Washington—The ups-and-downs of the Federal Communications Commission's year-plus review of the Adelphia cable company deal "remind me of the U.S.-Russia basketball game in 1972, in the Olympics, where the clock didn’t reach the end until the outcome was determined in a different way," Joe Waz, Comcast's senior vice president of external affairs and public policy counsel, said Thursday.
In June 2006, the FCC after 404 days finally let Comcast and Time Warner Inc. take control of Adelphia Communications, a bankrupt cable company destroyed by management corruption that was hemorrhaging subscribers while regulators temporized.
“During that period of time, we were left with a company in bankruptcy that we were in the process of acquiring that wasn’t able to upgrade systems and deliver new services to consumers," Waz said at an American Bar Association forum.
The FCC ended up slapping strong programming conditions on Comcast and Time Warner, causing monthly cable rates in the D.C. market to shoot up $2 per subscriber after Comcast was effectively forced to initiate carriage of Mid-Atlantic Sports Network, the pay-TV home of the Washington Nationals and Baltimore Orioles baseball teams.
FCC Media Bureau spokeswoman Mary Diamond said the Adelphia review was postponed at Comcast's request. Comcast wanted to await the confirmation of Robert McDowell so Republicans would have a 3-2 majority, she said.
“Comcast specifically asked us to wait until we had five commissioners in terms of Adelphia," Diamond said.
FCC attorney James Bird, in the audience as Waz spoke, rose to say that the FCC took its time on Adelphia because it didn't want to prejudice pending bankruptcy proceedings. But that didn't explain why the Federal Trade Commission, also aware of the bankruptcy case, decided to approve the Adelphia deal in January 2006, five months before the FCC acted.
Waz used the Adelphia odyssey in 2005-2006 to highlight what he considers the need for major process reform at the FCC, to ensure that key players in the digital economy don't get tied down by bureaucratic red tape.
Although he didn't mention FCC chairman Kevin Martin by name, Waz cited numerous steps taken by the FCC at Martin’s direction that resulted in negative outcomes for the cable industry, leading to a spate of litigation.
“I am aware of nearly a dozen pending court proceedings that are appeals of [FCC] decisions affecting the cable industry," Waz said.
To demonstrate the FCC's sometimes tortoise pace, Waz said that Comcast has been waiting five years (three under Martin) to act on unopposed petitions for price deregulation of its basic programming tier in various markets.
Waz pointed to other procedural problems.
He complained that in some cases, the Martin FCC has begun debating proposed rules internally before the public comment period has expired, or went ahead and adopted rules that were nothing close to the proposals that the public had been told were under consideration.
“When they adopted [cable] leased access rules, they were based on information that had not been in the record, let alone subject to public comment up to that point," Waz said.
Some of these topics are the focus of an FCC investigation being conducted by the House Energy and Commerce Committee under chairman John Dingell (D-Mich.)
The FCC's Diamond claimed that what's going on today has been going on for decades.
“In terms of process, this is the way it has been done at the FCC for 25 years with all previous chairmen, Republican and Democrat alike," she said.
Martin's rulings are starting to face trouble in court, Waz noted.
“If you are looking for a leading indicator that the FCC’s process is broken, consider the fact that the federal courts stayed three FCC orders in a one-month period, from late February to late March," Waz said.
One stay was granted to Cablevision Systems Corp. by the U.S. Court of Appeals for the 2nd Circuit. The FCC had ordered Cablevision to carry upstate New York TV station WRNN on its Long Island systems.
“Practitioners with long experience in this area tell me that it’s pretty unlikely the FCC has been stayed twice in a month, let alone three times," Waz said.