FCC, Broadcasters Hammer at Each Other's Effective Competition Cases
The FCC should have asked Congress to act on effective competition rather than "defy the statute," said a joint brief by NAB, NATOA and the Northern Dakota County (Minnesota) Cable Communications Commission to the U.S. Court of Appeals for the D.C. Circuit in their appeal of the agency's 2015 effective competition order (see 1506020060). But the industry is wrong in its argument the FCC can't terminate any local franchise authority's certification without a party first petitioning for that revocation (see 1603090021), the FCC responded in its own brief.
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"The agency properly rejected that cramped construction of the statute, which supposes that Congress intended to create unnecessary procedural obstacles to the elimination of cable rate regulation in competitive markets -- a core goal of the statute," the FCC said.
No oral argument has been scheduled, though an order scheduling that likely will come within a few weeks, one lawyer representing a party in the case told us. The briefs were filed Tuesday.
The FCC violated Section 623 of the Communications Act -- which says how local franchising authorities can regulate cable rates -- by denying franchising authorities' jurisdiction to regulate rates for basic cable service by finding there's effective competition without any specific evidence about any specific franchise area but instead by looking at the national market overall, NAB et al. said: "A national average is not a proxy for effective competition in a local franchise area."
The FCC said it complies with the spirit of Satellite Television Extension and Localism Act Reauthorization Act of 2014 by reducing regulatory burdens on cable operators (see 1602020038), the broadcast groups said, but "Congress did not give the Commission a free hand to reduce burdens on small cable operators in any way it saw fit [but] specifically commanded the Commission to 'establish' a process (albeit streamlined) by which those operators would have to file effective competition petitions" -- something the FCC has failed to do. The FCC cited a subsection of STELAR to indicate it doesn't limit the agency's authority to ax or change the presumption for cable operators, that section actually speaks to the burden of proof for effective competition, and it clearly shows Congress didn't alter cable operators' burden, the groups said.
Broadcasters claim the new rules violate STELAR by abolishing the process for filing effective competition petitions, but actually the new rules fulfill what Congress mandated with STELAR by streamlining the filing process for small cable operators, the FCC said. "Under those rules, cable operators will have fewer occasions to file effective competition petitions." Broadcaster arguments Congress didn't intend any relief for large cable operators in STELAR ignore that the legislation "does not disable the FCC from streamlining the process for other cable operators," the FCC said.
The FCC also attacked broadcaster arguments against using national effective competition data to make determinations about the state of competition in all the local franchise areas. National data isn't conclusive evidence of specific levels of cable competitor market penetration in each market, but the market share of cable competitors supports the FCC "reasonably infer[ring] that [competitors] serve at least 15 percent of the households" in almost every community, it said.
The argument the FCC abandoned its statutory duty ignores that courts often use evidentiary presumptions based on probabilistic determinations, "Yet, no one could argue that, in relying on such presumptions, the courts are abdicating their obligation to find facts and decide cases," intervenors NCTA and American Cable Association said in their joint brief.
Broadcaster arguments "rest on the false premise that the FCC has abandoned its statutory duty to make 'findings' of effective competition," and flipping the presumption and putting the burden of proof on local franchise authorities "is well within the FCC’s statutory authority," ACA and NCTA said. The cable groups also said NAB and the others say Section 623 precludes reliance on evidentiary presumptions in findings of effective competition, but Section 623 is silent on what procedures the FCC must follow on presumptions or determining if a cable operator is subject to effective competition. "That silence alone is dispositive of Petitioners’ principal claim," they said.
Broadcasters have said requiring previously certified franchise authorities to file a new certification is unreasonable, but ACA/NCTA said, based on the multichannel video programming distributors marketplace, "it would have been unreasonable to allow franchising authorities that obtained certification on the basis of former conditions and an outdated presumption 20-years past to retain regulatory jurisdiction based on inaction alone."