United States Court of Appeals, District of Columbia Circuit
National Association of Telecommunications Officers and Advisors, et al., Petitioners
Federal Communications Commission and United States of America, Respondents American Cable Association and National Cable & Telecommunications Association, Intervenors
Petition for Review of an Order of the Federal Communications
Stephen B. Kinnaird argued the cause for petitioners. With
him on the briefs were Rick. Kaplan and Jerianne Timmerman.
M. Carr, Counsel, Federal Communications Commission, argued
the cause for respondents. With him on the brief were William
J. Baer, Assistant Attorney General, U.S. Department of
Justice, Robert B. Nicholson and Steven J. Mintz, Attorneys,
Jonathan B. Sallet, General Counsel, Federal Communications
Commission, David M. Gossett, Deputy General Counsel, and
Richard K. Welch, Deputy Associate General Counsel. Jacob M.
Lewis, Associate General Counsel, and Maureen K. Flood,
Counsel, entered an appearance.
Matthew A. Brill, Matthew T. Murchison, Jonathan Y. Ellis,
Matthew J. Glover, Jeffrey Alan Lamken, Rick C. Chessen,
Michael S. Schooler, and Diane B. Burstein were on the joint
brief for intervenors in support of respondents.
Before: Henderson and Pillard, Circuit Judges, and Ginsburg,
Senior Circuit Judge.
Ginsburg, Senior Circuit Judge
2015, the Federal Communications Commission reversed a
decades-old, rebuttable presumption that determined whether
state and local franchising authorities may regulate cable
rates. Concerning Effective Competition; Implementation
of Section 111 of the STELA Reauthorization Act, 80 Fed.
Reg. 38001 (2015) (the Order) (to be codified at 47 C.F.R.
pt. 76). The National Association of Telecommunications
Officers and Advisors, the National Association of
Broadcasters, and the Northern Dakota County Cable
Communications Commission petition for review of the Order as
an impermissible construction of the statute and as arbitrary
and capricious. We deny their petition.
Cable Television Consumer Protection and Competition Act of
1992 (the Cable Act), which amended the Communications Act of
1934, authorized the Commission to certify a state or local
franchising authority to regulate the rates for basic cable
service charged by any cable system that it "finds"
is "not subject to effective competition." Pub. L.
No. 102-385, § 3, 106 Stat. 1460, 1464 (codified at 47
U.S.C. § 543); § 543(a)(2). The Order addresses the
procedures to be used by the Commission to find a cable
system is subject to the type of effective competition
defined in § 543(l)(1)(B), which the Commission
calls "Competing Provider Effective Competition."
See 80 Fed. Reg. at 38001/3. Competing Provider
Effective Competition is one of the four types of
"effective competition" defined in the
Communications Act; the Order does not affect the procedures
for finding any of the other three types of effective
competition. Id. at 38006/1.
Provider Effective Competition has two requirements: (i) the
franchise area is "served by at least two unaffiliated
multichannel video programming distributors
[MVPDs[*] each of which offers
comparable video programming to at least 50 percent of the
households in the franchise area"; and (ii) "the
number of households subscribing to programming services
offered by [MVPDs] other than the largest [MVPD] exceeds 15
percent of the households in the franchise area." §
543 (l)(1)(B)(i) and (ii).
first implemented the Cable Act, the Commission adopted a
rebuttable presumption that cable operators were not subject
to effective competition. Implementation of Sections of
the Cable Television Consumer Prot. & Competition Act of
1992 Rate Regulation, 8 FCC Rcd. 5631, 5669-70 (1993)
(1993 Order). A cable operator that wanted to avoid rate
regulation bore the burden of proving it was subject to
effective competition. Id. The cable operator or an
"other interested party" could "petition"
the Commission to "revoke the jurisdiction of such
authority." § 543(a)(5).
Order under review, the Commission, citing a changed
competitive landscape, reversed the presumption. See
80 Fed. Reg. at 38001-02. Under its new Order, the Commission
presumes there is Competing Provider Effective Competition
and places the burden upon the franchising authority that
wants to regulate basic cable rates to prove there is not
effective competition in its area. Id. The Order
also, with certain narrow exceptions not relevant here,
automatically, i.e. without receiving a petition from the
affected cable operator or any other "interested party,
" terminated previously issued certifications of no
effective competition. Id. at 38008.
Commission based its authority to promulgate the Order
primarily upon § 623 of the Communications Act, 47
U.S.C. § 543, as it was before the changes dictated by
the STELA Reauthorization Act of 2014 (the STELAR Act), Pub.
L. No. 113-200, § 111, 128 Stat. 2059, 2066 (codified at
47 U.S.C. § 543(o)), which further extended the
Satellite Television Extension and Localism Act of 2010
(STELA), Pub. L. No. 111-175, 124 Stat. 1218. See 80
Fed. Reg. at 38005. The Order would implement the STELAR Act
insofar as it requires the Commission to "establish a
streamlined process for filing of an effective competition
petition pursuant to [§ 543] for small cable
operators." 47 U.S.C. § 543(o)(1); 80 Fed. Reg. at
38005. The STELAR Act also provides that "[n]othing in
this subsection shall be construed to have any effect on the
duty of a small cable operator to prove the existence of
effective competition under this section." §
543(o)(2). The Commission reasoned that the Order fulfilled
the requirements of the STELAR Act because it
"establish[ed] a streamlined process for all cable
operators, including small operators, by reallocating the
burden of providing evidence of Effective Competition in a
manner that better comports with the current state of the
marketplace." 80 Fed. Reg. at 38005/1.
Order, the Commission describes how market conditions had
changed since it erected the original presumption in 1993. 80
Fed. Reg. at 38002-04. For example, in 1993:
Incumbent cable operators had captured approximately 95
percent of MVPD subscribers. In the vast majority of
franchise areas, only a single cable operator provided
service and those operators had "substantial market
power at the local distribution level." DBS service had
not yet entered the market, and [phone companies] had not yet
entered the MVPD business in any significant way.
Id. at 38002/1-2 (quoting Implementation of
Section 19 of the Cable Television Consumer Prot. &
Competition Act of 1992, 9 FCC Rcd. 7442, 7449 (1994)).
however, the Commission found two unaffiliated DBS providers
each offer "comparable video programming" to almost
all homes in the United States. Id. at 38002-03. The
Commission determined that fact alone "presumptively
satisfies" the first part of the Competing Provider