In late August, the U.S. Appeals Court for the District of Columbia Circuit threw out the FCC’s controversial cable ownership caps, a legacy of the chairmanship of Kevin Martin. The cap was adopted in late 2007, and prohibited any one cable company in the U.S. from serving more than 30% of all pay-TV subscribers. The Commission argued that the cap is necessary to ensure that no single cable operator would be able to shut out competitors.
In its ruling, the D.C. Circuit agreed with Comcast that the Commission acted arbitrarily and capriciously when it required that no cable operator serve more than 30% of U.S. cable subscribers. The Commission failed to adequately consider growing competition faced by cable companies from satellite TV providers and from telephone companies (for example, AT&T’s U-Verse, Verizon’s FiOS service). The decision notes that the FCC “failed to demonstrate that allowing a cable operator to serve more than 30 percent of all cable subscribers would threaten to reduce either competition or diversity in programming.”
This is not the first time the Commission has tried to cap nationwide cable ownership. In Time Warner v. FCC, a D.C. Circuit case decided in 2001, the court remanded the 30% cable ownership cap imposed under Chairman Kennard. It is unclear whether the current FCC will appeal the ruling, especially given that the 30% cap was a product of the previous chairman.