FCC Cuts Backlog of Cable Petitions Seeking Local Rate Deregulation

The bureau has been receiving fewer petitions than it’s disposed of. The bureau approved 160 petitions in the first half of this year, while seeking comment on 101 new requests. Less municipal opposition, newer census data on households getting video from cable rivals to show there’s competition in an area, and more attention by bureau officials to the requests seem among the reasons for the dwindling backlog, cable and municipal lawyers said. They said it still takes a while and sometimes years for requests that are opposed by communities to be processed. The bureau, which provided the figures, had no further comment for this article.

The bureau has been granting some petitions more quickly than in past years, said cable and municipal lawyers. They said the speed has been remarkable for requests not opposed by a local franchise authority. Cable operators seek exemption from rate regulation of the basic-programming package and from rental fees for devices like remote controls and set-top boxes rented to subscribers, so they can set those prices without local oversight. Some such requests have been approved in several months -- much faster than in years past, industry lawyers said. A municipal lawyer said it’s relatively easy for operators to get deregulation in most instances, and communities have cut back on filing oppositions.

"The Media Bureau deserves enormous credit for its timely processing of effective competition petitions,” an NCTA spokesman said. The approvals show viewers “are being well served by a competitive marketplace,” he added. Cable lawyer Craig Gilley of Edwards Angell is “encouraged” for his clients who seek rate deregulation, because the petitions are being acted on, he said. “When they file, there’s an expectation that someone at the bureau is going to respond to the petition. They're now acting in an appropriate time frame."

It took an average of 517 days for the bureau to approve the last 20 requests it acted on. That’s how long it takes to grant a request after it’s put on public notice, which agency and industry officials said often occurs within weeks of the FCC receiving it. Requests (http://xrl.us/bk2m4c) approved June 21 for Cox Communications in southern California each took 43 days to process. On the other hand, four requests approved a few weeks earlier each took more than three years to be approved, with one taking more than four years. They went to Comcast in 50 Illinois communities, many near Chicago (http://xrl.us/bk2m4x), Time Warner Cable in several dozen Ohio municipalities including those near Cincinnati (http://xrl.us/bk2m4z) and to Charter Communications for a town in the Birmingham, Ala., market (http://xrl.us/bk2m5d).

The oldest pending petition was filed in 2007 by Time Warner Cable for 16 communities in Texas. The request was recently updated with calculations of pay-TV subscribership from the 2010 Census. Petitions that are opposed can take several years to be granted or dismissed, said lawyer Ken Fellman of Kissinger & Fellman, who represents cities when they oppose the deregulation. The bureau denied a finding of effective competition to an operator for two communities, during the first half of 2011, and in another instance in that period a petitioner withdrew requests for relief in some communities.

Newer Census figures to update requests are now available, so some operators have supplemented their petitions with data on households in a community that’s current as of last year, cable lawyers said. The bureau has said in past cases that data newer than the 2000 Census, on which many previous petitions relied, isn’t needed. But newer data can bolster petitioners’ cases, industry lawyers said. “Things had slowed down,” with fewer requests being made, because “we were waiting for the 2010 Census numbers,” said Gilley. “Now we're full steam ahead ... because the numbers are out."

Petitions opposed by municipalities continue to take more time for the bureau to process, municipal and industry lawyers said. Some said that grounds on which cities have opposed such requests in the past have been dismissed by the bureau, so communities appear less likely to try to block new actions. “The threshold for effective competition really is pretty low,” since only 15 percent of pay-TV viewers in an area need to subscribe to a service other than from the petitioner, said Fellman. Of opponents to requests on the basis that the 15 percent threshold hasn’t been met “you lose based upon that,” added Fellman, also president of NATOA.

The low federal threshold makes a finding by the commission “difficult to challenge” successfully, Fellman said. Many cities don’t see the benefit in regulating basic rates, anyway, because so few cable subscribers buy only that package, he said. “So all that is left is for most of my clients to say `we're not going to fight this,'” he added. “So many of the charges are not for the basic tier -- it’s the higher-end stuff,” and “that’s what most people are complaining about,” he said. For cash-strapped cities, it means “paying a cable consultant to do a study for rate regulation usually isn’t in the top 10” ways to spend general fund money, Fellman said: Before a city can challenge the prices of a company that’s locally overseen, the municipality must pay thousands of dollars for a consultant to do research.

Such rate studies can cost $5,000 to $12,000, “depending on how difficult the company is” in giving information to a municipal consultant, said Ashpaugh & Sculco President Garth Ashpaugh, who conducts such research and is on NATOA’s board. Such studies can include comparing a cable operator’s actual programming fees for channels on the basic tier to the figures the company reported to the FCC, seeing if the costs ended up being less than expected over a period of time, he said. “In days of tight budgets, these are really not things that cities and counties want to be doing,” and the studies take time, Ashpaugh said: “People just aren’t interested in doing it anymore, because they just don’t see any impacts from it” in finding large enough differences between operators’ costs and what they charge consumers to lead to refunds of monthly bills.