FCC Cable Ownership Cap Approved by Three Commissioners

With approval to reinstate the caps from Martin when he circulated the order, there are now three votes for it, the sources said. Martin usually votes for orders when he circulates them to his colleagues. It’s unclear why the FCC Democrats approved the order after it languished for months on the agency’s top floor, a regulatory source said. Commissioners Robert McDowell and Deborah Tate may not have made up their minds how to vote, perhaps because of other high-priority items on the eighth floor, FCC sources said. Industry officials expect the two Republicans to vote against the proposed order.

The NCTA believes the limit stands little chance in court, President Kyle McSlarrow said in an interview. Although the group hasn’t decided whether to sue the FCC if the order is issued, he said a lawsuit by someone was all but certain. Comcast is the only cable operator near the cap. “We believe that the record in front of the FCC provides very little support for a cable ownership cap at any level and absolutely no support for a cap of 30 percent,” the company said. A previous FCC rule limiting the size each cable operator to 30 percent of pay-TV subscribers was remanded to the FCC in 2001 by U.S. Court of Appeals for the District of Columbia Circuit. The proposed order seeks to deal with the appeals court’s objections through a sophisticated economic analysis, an FCC official said.

“It was a very sound rejection of the cable ownership cap” because the commission failed to account for growing satellite competition, McSlarrow said of the ruling in Time Warner v FCC. Additional competition from phone companies selling video weakens the case for a cap, he added. “I think the practical effect of this is likely to be very small precisely because the likelihood of it being rejected in court is very, very high,” he said. “Under Chairman Martin’s tenure, on the one hand you have almost without exception a very aggressive deregulatory agenda for the Bells and particularly AT&T” combined with “an incredibly burdensome regulatory agenda for the cable industry. There is no consistent philosophical underpinning there.” Martin has repeatedly said he doesn’t target any industry for regulation and has criticized rising cable bills.

The cable industry will continue to make its case at the FCC and on Capitol Hill that deregulation is warranted because of increased competition in the voice and video market, said McSlarrow. Whether the issue is two-way plug and play cable rules, a la carte or leased spectrum, cable has a good case that regulation isn’t needed or that the industry’s existing plans are sound, said McSlarrow. “Why on earth would you take this opportunity to intervene in the marketplace, with no real consideration of what the consequences might be?”

Industry lawyers agreed with McSlarrow that cable has a good hand to play in court if the ownership cap is approved. “Any action they take is likely to be overturned,” said veteran cable attorney Burt Braverman. “It’s just another regulatory overture by the commission when it doesn’t seem necessary. It seems to be another in a line of anti-cable initiatives that this commission is putting out.” Martin has told the other commissioners he will put the cable cap on the Dec. 18 meeting agenda if they haven’t voted on it before then, according to FCC sources.