With the flurry of FCC activities taking place since May—including ongoing USF reform efforts, the AT&T/T-Mobile merger review, the 706 Report, and the Fifteenth Wireless Competition Report—one might easily have missed the quiet and anticlimactic demise of the cable a la carte regulation-through-litigation in Brantley v. NBC Universal (2011). In June, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit dismissed a nationwide class action antitrust lawsuit that sought to override marketplace business practices regarding video programming distribution by obtaining a judicial order imposing a la carte mandates. The Court dismissed the lawsuit for failure to state a valid antitrust claim.
Some background on Brantley v. NBC Universal can be found in a 2007 blog post, "Classless Class Action Against Cable." In short, the litigation sought to prohibit video programmers and video programming distributors such as cable and DBS providers from only offering multi-channel bundles and instead require separate channels be offered for purchase on a stand-alone basis. Soon after it was filed, the lawsuit picked up an effective endorsement of the then-Chairman of the FCC. But the litigation ran into trouble in the district court, where the trial lawyers were unsuccessful in making their Sherman Act claims through three complaint filings. So they appealed to the Ninth Circuit, and lost again.
The Ninth Circuit's opinion in Brantley observed that "[a]lthough plaintiffs may be required to purchase bundles that include unwanted channels in lieu of purchasing individual cable channels, antitrust law recognizes the ability of businesses to choose the manner in which they do business absent an injury to competition." For this proposition the Ninth Circuit relied on AT&T v. linkLine (2009) – a case I blogged about at the end of the Supreme Court's 2008-09 term.
The bundling of service offerings is a common feature of competitive markets, as discussed in an FSF Perspectives paper by Stan J. Leibowitz titled "Bundles of Joy: The Ubiquity and Efficiency of Bundles in New Technology Markets." Not to mention the First Amendment problems that plague cable a la carte regulatory schemes that FSF President Randolph J. May pointed out in "The Constitution, A La Carte."
Thankfully, the Ninth Circuit's ruling in Brantley put a baseless regulation-through-litigation claim to rest. But since the lawsuit commenced, a la carte mandates have been superseded by other regulatory threats to video marketplace freedom. The FCC's "AllVid" proposal and Comcast-NBCU merger order conditions regarding video navigation devices and online video content, for instance, foreshadow future regulatory actions regarding video services. So when it comes to the video market, proponents of pro-market policies still have their work cut out for them.