Cablevision made its case against the Federal Communications Commission's closing of the terrestrial exemption at federal court Monday, but if the judge doing almost all the talking was any indication, it could be tough sledding.
Arguing the case for Cablevision was Henk Brands, a partner in the communications practice of law firm
Paul, Weiss. C. Grey Pash argued for the FCC and AT&T attorney Jonathan Neuchterlein backed the FCC's reading of the statute.
Cablevision is challenging the FCC's decision to close the terrestrial exemption in the program-access rules.
That exemption had excluded terrestrially delivered cable networks, primarily regional sports networks, from the FCC's rule mandating access to competing distributors of satellite-delivered networks in which a distributor has a financial interest. AT&T wants access, which is why it was in court on the side of the FCC.
The statute "bristled" with references to "satellite," said Brands, saying it was mentioned 48 times and that Congress meant satellite when it said it, and certainly gave no express signal that it might mean something else. Brands also said that, since the FCC used similar arguments about not providing access to satellite competitor's Internet service in its justicification of network neutrality rules, the FCC's decision in the exemption case could be used to to upset the Comcast/Bitorrent decision by that same D.C. Court. He warned there was virtually no end to the kind of roving market monitoring the FCC could could justify under its interpretation of preventing actions that significantly hinder competition.
But Brands had hardly started making his case when Judge David Tatel broke in to ask questions, and hardly let up from there. His primary line of inquiry was why the FCC wasn't simply using its discretion as an expert agency to apply Congress'interest in preserving competition in view of changing technology--a number of regional sports networks are delivered terrestrially, which the FCC considers the kind of must-have programming Congress intended satellite operators to have noncisriminatory access to.
Brands argued that, instead, the FCC was exceeding that discretion, taking a statute that was meant to prevent barring the "provision" of satellite networks and turning it into one that allowed the FCC to regulate on the basis of the ability to "sell" a network, which would allow it to interpret "siginficantly hindering" in the statute to mean virtually anything it wanted, including price.
The FCC based its ruling that terrestrial delivery was no longer a de factor exemption from bans on withholding content on its finding, upheld by this same D. C. court--that exclusive contracts between cable companies and the owners of apartments and other multiple-dwelling units could be banned. That was why Brands went out of his way to draw a distinction between preventing physical access to satellite delivery, and what he said the FCC had done, which was to target the selling, rather than provision, of satellite service.
Tatel also took aim at Cablevision's argument that the FCC was foreclosed from regulating terrestrial programming. He posed the hypothetical of lawyers for a satellite distributed network, before the FCC closed the exemption, writing a memo advising their client to switch to terrestrial and thus evade the access rules. Wouldn't the FCC be able to prevent that, he asked. Brands suggested it might, but that those were different circumstances and under the current set of facts, the FCC would be foreclosed.
Brands came up with his own hypothetical, saying a statute that made it illegal to prevent doctors from providing services could be interpreted to allow prohibiting someone from blocking access to an ambulance, but not from charging a lower price for ambulance service to draw customers away from a competitor.
When it was his turn, Pash said Congress had been concerned about maintaining competition to must-have content, and when satellite programming delivery is hindered.
But Tatel challenged that argument as well, or at least probed the limits of it. He asked whether a cable operator could be forced by the statute to unbundle phone and Internet service because that hindered satellite competitors. Pash said potentially, but the FCC had not weighed in on that. Tatel conceded the point, but asked for advice on how the court could write an opinion that supported the FCC but did not open the door to that unbundling argument. Pash said he couldn't help, but Tatel seemed provide his own answer, saying that Congress obviosly did not mean to prohibit all competitive conduct, so that would be a governor on the FCC's actions even under their readin of the statue.
Judge Judith Rogers spoke only briefly, primarily to clarify that Cablevision was arguing that when Congress said satellite, it meant it. Griffith, saying he wanted to bring the argument back to this battle--rather than Tatel's "overall war" approach, asked what Cablevision's strongest argument was. Brands said it was that the statute did not prevent withholding terrestrial programming. Griffith said he thought the strongest argument was that not all withholding was bad (the "doctor" analogy, for example).