Comments filed last Friday in response to the FCC’s rulemaking proposal to alter the current standard for determining effective cable competition depict a distinct division of opinion, with cable operators who support a presumption in favor of effective competition standing against broadcasters and local franchising authorities (LFAs) that favor retention of the status quo.
Since 1993, and in accordance with provisions of the 1993 Cable Act, the FCC has applied a rebuttable presumption to cable operators that effective competition does not exist in the U.S. multichannel video program distribution (MVPD) market. As a consequence, cable operators have borne the burden of proving to the FCC that effective MVPD competition exists as a condition for winning relief from LFA regulation of basic cable rates. Citing competitive strides since 1993 and the fact that the FCC now “grants nearly all requests for a finding of effective competition,” the rulemaking notice adopted last month solicits comment on whether that presumption should be reversed.
Recommending against the rule change, the Massachusetts Department of Telecommunications and Cable cautioned the FCC that a nationwide finding of effective cable competition “in thousands of communities would be contrary to congressional intent and against the public interest.” As the New Jersey Division of Rate Counsel claimed that a reversal of the current presumption would “unfairly shift the burden from cable operators . . . over to the [LFA],” the National Association of Telecommunications Officers and Advisors warned of “unintended consequences” that include the possibility that basic tier public, educational or governmental access channels could be moved by cable operators “to a higher priced tier of service.” Along a similar vein, the National Association of Broadcasters also took issue with the “proposed sweeping, nationwide changes that would have broad implications well beyond” what was mandated by Congress in Section 111 of the recently-enacted Satellite Television Extension and Localism Reauthorization Act, which directs the FCC “to adopt a streamlined effective competition process for small cable operators.”
Cable industry players, however, maintained that reversal of long-standing FCC policy is warranted in the light of current competitive conditions. Comments filed by the National Cable & Telecommunications Association urged the FCC to establish the presumption “that cable operators face ‘effective competition’ as defined in the [Cable] Act” on grounds that “marketplace changes over the intervening two decades have not just ‘greatly eroded’ but ‘completely undercut’ the basis” for the FCC’s current presumption against effective competition. Declaring that the FCC possesses “clear” authority to enact the proposed rule change, the American Cable Association noted that the current presumption was not mandated by statute but was chosen by the FCC “as the most efficient approach to ‘finding’ effective competition given available evidence showing a lack of competition in the market at that time.”