The cable industry was dealt a legal defeat this week by the D.C. Circuit Court of Appeals, which upheld an FCC order that prohibited cable operators from entering into exclusive contracts with owners of apartment buildings and other multiple dwelling units (MDUs). Handed down on Tuesday, the decision by the three judge panel was praised by telcos, including Verizon and AT&T, which offer IP-based video services that compete head-to-head with cable. At the urging of Verizon and other multichannel video market entrants who claim that exclusive cable-MDU contracts impair their ability to compete, the FCC decided in 2007 that it possessed the authority under Section 628 of the 1934 Communications Act to ban exclusive MDU deals and to prohibit retroactively enforcement of existing MDU contracts. Arguing that the FCC’s interpretation of Section 628 was overly broad and that the agency had exceeded its statutory authority, the National Cable & Telecommunications Association (NCTA) called on the D.C. Circuit to overturn the FCC’s order. NCTA argued that Section 628 (which deals primarily with program access) had been narrowly constructed by Congress to address the vertical integration of cable operators and programmers. The court decided, however, that “nothing in the statute unambiguously limits the Commission to regulating anticompetitive practices in the delivery of . . . programming by methods addressed to that narrow concern alone.” Declaring that, “on a literal reading of the statute, exclusivity contracts do have the ‘effect’ of preventing competing MVPDs from ‘providing satellite cable programming or satellite broadcast programming to subscribers or consumers,’” Judge David Tatel added that NCTA “[offered] no evidence from the legislative record to show that Congress chose its language so as to limit the Commission.”