Martin Punts 70/70 Test To Next Chairman

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Washington -- Federal Communications Commission chairman Kevin Martin, who is resigning Tuesday, has punted to the next FCC chairman an issue that produced one of his biggest embarrassments in his contentious relationship with the cable industry.

In November 2007, the FCC concluded -- over Martin's strong objections -- that cable operators remained below a national subscriber penetration threshold of roughly 70%. If the FCC had found otherwise, federal law permitted the FCC to "promulgate any additional rules necessary to provide diversity of information sources."

To cable, those words meant one thing: a la carte mandates.

Martin went down to defeat mainly because his colleagues doubted the validity and reliability of the data he proffered as showing the 70% test had been met.

As a compromise, the agency decided to require cable operators to produce the key data. Martin had relied on data provided by a single private industry source, whose publisher warned that the data shouldn't be used in the context of determining cable subscriber penetration nationally.

Under Martin, the FCC didn't do anything else on the matter until Jan. 16 -- Martin's last working day as chairman and 416 days after his Nov. 27, 2007 defeat. The FCC released a proposed data collection survey, which still needs approval by the Office of Management and Budget.

Under a 1984 cable law, the FCC was charged with tracking whether cable wires pass 70% of households with systems that have 36 or more channels and whether 70% of such households actually subscribe to such systems. It's called the 70/70 test.

No one disputed the first prong of test because cable operators have routinely added channel capacity over the past 25 years. A 36-channel cable system is almost unheard of. In 2007, the fight at the FCC was over the total number of cable subscribers nationally and total number of households passed by cable.

According to the National Cable & Telecommunications Association, cable operators serve 64.7 million video customers, representing 57.1% of all TV households and 52% of all 124 million homes passed by cable wires.

In the survey, the FCC asked cable operators, in addition to providing subscriber totals, to provide the number of occupied, unoccupied and seasonal homes passed. However, the 1984 law refers to "households" and didn't distinguish between occupied and unoccupied.

According to the U.S. Census Bureau, the U.S. had 128 million housing units at the end of 2007, including 14 million unoccupied units. If the FCC ended up disallowing unoccupied home, cable penetration would be about 59%, far short of the 70% threshold.