NAB, NATOA Sue FCC Over Effective Competition Decision

Call It Arbitrary, Capricious

WASHINGTON — Broadcasters and local franchise authorities have filed suit in federal court to block the FCC's decision that cable operators are subject to effective competition unless proved otherwise.

The National Association of Telecommunications Officers and Advisors (NATOA) and the National Association of Broadcasters (NAB) — along with a local franchise authority in Minnesota — filed the suit, saying the FCC decision was "arbitrary, capricious, an abuse of discretion,." The suit was filed in the U.S. Court of Appeals for the D.C. Circuit, which has primary jurisdiction over FCC decisions.

NAB told the court that in markets deemed to be competitive, "cable operators are likely to deny any obligation to carry broadcasters who have negotiated retransmission consent agreements on the basic service tier that must be offered to every subscriber." Cable operators have pointed out that has not happened in the hundreds of markets deemed to be competitive in recent years.

The FCC, in a 3-2 vote (Democrats Jessica Rosenworcel and Mignon Clyburn dissented), reversed the presumption of "not competitive" following a mandate from Congress to review the effective competition regime to make it easier on smaller cable operators.

The FCC majority concluded it was time to make it easier for all operators and in June voted to reverse the presumption and assume cable operators face competition for traditional video in their local markets unless a franchise authority or other party can demonstrate otherwise.

An effective competition decision removes basic rate regulation.

The decision reduces paperwork for cable ops, but as a practical matter does not change the landscape dramatically since the FCC has granted virtually all such requests in recent years thanks largely to the presence of satellite-TV competition.

The National Cable & Telecommunications Assocaition, which backed the FCC decision, had no comment on the suit.