Opposition to Chairman Wheeler?s ?effective competition? Order grows

Since 1993, the Federal Communications Committee’s (FCC) cable competition rules presumed that, absent evidence to the contrary, cable operators do not face effective competition. A few months ago, the Committeesought comment on whether this presumption is still accurate, and whether the rules need updating:

Given the changes to the video marketplace that have occurred since 1993, including in particular the widespread availability of Direct Broadcast Satellite (“DBS”) service, we now seek comment on whether to reverse our presumption and instead presume that cable operators are subject to effective competition. Such an approach would reflect the fact that today, based on application of the effective competition test in the current market, the Commission grants nearly all requests for a finding of effective competition. If the Commission were to presume that cable operators are subject to effective competition, a franchising authority would be required to demonstrate to the Commission that one or more cable operators in its franchise area is not subject to effective competition if it wishes to regulate cable service rates. We intend to implement policies that are mindful of the evolving video marketplace.

Last week, FCC Chairman Wheeler circulated an Order reversing the presumption. Multichannelexplains what the reversal means for the cable industry, and why it’s facing opposition:

A ruling of effective competition means a cable system is no longer subject to basic-tier rate regulation and the requirement to carry retrans stations in that tier.

Broadcasters have been pushing back hard on the proposal, as have a number of high-profile Democratic senators and public interest groups, as well as the local franchising authorities that will lose rate-regulation authority.

Opposition to the Chairman’s Order continues to grow. Multichannelreports that Sen. Bennet (D-Colo.) registered his concerns in a letter to Wheeler, a move that puts Bennet in-line with a long list of Democratic Senators opposing the decision to reverse the presumption:

In a letter to FCC Chairman Tom Wheeler, Bennett said that he was concerned that able [operators] could move "less profitable local stations" from the basic tier, leading to less choice and higher prices, especially for rural and low income Coloradans.

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Other Senate Democrats (and an independent who [caucuses] with) who have taken aim at the proposal include Al Franken and Amy Klobuchar (both D-Minn.), Jeff Merkley (D-Ore.), Ed Markey (D-Mass.), Ron Wyden (D-Ore.), Bernard Sanders (I-Vt.), Jack Reed (D-R.I.), Tom Udall (D-N.M.), Sheldon Whitehouse (D-R.I.), Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wis.) and Elizabeth Warren (D-Mass.).

Notice of Proposed Rulemaking (FCC, Mar. 16, 2015)

Wheeler Circulates Effective Competition Order (Multichannel, May 21, 2015)

Sen. Bennet Asks FCC to Rethink Effective Competition (Multichannel, May 26, 2015)