Court Throws Out FCC's 30% Cable Subscriber Cap [Multichannel News]
For the third time since Congress passed the 1992 Cable Act, the federal courts have vacated the FCC's rulemaking that limits the number of customers any single cable operator can have. On Friday, the U.S. Court of Appeals for the D.C. Circuit, once again invalidated the FCC rule that limits cable operators from serving more than 30% of cable customers nationwide. The court continued to find that the FCC didn't properly account for competition that cable operators face from satellite providers and telephone companies.
The FCC implemented the latest version of the ownership cap in 2007, in an attempt to limit a single cable operator's control over the video marketplace. Unfortunately, the federal court found that the Commission didn't justify the rule by providing empirical evidence that demonstrated a lack of competition in the video market.
The ruling really only has immediate impact on Comcast, the nation's largest cable operator, which was the plaintiff in the suit that resulted in the invalidation of the cap. Here's what the Court said:
"[T]he commission has failed to demonstrate that allowing a cable operator to serve more than 30% of all cable subscribers would threaten to reduce either competition or diversity in programming. First, the record is replete with evidence of ever increasing competition among video providers: Satellite and fiber optic video providers have entered the market and grown in market share since the Congress passed the 1992 Act, and particularly in recent years. Cable operators, therefore, no longer have the bottleneck power over programming that concerned the Congress in 1992. Second, over the same period there has been a dramatic increase both in the number of cable networks and in the programming available to subscribers."In view of the overwhelming evidence concerning 'the dynamic nature of the communications marketplace,' and the entry of new competitors at both the programming and the distribution levels, it was arbitrary and capricious for the commission to conclude that a cable operator serving more than 30% of the market poses a threat either to competition or to diversity in programming."
The Court was 100% correct when it recognized what the FCC didn't adequately analyze the current market reality. Customers today have a variety of options in today's video marketplace. Satellite and telephone companies both provide service to customers in areas that Insight serves, and believe me, there are lots of extremely talanted people at Insight that work every single day to make sure we're staying ahead of the competition that we face.
Even though the Court didn't take note of online video as an emerging competitor to other video providers, but I noticed this chart over the weekend that indicates that Hulu has more viewers than Time Warner Cable, the nation's second largest cable operator. Both Comcast and Time Warner Cable have begun trials of their own online video services to address this emerging competitive video market.
This ruling reinforces the point that a light regulatory touch can actually encourage competition, rather than stifling it. If the FCC decides to readdress this issue, I'd encourage them to take a look at the light regulatory touch that preceded the nation's communications revolution in the 1990's.
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