FCC Effective Competition Order Rewrites the Cable Act, Broadcast Challengers Say
Whether the 1993 presumption of no effective competition in local cable markets stays or goes is beside the point because the legal challenge to the FCC's 2015 effective competition order involves ensuring the agency follows the statute through evidence-based findings of effective competition in each franchise area, said NAB, NATOA and Northern Dakota County (Minnesota) Cable Communications Commission in a reply brief filed Tuesday in U.S. Court of Appeals for the D.C. Circuit in their challenge of the agency's June order (see 1506020060). "Rulemakings do not provide a vehicle to rewrite statutes, even if the Commission regards the statutory scheme as anachronistic or inconvenient," the filing said, and any remedy "lies with Congress." Oral argument hasn't been scheduled. Final briefs are due March 29.
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The FCC wrongly focuses on whether Section 623 of the Cable Act forbids rebuttable presumptions (see 1602020038) when the real issue is whether the FCC can make findings of fact "without any evidence pertaining to the specific franchise area," the broadcasters said. "Simply producing evidence of national [direct broadcast satellite] market share does not suffice." That data also is suspect, they said, because DBS' national market share doesn't say anything about household penetration in any given locality, much like median national home pricing data says nothing about individual markets.
NAB et al. also said the FCC can't terminate a franchising authority's existing certification without petition by the cable operator and a finding of no effective competition. "The Commission must honor that limitation" Congress put on the FCC's power to revoke certifications only after petition by a cable operator or other interested party, they said. And they said the effective competition order violates the Satellite Television Extension and Localism Act Reauthorization Act of 2014 because it didn't set up a streamlined process for filing an effective competition petition -- as STELAR said to -- when it abolished the petition process completely. "STELAR was designed to provide a remedy -- i.e., a streamlined process for small operators to file effective competition petitions -- with regard to the franchise certifications that existed at the time of enactment," the filing said. "The Commission refused to implement that mandate."
The broadcasters also disputed the FCC argument that rebuttable presumptions have been used before in making findings required by Section 623. "Past practice is no answer," the broadcaster groups said, saying the previous presumption of no effective competition "differed both in justification and operation" because franchise authorities had to provide evidence about specific franchise areas, while the June order abrogates those authorities of regulatory power without any franchise area-specific evidence.
Cable industry interveners NCTA and American Cable Association (see 1602170012) said the effective competition presumption only shifts the burden from cable operators to franchise authorities, but NAB and the others said the FCC actually created "four administrative burden-shifting presumptions": a presumption of effective competition in every franchise area, and presumptions that low penetration, municipal and LEC competition don't exist in any franchise area. But the broadcasters said "the statute does not permit the Commission to abrogate a franchising authority's regulatory jurisdiction simply because of the absence of competition evidence; the Commission may only do so by finding that effective competition actually exists in the franchise area."
The FCC and NCTA didn't comment Wednesday. ACA in a statement said, "The FCC's new rebuttable presumption that cable operators are subject to effective competition nationally is reasonable, amply supported by an extensive record, and clearly within the agency’s statutory authority to adopt. The FCC deserves judicial deference in this case.”