Broadcast ownership rules are still swinging in the wind, but that's not deterring the FCC from taking another crack at cable ownership.
The commission this week issued a Second Notice of Proposed Rulemaking on just how to establish cable ownership limits that will stick. The previously established limits, like broadcast ownership limits, did not stand up to the scrutiny of the District of Columbia U.S. Court of Appeals.
The original cable ownership caps, established in 1993, limited a single MSO to 30 percent of the entire cable subscriber base (the horizontal rule), and to using no more than 40 percent of its channel capacity for its own channels (vertical ownership). The rules held for systems with 75 or more channels.
The FCC at the time determined that 30/40 was the tipping point at which an MSO wouldn't gain too much control over subscribers (i.e. rates) and still be able to get big enough to keep Wall Street interested.
In 1999, the FCC revised the horizontal rule to 30 percent of all multichannel video subscribers, which it determined to be about 37 percent of all cable subs at the time. The following year, Time Warner Entertainment took the government to court, which upheld the underlying statute. TWE regrouped, returned to court in with a new strategy, and got the ownership limits remanded in March 2001. The FCC consequently launched a First Notice of Proposed Rulemaking the following September. While that notice sat in the FCC files collecting comments, Comcast consumed AT&T in a $60 billion deal that launched Comcast from a subscriber base of 8.5 million to a behemoth with nearly 22 million subscribers.
Now Comcast and Time Warner Cable are on the verge of carving up the assets of erstwhile Adelphia's 5.2 million subscribers.
The commission's two Democrats issued a joint statement to the effect of, "about time."
"After the D.C. Circuit reversed our prior rules, the commission sought public comment, in September 2001, on how to fashion new standards, consistent with the court's opinion," said Commissioners Jonathan Adelstein and Michael Copps. "Now, almost four years later, we still do not resolve these issues and provide much needed certainty, but instead seek another round of comments. The record we adduced before, limited though it was, has grown stale, and needs to be refreshed and updated."
Their disappointment registered, the two went on to say that they were pleased that the notice did not abandon the idea of ownership limits altogether.
"The item reiterates the clear language of the law: the Commission 'shall... prescribe rules and regulations establishing reasonable limits' for a cable operator's subscriber reach, as well as the number of its own channels it can run on its system. Against this backdrop, we hope cable operators and other parties do not argue that there should be no numerical limits, but instead provide appropriate and necessary information to help us implement the clear command of the statute."
The National Cable and Telecommunications Association, under the relatively new leadership of Kyle McSlarrow, chose to remain mum on the topic, instead responding to the commission's decision to require enhanced 911 on VoIP.
"We applaud Chairman Martin and the FCC for taking action on this important public safety issue which is of critical importance for every telephone customer, no matter what technology is used," he responded.
Broadcast ownership rules, meanwhile, remain in the chambers of the U.S. Supreme Court. The NAB, having filed a petition for cert back in January, filed its latest brief with the court May 16. It rebuts arguments from the FCC and other cross petitioners that a SCOTUS review would be "premature," because the commission's own review is coming up. The NAB contends that in the '96 Telecom Act, Congress directs the FCC to apply a more "competitive" interpretation on its ownership rulemakings, and the court must uphold that interpretation before the FCC does its next review.
"That the commission will soon be reviewing its ownership rules again is... no reason to delay review," the brief stated. "Quite the contrary. The next mandatory review is in 2006, and the commission will likely begin preparing for that review later this year. It is precisely because the commission must undertake these regular reviews that this Court's review is urgent."
