Comcast To Challenge 30% Cap In U.S. Court of Appeals

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Fans and foes of the FCC's 30% cap on cable's national reach should mark their calendars for April 24.
That is when the U.S. Court of Appeals for the District of Columbia will hear oral arguments in Comcast's challenge of its decision to reinstate the cap. Comcast filed the suit back in March of 2008, calling the FCC decision arbitrary and capricious, as well as an abuse of its discretion.
At the time, Comcast executive David Cohen told B&C just what Comcast thought was wrong with the decision: "The record at the FCC provided absolutely no support for a horizontal ownership cap of 30% -- a position that has been supported by the courts," Cohen said at the time. "In an era of increased and intensifying competition among telephone, satellite and cable companies, the case for a 30% cap is even weaker than when the courts rejected it six years ago."
He also saw some telco favoritism in the move. “The FCC action in this case is perplexing from the same commission that approved the largest telecommunications deal in history with the AT&T merger," Cohen said in February, "as well as two other Bell company mega-mergers in the past three years. As these FCC decisions have strengthened the hands of our Bell competitors, it is unthinkable that the government would constrain the ability of cable companies like Comcast to compete with these colossal companies."
The FCC majority -- in this case, Republican chairman Kevin Martin and the two Democratic commissioners -- voted to reinstate that cap, with Martin saying that the fact that the FCC did not loosen it was, like the fact that it did not lift the newspaper broadcast cross-ownership ban entirely, a sign that the agency had listened to the complaints of anti-consolidation activists and concluded that no further cable deregulation was in the public interest.
That FCC decision came after the same D.C. court instructed it to either throw out the cap or better justify its continued existence, which the FCC tried to do by saying that the 30% limit was "designed to ensure that no single cable operator or group of operators, because of its size, could unfairly impede the flow of programming to consumers."
Comcast's challenge was backed by cable operators, who argued that the FCC had failed to conduct a crucial market-power analysis before deciding to reimpose the cap on the percentage of cable subscribers operators may reach nationally.
The National Cable & Telecommunications Association and a handful of state cable associations and cable operators--notably Time Warner--filed a friend of the court brief backing Comcast.
NCTA earlier on signaled its desire to stand with Comcast, the nation's largest cable operator.
The cap had been thrown out in 2001 by the same court, which found wanting the FCC's defense of the rule. The commission concluded that allowing two companies to own 60% of the market would leave only 40% "available for the competition. The court said that the FCC was wrong to assume that two companies would collude to deny access to programming.
The FCC-- actually then chairman Kevin Martin and the two Democrats--in fall 2007 voted to restore the 30% cap, saying that it wanted to make sure no cable operator or group of operators could "impede the flow of programming to its consumers" because of its size.
Republican FCC commissioners Robert McDowell and Deborah Taylor Tate dissented, with McDowell saying that the cap was unnecessary, unjustified and would be thrown out by the court.
Comcast, closest to the cap at about 27% of subscribers, filed suit against the decision March 12.
NCTA and company argue that the FCC barely acknowledged the explosion of alternative, competing video delivery systems--satellite, the Internet, telocs.
Without that market power determination, they argue, the FCC cannot show that the harms it purports are not merely conjecture, much as it conjectured the 60% collusion in its earlier justification that was thrown out by the court.
NCTA and company argue the cap hinders their ability to grow, to reach a larger audience, and to raise capital, all of which are crucial to remaining competitive.

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