The Federal Communications Commission Monday barred the city of Dallas from regulating basic-cable rates charged by Comcast Corp., settling a bitter dispute between city regulators and the largest U.S. cable company.
In a short ruling that took one year to decide and release, the FCC determined that Comcast met its legal burden of proving that more than 15% of Dallas households subscribe to a major satellite service.
"We are pleased that the FCC has recognized the high level of competition that exists in Dallas," Comcast spokesman Tim Fitzpatrick said.
When the 15% test is met, local regulators may not set basic rates, and the cable operator is no longer required to provide a uniform rate structure or to give basic subscribers the option of buying a premium service like Home Box Office without having to buy a higher tier of service.
Comcast has about 136,000 subscribers in Dallas, the country's seventh-largest TV market. Assuming that Comcast and Time Warner Inc. complete their takeover of Adelphia Communications Corp., Comcast intends to transfer the Dallas franchise to Time Warner Cable.
While Comcast argued that direct-broadcast satellite penetration was 17%, Dallas regulators complained that Comcast had inflated DBS penetration and relied on outdated U.S. Census data. The FCC said the city's arguments "lack merit."
Because a senior official in the FCC's Media Bureau signed the decision, Dallas is allowed to appeal it to the FCC commissioners.
Nick Fehrenbach, Dallas' manger of regulatory affairs and utility franchising, said he needed to review the FCC ruling before making a decision about an appeal.