In National Association of Telecommunications Officers & Advisors v. FCC (1) the Court of Appeals for the District of Columbia Circuit upheld the FCC's reversal of "a decades-old, rebuttable presumption that determined whether state and local franchising authorities may regulate cable rates." (2) The D.C. Circuit held that the FCC's rule, shifting the presumption to favor cable providers over local franchising authorities, was neither arbitrary nor capricious, and was a permissible interpretation of the statutory language. (3)
The Cable Act (4) gives the FCC the ability to decide whether a franchising authority can regulate cable rates. (5) If the FCC "finds that a cable system is subject to effective competition," then neither the FCC nor "a State or franchising authority" will have the ability to regulate rates. (6) However, if the FCC "finds that a cable system is not subject to effective competition," the FCC can regulate the rates for cable programming services or delegate rate regulations to the franchising authorities. (7)
Soon after Congress passed the Cable Act, the FCC clarified that the cable providers carry the burden of proving they are not "subject to effective competition" if they wish to rebut the presumption that their rates can be regulated. (8) This presumption, outlined in the 1993 Rate Order, required cable systems to prevent rate regulation by proving that a competitor not only offered services in that community, but that those services were "actually available" to consumers. (9) When the 1993 Rate Order's presumption was adopted the "vast majority" of regulated regions only had one cable service. (10) The presumption has played an important role in rate regulation authority because, practically speaking, "given the sheer number of franchise areas....[the FCC could not] make an affirmative finding...as to the presence or absence of effective competition" in each area without excessive and unreasonable delay in issuing approvals. (11)
In 2015, the FCC publicly recognized the role multichannel video programming distributors ("MVPDs") and direct broadcast satellites ("DBS") have come to play in the cable landscape; the FCC concluded this rise in competition justified flipping the presumption from assuming no competition, to assuming competition. (12) The FCC's original presumption of no competition was adopted before MVPD and DBS service had "enter[ed] the market...in any significant way." (13)...