FCC sources have reportedly confirmed the recent circulation of a draft order among the agency’s commissioners that would reverse the FCC’s long-standing presumption against the existence of effective competition in the U.S. cable industry. In response, Senator Michael Bennet (D-CO) wrote to FCC Chairman Tom Wheeler this week to warn that revision of the rules in favor of effective competition could induce multichannel program video distributors (MVPDs) to move “less profitable local stations” from basic tiers, thereby resulting in higher subscriber rates and restricted consumer choice. Bennet’s letter is the most recent to be delivered by lawmakers to Wheeler on the topic of effective cable competition.
Since 1993—a time at which cable operators dominated the MVPD market with a 95% share of that sector—the FCC has applied a rebuttable presumption to cable operators that effective competition does not exist in the U.S. Although Section 111 of the STELA Reauthorization Act of 2014 (STELARA) requires the FCC to issue rules by June 1 that prescribe a “streamlined effective competition petition process for small cable operators,” the FCC proposed rules in March that would take the STELARA directive a step further by applying a rebuttable presumption to the entire cable industry that effective competition exists throughout the U.S. MVPD sector. In proposing to reverse the presumption, the FCC cited the vast changes in the competitive cable landscape since 1993 along with the fact that the FCC has granted 224 petitions for findings of effective cable competition since 2013.
In a May 12 letter which echoes Bennet’s concerns, a group of eleven Senate Democrats and one independent senator told Wheeler that a reversal of the presumption “may increase the rates that consumer pay for cable TV while reducing the number of channels offered in a cable company’s lowest-cost package.” Emphasizing however, that the FCC “has approved 99.5% of all the petitions” for effective competition filed since 2013, ranking House Communications & Technology Subcommittee member Anna Eshoo (D-CA) joined Representative Steve Scalise (R-LA) in voicing support for rule change in a May 13 letter to Wheeler. As they cited recent statistics showing that “99% of American homes have access to at least three pay TV providers,” Eshoo and Scalise argued that reversing the presumption would lift “the time-consuming and costly requirements that the ‘effective competition’ provision places on cable operators” and would also save “extensive FCC time and resources.”