U.S. Court Splits Cable Ownership Case


Washington -- A federal court here has indefinitely
postponed oral arguments set for Dec. 3 on the Federal Communications Commission's cable
system-ownership rules, legal sources said last week.

In an order released Nov. 4, the U.S. Court of Appeals for
the District of Columbia Circuit decided to break the case into two parts, separating the
challenge to the statute from the test of new FCC subscriber-limits rules announced Oct.

On Dec. 3, the court will go forward with oral arguments on
only the 1992 statute, which authorized the FCC to limit the number of cable subscribers
that one company can serve.

A lower court determined in 1993 that the statute was
unconstitutional under the First Amendment.

Time Warner Entertainment Co. is leading the cable
industry's effort to strike down both the law and the rules on First Amendment grounds.

The court's decision to deconsolidate the case, while not a
complete surprise, was a setback for Time Warner. The MSO believed simultaneous judicial
review of the law and the rules was to the cable industry's advantage.

The FCC rules, which have never been enforced, were changed
last month to read that a cable operator is barred from serving no more than 30 percent of
all subscribers to cable and DBS -- or 36.7 percent of all cable subscribers.

In 1993, the FCC adopted rules that barred one cable
operator from owning systems that serve more than 30 percent of all U.S. homes passed by
cable wires.

If cable wins the statutory case, the challenge to the
rules would be moot. The court is not expected to hand down a decision in the statutory
case until late next spring or early next summer.

Were the court to uphold the law, it is unclear when the
case on the new rules would proceed. The timing would depend on whether parties ask the
FCC to reconsider its rules and how long the commission would take to review those

The court typically refrains from taking a case that
involves FCC rules under reconsideration.

The parties were asked to file motions by late December
recommending how the case on the rules should proceed, in light of the deconsolidation.