Effective Competition Order Went Far Beyond Congress' Wishes, Communications Act Power, Opponents Say

The FCC went dramatically overboard in response to Congress' desire to streamline the cable-TV effective competition petitioning process when it decided the cable market is effectively competitive in every franchise area and put the onus of rebutting that presumption on franchising authorities, said NAB, NATOA and Minnesota's Northern Dakota County Cable Communications Commission (NDCCCC) in a brief. It was filed Monday, the deadline for those petitioners to file their initial brief in their lawsuit against the FCC at the U.S. Court of Appeals for the D.C. Circuit. NAB, NATOA and Minnesota's NDCCCC -- whose executive director, Jodie Miller, is president of NATOA -- sued the FCC in August (see 1508280033), asking the D.C. Circuit to reject the June order (see 1506020060).

The FCC's respondent brief is due Jan. 28. Oral argument hasn't been scheduled. Neither the FCC nor NCTA -- an intervenor in the case -- commented Tuesday. The American Cable Association, which also is an intervenor, "has confidence that the petitioners will not prevail in this case," said a spokesman.

The FCC order violates, or at least misreads, the Communications Act by deciding cable operators nationwide face effective competition without looking at any market-specific information, NAB et al. said. "The Commission cannot make franchise-area findings based on the absence of evidence regarding the franchise area, especially in light of the longstanding principle that the Commission must develop an adequate record to perform its public functions even if parties to a proceeding fail to do so." Pointing to the 1992 Cable Act as requiring FCC findings about effective competition in each franchise area, the petitioners said the agency has to base any effective competition findings "on actual evidence concerning the presence of competition in individual franchise areas." Looking at national market share data isn't the same as looking at competitive conditions in the 23,000-plus franchise areas nationwide, NAB et al. said.

The order legally fails because its "mass termination" of the certifications of legions of franchising authorities doesn't jibe with Section 623 of the Communications Act, which covers basic-service tier rate regulation, the petitioners said. Section 623 doesn't give the agency the power to terminate those certifications minus any cable operator petition or finding that the authority's jurisdiction violates the statute, they said. While the FCC claims its order is in the same vein as its 1993 order that adopted a mirror presumption of no effective competition, the 1993 presumption involved the FCC having some specific evidence about individual franchise areas, they said. Now, the agency is automatically doing away with franchising authority power without any specific data about the state of effective competition in any franchise area, NAB et al. said.

The rule doesn't line up with the 2014 Satellite Television Extension and Localism Reauthorization Act, which included provisions requiring the FCC to streamline its process for filing effective competition petitions so as to make it easier for small cable operators, the NAB-led group said. "The Commission does not 'establish a streamlined process for filing of an effective competition petition' ... by abolishing that process altogether." While the FCC has argued its effective competition order reduced regulatory burdens across the board for cable operators, Congress "did not give [it] a free hand to reduce burdens on small cable operators in any way it saw fit," petitioners said, saying Congress also didn't change cable operators' burden of proving effective competition.