FCC Actions Deregulating Cable Rates to Send Consumers’ Monthly Bills Sky High
Robert C. Kenny | August 31, 2015
In June, the FCC approved a rule change that now allows cable companies to raise consumers’ monthly rates without first securing approval from local governments. In essence, the change lifts existing local price regulation for all U.S. cable television companies by presuming that all such operators are now subject to effective video competition.
The FCC action severely curtails the ability of local franchising authorities to regulate cable rates, and the ramifications for cable subscribers are huge. As a result, consumers may soon be paying $200 per month for cable service.
In an effort to protect consumers, the National Association of Broadcasters (NAB), The National Association of Telecommunications Officers and Advisors (NATOA) and a local franchise authority in Minnesota—recently filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit, on the grounds that the FCC’s decision was “arbitrary, capricious and an abuse of discretion.”
TVfreedom.org supports the lawsuit and agrees that the court should thoroughly examine this case.
The FCC’s decision to do a favor for big cable is odd, given that consumers’ monthly pay-TV bills continue to rise unchecked at three times the rate of inflation. Rather than leaping to quick judgement and granting a blanket waiver of all local price regulation for the U.S. cable industry, shouldn’t the agency have first inquired into the 2015 price hikes (some as high as a 7.4 percent) that have already been added to the monthly bills of the nation’s cable subscribers?
The FCC, in justifying its decision, contends it’s furthering its Congressional mandate under STELAR to “establish a streamlined process for the filing of effective competition petitions” by small cable operators. Leaping the bounds of logic, the agency used a Congressional goal narrowly designed to improve the administrative process for small cable companies as means to eliminate a statutory evidentiary burden regarding proof of effective competition for every single cable company in America.
The agency further defended its actions on the basis that it virtually approves all “effective competition” petitions filed by cable companies and that local franchising authorities contest less than eight percent of all such applications filed with the Commission. However, the FCC conveniently fails to note the small percentage of applications filed annually and remains silent how many cable companies serving rural America have ever filed in the first instance to assert the existence of effective competition in their local franchise areas.
At the expense of consumers, this sleight of hand grants the industry a blanket windfall.
Why lift the burden of proving the existence of effective competition within a local market for cable companies without first completing a thorough analysis? The Commission’s sweeping change completely shifts this burden to cashed-strapped local governments, requiring that they demonstrate a lack of competitive service choices for consumers beyond the dominant local cable operator.
It’s a decision that runs counterintuitive to the FCC’s historical preference in building a fact-based and data-driving record before making regulatory changes of this magnitude. The FCC even acknowledged in its rulemaking that there is a likelihood that certain local markets are not yet subject to effective competition even with the presence of satellite TV service, yet the agency decided forego building a supportive record for its presumption and, rather, chose to embrace administrative efficiency as a sufficient enough reason for the rule change.
The central question is: How will this market-changing decision impact millions of low-income American’s who today depend on cable’s most affordable bundle TV programming package, the lifeline basic service tier?
Does this mean that all cable companies can now simply eliminate the basic tier and freely increase impacted customers’ monthly pay-TV bills by as much as three times the amount they pay today? Right now, there are a lot of questions, and very few answers.
The Court would be wholly justified to rule against this arbitrary and capricious FCC decision and stop big cable companies from taking advantage of this price deregulation at the expense of tens of millions of cable subscribers.
Kenny is director of public affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations and others advocating for preserving the retransmission consent regime. He is a former press secretary at the FCC.