Disputing broadcaster and local franchise authority (LFA) claims that the FCC erred in reversing its long-standing presumption that cable operators do not face effective competition, the National Cable & Telecommunications Association (NCTA) and the American Cable Association (ACA) told the D.C. Circuit Court Monday that the FCC’s decision complies with relevant law and corresponds with current market realities. 

NCTA and ACA presented their arguments in a joint intervenor brief which responds to legal challenges brought to the D.C. Circuit last August by the National Association of Broadcasters (NAB), the Northern Dakota County Cable Communications Commission, and the National Association of Telecommunications Officers and Advisors (NATOA).  Prior to June 2015, the FCC had applied a rebuttable presumption to the cable industry that effective competition did not exist in the U.S.  As a result, cable operators were required to petition the FCC for findings of effective competition to win relief from basic rate regulation in their respective service areas. Under Section 111 of the 2014 STELA Reauthorization Act (STELARA), the FCC was required to issue rules that prescribe a “streamlined effective competition petition process for small cable operators.”  In a ruling handed down last June, however, the FCC took the STELARA directive a step further by applying a rebuttable presumption in favor of effective competition to the entire cable industry.  In support of its decision, the FCC cited evidence showing that cable’s share of the U.S. multichannel video program distribution (MVPD) market has shrunk to just over 50% since 1993.  The agency further noted that it has approved 99% of petitions filed since 2013 for findings of effective competition. 

As they faulted the FCC for acting beyond the scope of STELARA Section 111, NAB and the other petitioners told the court it was irrational for the FCC to apply a blanket presumption favoring effective competition in the 23,000 franchise areas that the FCC had not previously decreed to be competitive.  In opposition to this claim, NCTA and ACA highlighted conditions in the current cable marketplace, which now faces competition from online video distributors as well as from satellite TV providers.  According to these parties, arguing that, “just as 2009 marketplace conditions no longer supported the continued imposition of a nationwide ownership cap” on cable operators, “today’s even more competitive video distribution marketplace could not have supported the ongoing application of a presumption of no effective competition.”  Countering petitioner arguments that the FCC abandoned its statutory duty to make findings of effective competition, NCTA and ACA maintained:  “an action that merely flips the presumption and reallocates the burden of production is well within the FCC’s statutory authority.”