FCC Not Making Effective Competition Presumption Would Be 'Arbitrary and Capricious,' Cable Says

The effective competition presumption is just an alteration of FCC procedures for making findings of effective competition, putting the burden on franchise authorities rather than cable operators, the cable organizations said. While NAB and the others say Section 623 of the Communications Act doesn't allow evidentiary presumptions in effective competition determinations, "nothing in Section 623 specifies the procedures the Commission must follow or governs the use of presumptions [and] that silence alone" settles the issue of the argument, ACA and NCTA and ACA said. That echoed similar arguments the FCC made in opposition to the broadcast industry challenge. The effective competition presumption "provided ample opportunity for rebuttal," ACA and NCTA said. "There is no contradiction between the obligation to make a finding and using rebuttable presumptions in the process." Under the old regime, the FCC relied on the opposite rebuttable presumption of a lack of effective competition, said the cable associations.

Congress twice amended Section 623 over the past 23 years but never indicated there was any problem in FCC reliance on presumptions to make findings, ACA and NCTA said. The effective competition order doesn't conflict with the Satellite Television Extension and Localism Act Reauthorization provision requiring a streamlined process for filing effective competition petitions, because the requirement that franchising authorities will have to submit evidence to rebut the new presumption means fewer small cable operators will have to contest franchising authorities' certifications, they said.

Given the "overwhelming evidence of ubiquitous and successful [multichannel video programming distribution] competition throughout the country," NAB and others "would have this Court turn a blind eye to the dramatic marketplace developments that prompted -- and arguably compelled -- the FCC's action," ACA and NCTA said. Broadcasters argued national data doesn't illustrate realities in individual local markets, but rather it is "simply" aggregation of local data. Since competitor penetration levels hit 34 percent of U.S. households in 2013, the odds of 15 percent penetration "in the vast majority of local franchise areas is not only probable but nearly certain," they said. And if a franchise area doesn't meet the effective competition standard, ACA and NCTA said, the FCC isn't precluded from determining so. "The FCC did not establish a conclusive presumption based on national and local evidence [but] a rebuttable presumption -- one that franchising authorities are free to try to overcome in particular cases based on any local data," they said.

The D.C. Circuit Court has repeatedly vacated FCC actions that don't account for the changed video distribution market since the 1992 Cable Act, such as its 2009 ruling in Comcast v. FCC, so the effective competition presumption "likely was required as a matter of administrative law," ACA and NCTA said. "Today's ... more competitive video distribution marketplace could not have supported the ongoing application of a presumption of no effective competition from 1993.”

“It’s not a surprise that a massively consolidated pay-TV industry supports an FCC decision that weakens local municipalities’ ability to protect Americans from abusive treatment at the hands of cable and satellite providers," NAB said in a statement Wednesday. Pointing to various senators and House Commerce Committee ranking member Frank Pallone, D-N.J., (see 1505260043 and 1505130043) who also have voiced concern about the FCC effective competition presumption move, NAB called it "overreach of [the FCC's] statutory authority" and said it "look[s] forward to vigorously defending our petition in court.” The FCC didn't comment.