Cable Groups Square Off With NAB, PK, LFAs on Effective Competition
An FCC proposal to make effective competition a “rebuttable presumption” for cable systems is endorsed by cable trade groups but opposed by local franchising authorities (LFAs), NAB, Public Knowledge and groups that advocate for public, educational and government (PEG) channels, according to comments in docket 15-53. The FCC overstepped its bounds in trying to apply a provision in the Satellite Television Extension and Localism Act Reauthorization (STELAR) intended for small cable systems to all cable systems, opponents of the proposal said. “An automatic, nationwide grant of effective competition to cable operators in thousands of communities would be contrary to congressional intent and against the public interest,” said the Massachusetts Department of Telecommunications and Cable (MDTC).
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In proposing that all cable systems face effective competition, the FCC is recognizing reality, said the American Cable Association, ITTA and NCTA. The proposed rule is "an appropriate exercise of the Commission’s broad authority to update its rules to reflect the reality of the current highly competitive video marketplace,” ACA said. “The presumption that cable operators do not face 'effective competition' is a relic of the earliest days of Commission rate regulation under the 1992 Cable Act,” NCTA said. Both associations said the FCC should take the proposal slightly further and rule it a rebuttable presumption that effective competition is present in any franchise area in which a LEC multichannel video programming distributor offers video. The FCC should ease the burden of cable operators by requiring LFAs “to show the lack of effective competition in those extremely rare cases where such competition is not present," NCTA said.
Cable operators are in a better position to provide the necessary data to prove effective competition exists, the New Jersey Rate Counsel said, a point also made by MDTC. Cable’s contention that it faces widespread competition is false, NJRC said. “The FCC's own report on cable competition and cable rates shows that rate increases are higher in systems that have been granted effective competition,” NJRC said. “The ability to increase rates evidences a provider's exercise of market power and negates any claim of a truly competitive market.” Cable operators also haven’t shown that the current system “inflicts hardship or onerous cost on the cable operator's ability to operate, fairly compete, or provide service,” NJRC said.
Presuming effective competition could threaten PEG channels, American Community Television and NATOA said. Declaring all cable to be free from rate regulation could allow the cable industry to remove PEG channels from the basic service tier, since the basic tier requirement applies only under rate regulation, ACT said. “Such an opening is not in the public interest as PEG channels have for many decades been part of the compact for the cable industry to use the public rights of way.”
The FCC doesn’t have the authority to declare all cable systems are facing effective competition, NAB said. Congress granted the agency power to revoke the certification of franchising authorities but requires “a petition by the cable operator or other interested party, notice to the franchising authority, and a finding by the Commission,” NAB said. It and Public Knowledge said the commission should stick to the original intent of the STELAR provision and provide relief only to small cable companies. The same rules shouldn’t apply to Comcast and smaller cable systems, Public Knowledge said.