Effective Competition Rule Circulates

A draft order to make effective competition a rebuttable presumption for all cable companies circulated at the FCC, as expected (see 1505140063), agency officials said Friday. As also expected, the proposal is largely unchanged in scope from what was proposed in the NPRM, they said. As was originally put out for comment, the item would make all cable companies exempt from rate regulation unless a local franchising authority challenged their status as facing effective competition. The proposed rule change is moving forward in the face of a concerted opposition from broadcasters and some lawmakers.

NAB publicized Friday a recommendation against the rule change from the Intergovernmental Advisory Committee. Broadcaster reaction to the proposal “has become increasingly feverish and divorced from reality,” NCTA said in an ex parte filing posted Friday to docket 15-53. Along with the American Cable Association and other cable interests, NCTA supports the proposed rule change. NAB made a filing of its own, saying that the commission's approach would be "unlawful" and that there is "misinformation being suggested by proponents of the Commission’s proposal to reduce the amount of consumer protections in place against ever-rising cable rates."

“The Commission’s proposal is firmly grounded in data and unassailable as a matter of law and policy,” NCTA said. Market changes over the past 20 years “warrant modifying the rebuttable presumption regarding the presence or absence of effective competition,” NCTA said. Cable’s market share has dropped to 54 percent, and the effective competition threshold has been met “in every DMA [designated market area] in the country,” NCTA said. The commission had no comment for this report.

The FCC should allow more time for commenters to respond to the FCC proposal to make effective competition a rebuttable presumption for all cable companies, the Intergovernmental Advisory Committee (IAC) said to the agency in an advisory recommendation. The document is in docket 15-53. “It does not appear that the Commission is under any time pressure with respect to a wholesale change in the rules,” IAC said, referring to the fact that the Satellite Television Extension and Localism Act Reauthorization Act only requires the FCC to ease the burden for showing effective competition for small cable operators by June 2. The broader change to an effective competition presumption is contrary to the public interest, IAC said.

The FCC argument that effective competition should be nationwide because cable company applications to be removed from rate regulation are rarely opposed is based on a false premise, IAC said. Cable applications for effective competition are rarely opposed because local franchise authorities typically don't have the resources to oppose them, IAC said. “There are important consumer protections in federal law that cable operators claim disappear when there is a finding of effective competition.” The FCC should specifically address whether regulatory presumption of effective competition would pre-empt state laws that protect consumers, IAC said.