Wednesday, June 05, 2019

FCC Gives the First Amendment Its Due in Cable Leased Access Proposal

On June 6, the FCC will vote on a proposed order and rulemaking to modify its analog-era leased access rules, including its dispute procedures and rate formula. To its credit, the Commission factors First Amendment free speech protections into its proposed modifications of its leased access rules. Indeed, the Commission expressly recognizes that leased access requirements, which restrict the editorial and speech rights of cable providers, are constitutionally on shaky ground. This is an important point that Free State Foundation scholars have been making for several years. 

As I wrote in "FCC Over-Regulation of Video Services Undermines Free Speech, a 2012 Perspectives from FSF Scholars paper:
The Supreme Court's First Amendment jurisprudence holds that content-based restrictions are presumptively unconstitutional and that government is generally prohibited from telling speakers what they must say. But many of the FCC's regulations applicable to video service providers include access or forced sharing mandates. Some agency restrictions are even based on speech content. These continuing legacy regulations governing video services infringe upon the editorial choices of MVPDs. Court precedents recognize that MVPDs are entitled to First Amendment protection. The logic of the Court's relevant First Amendment decisions therefore renders significant aspects of current federal regulation of MVPDs' free speech constitutionally suspect. The FCC's leased access regulations [] pose First Amendment problems. Under the statute, MVPDs lose "editorial control over any video programming" on the leased channel capacity. Rate controls constitute another facet of leased access regulations, which are another variety of forced access regulation. MVPDs are subject to FCC-set maximum amounts that independent video programmers can be charged for leasing channel capacity.  
Previously, legacy cable regulations, including leased access rules, were upheld under the intermediate scrutiny standard because of perceived cable video programming distribution bottlenecks in the early 1990s. Under intermediate scrutiny, speech of cable operators may be restricted so long as the regulation furthers an important government interest by means substantially related to further that interest. 

But by the time of my May 2011 blog post on ending legacy cable regulation we already were long past the days when cable operators possessed a 91% or more nationwide market share. And we already were long past the days when consumers' only option for subscription video services was a single local cable provider. Data from the Commission's Communications Marketplace Report (2018) reflect a video services ecosystem featuring competitive cable, direct broadcast satellite (DBS), and online platforms for video programmers to distribute content to consumers. As I summed things up in a February 2019 Perspectives paper:
For video services, the report found that at the end of 2017 all or nearly all U.S. consumers have access to three competing multi-channel video programming distributors (MVPDs). Some consumers had access to four. Furthermore, MVPDs lost subscribers to competing broadcast TV and – especially – to online video distributor (OVD) services. Whereas MVPDs lost 3.6 million video subscribers in 2017, a drop to 94 million, 16.6 million TV households (13.9%) relied exclusively on over-the-air (OTA) TV broadcast signals, up from 15.7 million TV households (13.2%) in 2017. Top three OVDs Amazon Prime, Netflix, and Hulu exceeded 125 million subscriptions in 2017, up from about 103 million in 2016. And "Virtual MVPDs" such as SlingTV and DIRECTV NOW climbed from 2.2 million subscribers to 4.8 million. 
In a June 2018 blog post titled "Improving the FCC's Cable Leased Access Proposal," I again pointed out that the old rationale for leased access rules no longer holds up. Therein I wrote that "the Commission should expressly identify the First Amendment problem posed by the leased access requirements in today’s competitive video market." Furthermore, I wrote: "If the Commission believes it is powerless to eliminate completely the leased access requirements, it should ameliorate the First Amendment problem," perhaps by predicating enforcement of its leased access rules on findings of market power.

Commendably, the Commission's proposed order and rulemaking states: "We agree that dramatic changes in technology and the marketplace for the distribution of programming cast substantial doubt on the constitutional foundation for our leased access rules." It goes on to say: 
[W]e now find that the First Amendment concerns raised by commenters provide additional reason to interpret the statutory obligations of Section 612 in a manner that reduces burdens on the speech of cable operators. We do so here by, among other things, eliminating the Commission rule requiring that cable operators make leased access available on a part-time basis.
The Commission's proposed order would vacate faulty 2008 rules that were never implemented and modify pre-2008 procedural requirements. And its proposed rulemaking would modify its leased access rate formula. Also, the Commission again asks if leased access requirements continue to withstand First Amendment scrutiny, and what discretion the Commission has to reduce the burdens on speech posed by those rules. By this admirable approach, the FCC rightly gives due respect to the First Amendment free speech interests that are burdened by leased access rules.