FCC Franchise Treats Cable, Bells Differently, NCTA Says

The 6th Circuit is expected soon to hear oral argument on the case. Some FCC and industry officials think the agency argument was hurt by the March 5 commission franchise order that didn’t deregulate all pay-TV providers undergoing local review. Since then, the FCC Office of General Counsel advised commissioners to vote on a separate order directed at cable operators to erase some of the disparities cited by NCTA. But as of Friday, that order hadn’t been voted on, said an FCC official, nor has it been made public. The likely outcome is a 3-2 vote with Commissioners Jonathan Adelstein and Michael Copps dissenting, said another source. The vote was delayed because at least one commissioner sought changes to Martin’s draft, said two agency sources.

NCTA focused on what it considers the March order’s unfair treatment of the cable industry. The group said the FCC was wrong to tell the court it may apply rules to some but not all companies selling a similar product and the agency did a poor job justifying that. “It is well established that an agency must provide a reasoned explanation for any decision to proceed incrementally; may not proceed incrementally when the result is to create a long-lasting unlevel playing field; and may not justify proceeding ‘incrementally’ when establishing new interpretations of law that could easily be extended to all parties,” said NCTA. “This court and others have recognized that when the FCC imposes disparate regulatory treatment on competitors, ’time is of the essence,” to cure the disparity, it added.

Under the March 5 order, many cable operators have to wait until existing contracts expire before they can take advantage of FCC limits on fees cities charge companies for public access, data and other networks. Some FCC officials contend cable operators can renegotiate existing franchises. The recent commission filing said it acted as Congress meant it to in limiting the duration of municipal review of franchise applications and the types of fees they can charge. It said FCC limits on public access channel support, data network fees and requirements for video system build-outs will simplify franchise talks.

Filings by cities and their lobbying groups said the FCC overstepped its authority under the Act by issuing rules affecting local government. The FCC never told the 6th Circuit why the commission has dominion over franchising, which the Act says is municipalities’ province, said a filing by Boston, Chicago, Milwaukee, Los Angeles and other cities. “The FCC and its supporters essentially concede the Congressional intent was to place responsibility for franchising at the local level,” said the filing. “As the FCC’s silence on this point underscores, the Cable Act does not authorize the FCC to grant cable franchises directly, or by deeming them issued” if cities don’t meet FCC deadlines to act on applications. Besides, said the cities, “local cable franchising authority derives not from the Cable Act, but from sovereign control of the state and local government property that cable companies seek to occupy.”

The Cable Act makes cable operators responsible to their communities, said a joint filing by municipal groups. “As this court and Congress have found, the entity who is ‘best able to determine a community’s cable related needs and interests’ is the local community itself (and not the FCC),” said the Alliance for Community Media, National Association of Counties, National League of Cities, U.S. Conference of Mayors and others. “It is Congress’ intent that the franchise process take place at the local level.” - Jonathan Make