In case that could have broad implications for cable operators looking to dodge regulation, operator says vMVPD’s presence is enough to satisfy LEC Test

Charter Communications continues to plead its case to the FCC that effective competition from DirecTV Now should free it from regulatory oversight in select regions of Massachusetts and the island of Kauai.

After petitioning the FCC with this claim in September, Charter reps met with agency officials on Dec. 19, arguing that just because the virtual MVPD requires an additional broadband connection, that doesn’t necessarily disqualify the service’s operator, AT&T, from satisfying the Local Exchange Carrier (LEC) Test.

“We noted that, while one purpose of the Telecommunications Act of 1996 was to promote facilities-based competition between cable operators and local telephone companies, Congress took a broader approach in the LEC Test by specifying that it can be satisfied by the offering of video programming by a LEC or LEC affiliate ‘by any means’ other than direct-to home satellite services,” wrote Charter in a Dec. 21 ex parte filing detailing the meeting.

Related: AT&T’s New DirecTV Now Plan: ‘Thin Out’ Bundle, Reset Price Point to ‘$50-$60’

In Massachusetts, Charter has franchise agreements in 118 municipalities that have been deemed not to have effective competition under FCC guidelines. Charter’s franchise areas in Kauai falls under similar assessment. Basic cable rates and equipment fees remain regulated in those markets.

Charter is arguing that the aforementioned markets do indeed face effective competition due to presence of live-streaming video service DirecTV Now.

“We also explained that even customers who do not choose to subscribe to DirecTV Now benefit from the availability of that service because competition from a LEC or LEC affiliate would impose a competitive check on the rates that cable services charge,” Charter’s ex parte reads.

“We also noted that while the LEC Test can only be satisfied by a multichannel video programming distributor ('MVPD') 'using the facilities of' a LEC or LEC affiliate, that provision is not a generally applicable facilities requirement,” Charter added. “Rather, we explained that the phrase 'using the facilities of such carrier or its affiliate' on its face applies only to MVPDs, including providers unaffiliated with a LEC—not to LECs or their affiliates in every instance.”

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