Future of Franchise Authorities' Role in Question, Given Effective Competition Presumption
How the FCC will handle cable system franchising authorities seeking recertification in an era of presumed competing provider effective competition won't be clear until the agency starts making decisions on some of the recertification applications before it, cable franchising authority experts told us. "It's too early to read the tea leaves," said Dan Cohen of Cohen Law Group. "[However,] I don't think we can assume because of the [effective competition] order ... that the FCC is simply going to deny all these petitions." Echoed Mike Bradley of Bradley Hagen: "Until we see some order coming out of the FCC, it's hard to gauge how successful franchising authorities might be." The American Cable Association, National Association of Telecommunications Officers and Advisors (NATOA) and NCTA didn't comment.
The deadline for franchising authorities with an existing certification to file for recertification was Dec. 8. In a public notice, the FCC Media Bureau said three franchising authorities had filed: the Campbell County, Kentucky, Cable Board; the Hawaii Department of Commerce and Consumer Affairs; and the Massachusetts Department of Telecommunications and Cable (DTC). The Media Bureau denied one the following day when it said Campbell County had failed to provide any evidence with its filing to rebut the presumption of effective competition (see 1512090047).
The DTC filing covered by far the most local communities -- in excess of 100 around the state. The Massachusetts agency in an email told us it filed Form 328s for “all regulated communities that do not meet the FCC’s test for effective competition” because they have only one terrestrial multichannel video programming distributor. And the state expects all of them to be recertified because the DTC said it “conducted a fact-based analysis in accordance with the FCC’s rules … and only filed the Form 328 on behalf of those communities that do not meet the FCC’s test for effective competition. Accordingly, the DTC expects that its certifications will remain valid in all of the communities for which it filed.” One cable industry ally said most local franchising authorities don't have facts to rebut the effective competition presumption and will be turned down by the FCC. In its June effective competition order the FCC said it expected few franchising authorities would file by the Dec. 8 deadline "because they will be unable to produce the necessary evidence the rebut the presumption of Competing Provider Effective Competition in most franchise areas" due to the ubiquity of direct broadcast satellite service.
Those Dec. 8 Form 328s joined more than 200 pending petitions that previously had been filed and were opposed by various cable operators, and close to 300 applications by cable operators for review of a previous effective competition decision. When asked about the agency's time frame for making decisions on the effective competition petitions, an FCC spokesman pointed to the effective competition order saying certifications "remain valid unless and until the Media Bureau issues a decision denying" the certification. The agency said it didn't know how many franchise authorities were certified before the Dec. 8 deadline.
Fiscal constraints and uncertainty kept many communities from filing, Bradley said. The effective competition order “totally flips the burden, from previously on the cable operators to now cities across the country having to show now there’s not effective competition,” he said. “Cities are already strapped for financial resources. When faced with having to go through the time and expense of recertifying, they’re hesitant ... especially when they have no idea when the FCC might choose to act,” he said, noting rate dispute petitions between cable companies and franchising authorities in the past could at times take years for the FCC to resolve.
The urge to continue pushing for local rate regulation also was likely tamped down because communities have relatively limited regulatory authority, covering just the basic tier, lawyers told us. "For many of our clients, the cost involved in getting certified or recertified by demonstrating there's not effective competition outweighs the benefit" of relatively limited rate regulation, Cohen said.
That presumption of effective competition is being legally challenged by NAB, NATOA and Minnesota's Northern Dakota County Cable Communications Commission, which have argued the FCC far exceeded Congress' goal to streamline the cable-TV effective competition petitioning process (see 1512150019). The FCC's response brief is due by Jan. 28. NAB declined comment.