On July 15, the FCC's legal brief was filed with the First Circuit in Massachusetts Department of Telecommunications and Cable v. FCC. The case involves a legal challenge to the Commission's LEC Test Order (2019). In that order, the Commission found that the "LEC Test" for determining whether local areas are subject to "effective competition" in video services can be satisfied by competition to incumbent cable operators from over-the-top (OTT) or online video services offering multi-channel video programming. Specifically, the order found that AT&T's streaming video service, which included 65+ channels, was comparable to Charter Communications' multichannel video programming distributor (MVPD) service. Thus, the order found that "effective competition" existed in the few localities in the U.S. still subject to local cable rate controls.
The brief for the FCC ably defends the legal basis for the LEC Test Order and for the relief from local cable rate regulation that the Commission granted to Charter in the order. Hopefully, the First Circuit will take a similar view and uphold the order. The LEC Test Order is an important measure that cleared away costly legacy cable regulations that no longer make sense in today's competitive video marketplace, wherein cable MVPDs compete not only with direct broadcast satellite (DBS), but also against OTT services.
My October 2019 Perspectives from FSF Scholars paper, "FCC Action Would Finally Eliminate Local Cable Rate Regulation," identified four positive results from the LEC Test Order: (1) removal of old rules that don't fit today's competitive video market; (2) establishment of regulatory parity between cable providers and competitors not subject to local rate regulation; (3) removal of burdens on the cable providers' editorial free speech rights; and (4) prevention of local authorities re-regulating cable rates. In an April 2019 blog titled "The Metaphysics of Video Competition," Free State Foundation President Randolph May first wrote about Charter' petition to the FCC for relief from local cable rate regulation in light of competition it faced from AT&T's nationwide streaming MVPD service, then called AT&T NOW. His October 2016 media advisory responding to the Commission's adoption of the LEC Test Order is available here.
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