WASHINGTON — The unusual scene of the Federal Communications Commission strongly defending cable deregulation played out in a federal appeals court here, with the agency defending its decision to presume there is local MVPD competition in a market unless franchise authorities can prove otherwise.
When the FCC decides that a market is competitive, basic rate regulation is eliminated.
The FCC’s decision to reverse the presumption of no effective competition — which placed the burden of proof on cable operators — was prompted both by a legislative directive (in the Satellite Television Extension and Localism Act Reauthorization, or STELAR, bill) to make the effective-competition determination process easier on smaller cable providers and by a petition from NCTA: The Internet & Television Association to extend the reversed presumption to all cable providers.
The National Association of Broadcasters was on the other side of the argument. The NAB backs the National Association of Telecommunications Officers and Advisers in seeking to reverse the new FCC policy, concerned that basic-cable deregulation threatens TV stations that are “must buys” on regulated basic tiers.
In oral arguments on Nov. 10, FCC attorney James Carr cited NCTA and the American Cable Association, which represents smaller operators. Carr cited NCTA’s submission showing that in each of 210 designated market areas across the country, more than 15% of pay TV customers were subscribing to a cable competitor, primarily satellite TV. That’s one of the key benchmarks in determining effective competition.
The FCC said that does not mean that there will be effective competition in each franchise area, because DMAs typically encompass multiple franchise areas. Carr’s point was that there was no countervailing evidence in the record or raised by NATOA to show “there is some marked deviation from the mean that would lead us to expect there was a significant cluster that didn’t meet the threshold.”
In other words, if there was going to be a presumption that had to be disproved, it made more sense for it to be that competition exists rather than it doesn’t.
Stephen Kinnaird, representing NATOA, told the court the FCC had seized on “narrow streamlining legislation” to “shed statutory duties that it had long been keen to escape,” and, in the process, violated the statute.
It is hard to gauge how judges are leaning by their questions, as they probe arguments and play devil’s advocate. But several seemed to suggest that if there was going to be a presumption one way or the other, the NCTA evidence about presuming in favor of competition made sense. There’s no schedule on when the judges will rule but a decision likely won’t come until at least the first quarter of next year.