FCC Deletes, Modernizes, Streamlines Cable Rate Regulation

At today's Commission open meeting, Chairman Brendan Carr's IN RE: DELETE, DELETE, DELETE initiative bore fruit when the agency adopted a Report and Order providing the cable industry with long-overdue relief on the rate regulation front. As long as Section 623 of the Communications Act remains on the books (see below for more on that), the rate a cable operator not facing "effective competition" – essentially a null set, legally speaking, since 2017 –charges for the Basic Service Tier (BST) remains subject to regulation. This item, (circulated version available here), however, "will remove from … regulations approximately 27 pages, 11,475 words, 77 rules or requirements, and 8 forms."

The Report and Order deregulates most cable equipment, exempts smaller systems, and declines to extend its rules to commercial establishments. It also modernizes and streamlines those rules that remain in place, primarily to reflect the sunset, over 25 years ago, of tier regulation beyond that of the BST – that is, the tier (1) upon which local broadcast television stations and public, educational, and government access (PEG) channels must be carried, and (2) to which rate regulation in theory still applies.

In practice, of course, given the ubiquitous presence nationwide of "effective competition" from direct broadcast satellite (DBS) operators, telco TV providers, and virtual multichannel video programming distributors (vMVPDs), rate regulation of the BST no longer occurs. As the item notes, the Commission itself is "unaware of any local communities that are actively regulating cable rates at this time."

In a June 5, 2025, post to the FSF Blog, Free State Foundation President Randolph May described this undertaking broadly as "a meaningful regulatory reform accomplishment" and referenced the following language from our comments: "what primarily stands in the way of unbridled, consumer-benefitting competition are ill-fitting rules that hamstring the subset of participants to which they uniquely apply." The Report and Order, the goal of which is to "unleash prosperity through deregulation," is significant step in the right direction.

Speaking of deregulation, according to Law360 (subscription required), earlier this week House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) stated that "'it's time to have a real conversation and update the 1992 Cable Act.'" Consistent with the position for which I (as well as others associated with the Free State Foundation) long have advocated, most recently in "Deregulation Is the Cure for the Video Regulatory Disparity," a June 9 post to the FSF Blog, Chairman Guthrie indicated that he opposes calls to extend legacy MVPD regulation to virtual alternatives: "'I fear that imposing additional regulation on this industry rather than relieving burdens on others would slow down innovation rather than encourage it.'"

Communications Marketplace Report Nears Release

On December 13, the 2022 Communications Marketplace Report was put on circulation at the FCC, indicating that the report is nearing approval. The Commission is required to prepare and release the report by the end of the year.

Free State Foundation President Randolph May, Senior Fellow Andrew Long, and I filed comments and reply comments in the FCC's 2022 Communications Marketplace Report proceeding. As FSF's July 2022 comments stated available data from 2020 and 2021 support the conclusion that the broadband and video services markets are effectively competitive" and that "each of these markets increasingly is characterized by effective intermodal competition." Regarding the broadband Internet access services, our comments cited a host of data regarding competing provider coverage, next-generation network deployment, speeds, and pricing that point to the competitive and innovative state of the market. 

 

In the time since FSF's comments were filed, news stories and reports – about fixed broadband speed improvements, fiber broadband subscriber growth, fixed wireless access (FWA) service subscriber growth, multi-gigabit cable broadband"10G" network rollouts by Comcast and by Charter Communications, subscriber growth in cable competitive mobile virtual network operator (cable MVNO) services, projected growing demand for 5G mobile data, mobile wirelessbroadband affordability, fixed broadband speed improvements, strong wireless network investment, speed increases for 5G wireless networks, and more – appear to confirm the effectively competitive state of the broadband market.

 

Furthermore, FSF's August 2022 reply comments emphasized policy actions that the FCC should take to promote continued investment, innovation, and competition in the broadband and video markets. Regarding broadband inputs, the reply comments emphasized repurposing of spectrum for commercial use, particularly in the lower 3 GHz, the 4 GHz, 7 GHz, and 12 GHz bands. And on the infrastructure siting front, FSF's reply comments recommended that the Commission: (1) declare that fees charged by local governments for deploying wireline facilities in rights-of-way that exceed reasonable costs effectively prohibit broadband services, contrary to Section 253(a); and (2) adopt presumptive reasonableness timeframes of 60-days and 90-days for local governments to act on permit applications involving existing and new wireline facilities in rights-of-way. 

 

Hopefully, the 2022 Communications Marketplace Report will recognize the continuing reality of the competitive state of the broadband market (as well as the video market). Expect to hear more from Free State Foundation scholars following the release of the forthcoming report.

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.

FCC Defends its Order on Effective Competition in the Video Services Market

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. 

Roundup of Recent FCC Reform Actions

At its October 25 public meeting, the FCC took a number of actions, including a vote to approve its Effective Competition Order. This order was discussed in My Perspectives from FSF Scholars paper, "FCC Action Would Finally Eliminate Local Cable Rate Regulation." Additionally, the order is the subject of Free State Foundation President Randolph May's Media Advisory from October 4. Given the choice of video services consumers have today, the Commission's grant of relief from the last remains of early 90s-era local cable rate regulation is welcome.

Also at its October 25 public meeting, the Commission voted to approve a declaratory ruling that provides parity and prohibits discriminatory fees on VoIP services. My October 17 blog post discussed that ruling.  

At its September 26 public meeting, the Commission approved an order eliminating forms of access arbitrage involving the intercarrier compensation system. Prior blog posts called attention to that order. 

Online Video Offerings from INCOMPAS/DISH TV Bolster the Case Against Local Cable Rate Controls

On October 15, it was reported that INCOMPAS and DISH NETWORK have entered into a Retail Partner Program agreement to provide nationwide video service offerings, including video services comparable to cable multi-channel video programming distributor (MVPD) services. According to reports, INCOMPAS members will resell DISH TV's video services, making them available via broadband connections to INCOMPAS subscribers. This market development demonstrates the competitiveness of the video market and it bolsters the case against outdated local cable rate controls. 

My October 11 Perspectives from FSF Scholars paper, "FCC Action Would Finally Eliminate Local Cable Rate Regulation," explained why the Commission should adopt its proposed LEC "effective competition" order. Local rate regulation of basic cable tier services and equipment shouldn't exist in today's competitive video marketplace, which includes nationwide direct broadcast satellite (DBS) services and over-the-top (OTT) online video services. Based on the Commissions' "LEC test," the proposed order would eliminate local cable rate controls in the few geographic areas where they are still enforced. 

The Commission's proposed order is scheduled for a vote at its public meeting on October 25. The order is prompted by Charter Communications' petition requesting the Commission to find that AT&T TV NOW's nationwide offering of streaming video service via broadband Internet facilities is comparable to cable services and provides effective competition to cable systems in certain Massachusetts and Hawaii localities. My Perspectives paper sets forth some positive results that would obtain from the Commission's adoption of its proposal. 

The Commission's "LEC test" requirements aside, the INCOMPAS/DISH TV announcement goes to show that today's video marketplace offers consumers competitive choices. Legacy cable regulation based on early 1990s analog- and VCR-era market assumptions, including local cable rate regulation, provide no discernable benefit to consumers in 2019's video landscape. Local cable rate controls ought to be scrapped.

Effective Wireless Competition: Robust Broadband Coverage

Effective Wireless Competition: Lower Prices and More Data

Ericsson ConsumerLab Report Projects Increase in Mobile Video

Today, Ericsson released its 2017 edition of the ConsumerLab TV and Media Report, showing significant growth in the proliferation of mobile video. Here are some of the key findings from the report:

• By 2020, 50% of all TV and video viewing will take place on a mobile screen (tablets, smartphones and laptops), an increase of 85% since 2010.

• In 2017, nearly 60% of viewers prefer on-demand viewing over scheduled linear TV viewing, an increase of around 50% since 2010. By 2020, linear and video on demand viewing will be almost equal.

• The average number of used on-demand services has increased from 1.6 in 2012 to 3.8 services in 2017 per person.

• By 2020, one in three consumers will be Virtual Reality users.

The significant increase in consumer demand for mobile video is the main reason that Cisco projected mobile data to increase fivefold from 2016 to 2021.  This explosion in demand combined with effective wireless competition produces enormous enhancements in consumer welfare.

Effective Wireless Competition