DOJ Vows to Police Cable Competition

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The Department of Justice said potential changes in cable-ownership rules by
the Federal Communications Commission won't disrupt the DOJ's ability to police
the industry.

On Tuesday, the DOJ filed comments in an FCC cable-ownership rulemaking to
say that it would 'continue to safeguard competition through its enforcement
activities in the industry, and does not believe changes in the [FCC's rules]
will diminish its ability to do so.'

The FCC is reviewing whether to relax a cap that limits a cable company to
serving no more than 30 percent of the nation's 88 million pay TV
subscribers.

Last March, a panel of the U.S. Court of Appeals for the D.C. Circuit tossed
out the 30 percent cap on First Amendment grounds.

The panel also tossed out a rule that banned a cable operator from occupying
more than 40 percent of its first 75 channels with programming in which it has
an ownership interest.

The DOJ is currently reviewing EchoStar Communications Corp.'s proposed
merger with DirecTV Inc., a $25.8 billion transaction that would give the new
company at least 14.9 million subscribers.

In its six-page filing, the DOJ provided some support for EchoStar's position
that the merger, while leaving just a single direct-broadcast satellite carrier,
is needed to take on cable's 78 percent market share.

'Most local [pay TV] markets continue to be dominated by the cable industry,'
the DOJ said. 'As the [FCC] recognizes, however, in the past several years, new
entry (particularly by DBS firms) has begun to erode the market share of
incumbent cable operators, and high-power DBS continues to be the most serious
competitive threat to the cable industry.'

However, the DOJ also said its role is to protect competition in local pay TV
markets, and it performs that role by scrubbing mergers on a case-by-case basis
for anti-competitive effects.

Opponents of the DBS merger claimed that the deal would lessen competition in
cable markets and create a DBS monopoly in rural markets for millions of
Americans.

It is unclear yet whether the DOJ or the Federal Trade Commission will be
assigned to review the proposed merger between Comcast Corp. and AT&T
Broadband -- the largest cable merger ever, which would leave the new company in
control of at least 22 million subscribers.

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