Arguing that the FCC’s decision in June to adopt a rebuttable presumption in favor of competition throughout the U.S. cable industry was “arbitrary, capricious, [and] an abuse of discretion” pursuant to the Administrative Procedure Act, the National Association of Broadcasters (NAB) joined the National Association of Telecommunications Officers and Advisors (NATOA) and a Minnesota-based local franchise authority (LFA) in asking the D.C. Circuit Court last Friday to overturn the FCC’s order.
Adopted by a 3-2 margin, the FCC ruling addresses Congressional mandates prescribed by Section 111 of the 2014 Satellite Television Extension and Localism Act Reauthorization Act (STELARA), which required the FCC to streamline the process by which small cable operators request relief from basic tier rate regulation imposed by LFAs. In accordance with the FCC’s long-standing rebuttable presumption against effective cable completion, which was first enacted in 1993, cable operators hoping to obtain relief from LFA basic rate regulation had been required to request a finding of effective competition from the FCC. Noting that cable’s share of the U.S. multichannel video distribution market has shrunk by nearly 50% since 1993 and that the FCC had approved 99% of petitions for effective competition filed in the past two years, the FCC decreed that reversal of the rebuttable presumption was warranted not only for small cable operators but also for the U.S. cable market as a whole. The FCC also declared that certifications issued previously to thousands of LFAs to regulate basic cable rates would terminate within 90 days of the effective date of the new rules unless affected LFAs submit new requests for certification “with evidence rebutting the presumption” in favor of effective competition.
The joint appeal filed by the NAB, the NATOA and the Northern Dakota County Cable Communications Commission contends that the FCC order exceeds “statutory jurisdiction, authority or limitations” in extending the narrowly-tailored tenets of STELARA Section 111 to the national cable industry. Claiming its standing to challenge the FCC, NAB warned that, “in jurisdictions that are deemed subject to effective competition pursuant to the [FCC] order, 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.” In a joint blog post announcing the appeal, NAB Associate General Counsel Scott Goodwin and NATOA Executive Director Steve Taylor further lamented that “consumers are the big losers” as “the FCC stripped from [LFAs] across the country their longstanding roles as cops on the beat.” Although executives of the National Cable & Telecommunications Association declined comment on the appeal, FCC Chairman Tom Wheeler told the press in June that “there has been no evidence in this proceeding to suggest that our previous findings of effective competition . . . led to any changes in tier placement of local broadcast stations.”