Cable operator execs met with Media Bureau staffers last week to press their argument that leased access rules are both outdated and unconstitutional and need to go, though they acknowledge the FCC can't simply scrap them since Congress imposed the mandate.
Under the leased access rules, cable operators with more than 100 channels have to set aside 15% of those channels for leased access, with smaller operators having to provide a smaller percentage. The FCC regulates the price cable ops can charge for the lease of the channels per a rate formula.
Back in June 2019, the FCC voted unanimously--with a couple of partial dissents--to tweak and review its rules requiring cable operators to provide channel capacity to independent programmers. The Commissioners voted to approve a Report and Order (R&O) and Second Further Notice of Proposed Rulemaking (FNPRM) that would vacate the FCC's 2008 leased access rules, adopt new rules that "reflect changes in the video programming market," and seek comment on whether the rules should still be in place at all.
The dissents were from the FCC's suggestion in the order that the leased access rules could be an unconstitutional abridgment of speech, which the cable operators argue they are and need to go. Ultimately, that constitutional call would need to be made by a court. That is why the FCC asked what discretion it had to modify the rules if it concluded the regime was unconstitutional. The cable ops' answer is that the FCC should get rid of the rate regulation formula and allow leased access rates to be determined by market forces. Absent that, they support the FCC proposal to make the rates tier-specific.
The cable ops argue that given that "nearly all consumers have access to at least three competing MVPDs; cable operators carry hundreds of channels, the great majority of which are unaffiliated with the cable operator; and, perhaps most significantly, the Internet has transformed how we consume video content, supporting an incredible array of platforms through which content providers may distribute their content, many of which are free to use...today’s video marketplace is providing the American public and content providers with precisely the competition and diversity in sources of video programming that Congress desired" in imposing the leased access mandate.
Given that reality, they say, the rules can no longer "withstand First Amendment scrutiny" and the FCC needs to do what it can to at least reduce the burden.
Cable operators have long argued that the government should not be telling it how to use its channel capacity. For example, ACA Connects told the FCC that in many cases the highest, best use of a channel is for more broadband capacity, rather than traditional video, while it is required to give up that channel for leased access at a video rate. ACAC has said the FCC should either set a minimum rate to reflect that apples for oranges pricing, "or adjust the formula to avoid requiring the least profitable operators to offer leased access at extremely inexpensive amounts—essentially forcing them to give away capacity that could better be used for broadband."
Representing cable ops in the meeting last week were Rick Chessen and Radhika Bhat of NCTA – The Internet & Television Association; Howard Symons (Jenner & Block LLP), on behalf of NCTA; Jordan Goldstein and Ryan Wallach of Comcast, and Maureen O’Connell from Charter.