Pai Calls for ‘Regulatory Humility’ in Application of Cable Act to Modern Video Marketplace
The video marketplace has changed dramatically since the Cable Act of 1992 was passed, and it’s time for the FCC to “exercise regulatory humility” instead of ignoring the changes, Commissioner Ajit Pai told a Federalist Society audience Thursday. Continuing to apply the outdated regulations will create thorny First Amendment issues for the courts, he said.
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In the early 1990s, cable companies had a 95 percent market share and the vast majority of Americans couldn’t choose any other competitive multichannel video programming distributor (MVPD) option, Pai said. Video over the Internet didn’t exist. Pai read aloud from the legislative history of the Cable Act, which warned that without competition, cable has undue market power. Members from both sides of the aisle attacked a perceived bottleneck in the marketplace, he said. “It’s no surprise when you look at some of the legislative history of the Cable Act, you see statements that ring hollow to the modern ear,” Pai said.
Even though the Cable Act remains on the books, the market is completely different, Pai said. Satellite competitors have eaten away “tremendously” at cable’s market share, and almost all Americans have at least three MVPDs to choose from, he said. New programmers completely bypass the traditional bottleneck by starting YouTube channels. To those in a younger generation, “video is completely indifferent as to the distribution platform, and even to the device that’s being used,” Pai said.
It’s hard to try to apply the Cable Act to the modern landscape, and it raises difficult First Amendment issues, Pai said. In such cases, it’s often best for the FCC to simply exercise humility, and “refrain from engaging in judgments that require courts to grapple with these difficult constitutional issues,” he said.
Members of Congress he’s met with all appreciate that the marketplace has changed, but they can’t seem to agree on a solution, Pai said. Congress could reauthorize the Satellite Television Extension and Localism Act, and use it as a vehicle to revamp the laws. Pai stands ready to work with them if they require FCC advice on any proposed revamp, he said.
Broadcasters are also concerned about the different regulatory treatment they face, said NAB Executive Vice President Jane Mago. It’s “entirely unjustified” in the new marketplace that one set of rules should apply to one channel on a cable system as opposed to the next channel, she said. Broadcasters are concerned about the rules that broadcasters have to put political files online, but not cable or others. “That creates a competitive disadvantage that we think is very concerning,” Mago said.
There’s incredible competition between MVPDs and Internet video providers, said Gibson Dunn attorney Miguel Estrada. The largest market share still belongs to an MVPD, but second and third place go to satellite providers, and telephony companies are in the top 10, he said.