable programming when in some markets it doesn't offer local [broadcast signals], and doesn't offer local government channels in any market," Beaty said.

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