Media Bureau Grants Relief from Cable Rate Regulation in Light of Streaming Competition

The FCC's Media Bureau on December 7 adopted and released a Memorandum Opinion and Order exempting Comcast and Cox Communications from local cable rate regulation in 85 Massachusetts communities. That decision once again recognized that the AT&T TV NOW streaming service provides "effective competition" in accordance with the so-called "LEC" test set forth in Section 623(l)(1)(D) of the Communications Act.

Local franchising authorities (LFAs) are permitted to regulate the rate a cable operator charges for the basic service tier in a given area only until the FCC concludes that that cable operator is subject to "effective competition." Subsection (l) of Section 623 defines "effective competition" in a number of ways, one of which is as follows:

a local exchange carrier or its affiliate ... offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area.

In an October 2019 Memorandum Opinion and Order, the Commission for the first time acknowledged that the AT&T TV NOW service satisfies the four prongs of "LEC" test.

Free State Foundation scholar Seth L. Cooper approvingly anticipated that decision in a Perspectives from FSF Scholars, "FCC Action Would Finally Eliminate Local Cable Rate Regulation," published shortly before the agency acted on the petition filed by Charter Communications. When that item was placed on circulation, FSF President Randolph J. May issued a Media Advisory expressing his approval of that proposed decision. Click here and here for additional commentary.

In a Perspectives from FSF Scholars posted to the Free State Foundation website earlier today, I describe how recent subscriber growth by virtual Multichannel Video Programming Distributors (vMVPDs) provides still more evidence that, in 2020, video distribution unquestionably is defined by robust and full competition, This decision by the Media Bureau to eliminate legacy rate regulation in Massachusetts reflects that reality, but the Commission can and should do more to remove outdated rules and unleash the power of an unfettered competitive marketplace.