Effective Competition Order Opposition Seen Facing Hurdles

A petition seeking a review of the FCC cable TV effective competition decision faces hurdles to success, said two sometime-critics of the industry. Much like the opposition to the agency's open Internet rule, the order faces a big legal hurdle in trying to convince the U.S. Court of Appeals for the D.C. Circuit that the way the agency came to that decision was flawed, a communications attorney said. The plaintiffs said they have a strong case.

NAB, NATOA and Minnesota's Northern Dakota County Cable Communications Commission -- whose executive director, Jodie Miller, is president-elect of NATOA -- Friday asked the court to review the June order establishing that the cable market is effectively competitive (see 1506020060). The order had been opposed by broadcasters and advocacy groups, who said that despite cable industry arguments that the growth of DBS and online video distribution showed that competition presumption warranted change, DBS and OVD weren't truly equal substitutes. The order "was an overreach" and the hope is the court recognizes that, Richard Treich, a board member at public, educational and government channel group American Community Television, told us. While market penetration for such cable competition as satellite has been growing, "I don't know that's a good, sound basis" for the order, Treich said. "This voids a lot of things, not just rate regulation."

"The Commission’s decision -- made over the objection of two commissioners -- was bad for consumers and wrong on the law," NAB Associate General Counsel Scott Goodwin and NATOA Executive Director Steve Traylor said in a joint NAB blog post. Members of FCC Chairman Tom Wheeler's own party partly dissented on the order. While Congress last year told the FCC "to make limited administrative changes in the processing of effective competition petitions filed by small cable operators ... Wheeler instead opted to push through an order that turned Congress’s directive on its head" by deeming the entire nation effectively competitive for cable operators of all sizes, wrote Goodwin and Traylor. "While federal courts traditionally give agencies a great deal of leeway, we believe that this time, they’ll recognize that the FCC went way too far."

"The American Cable Association believes the FCC acted appropriately, and it does not think NAB will prevail," an ACA spokesman said. The FCC and NCTA declined to comment Friday.

The D.C. Circuit Court is less deferential than some other circuit courts, noted a communications lawyer who at times is at odds with cable. However, the legal standard set in the Supreme Court's 1984 Chevron v. National Resources Defense Council decision -- essentially not whether a government agency made the right decision, but whether that decision itself was made arbitrarily or capaciously -- "is a very hard standard," the attorney said. Overcoming that hurdle might be difficult, said Executive Director Tracy Rosenberg of the nonprofit Media Alliance, which opposed the effective competition order. "But I'm reasonably confident [NAB] has sufficient resources [so that] they would be pursuing something based on some internal analysis," she said. "They have a chance of prevailing."