FCC Publishes Rule on Cable Reach; Comcast Files Challenge

By Ira Teinowitz

The Federal Communications Commission is finally publishing the rule it approved in December limiting cable system operators’ reach to no more than 30% of the nation’s cable households, and it’s not taking long to see the agency has a legal fight ahead.

Comcast, the cable provider most affected, said today it would sue to challenge the limit.

“The record at the FCC provided absolutely no support for a horizontal ownership cap of 30%,” said David L. Cohen, Comcast executive VP.

The cap stems from Congress’ concern that cable system concentration might some day give a single powerful cable system life-and-death say over the distribution of cable channels. Congress told the FCC to set a cap.

The FCC originally set the 30% limit in 1993, only to see a ruling overturn it in 2001. The ruling sent the limit back to the commission with the instruction that any new limit be better justified. The commission is finally acting on that instruction.

Cable providers argue the limit now is unwarranted, as it does not take into account the growing number of consumers who get programming from satellite providers and phone companies.

“In an era of increased and intensifying competition among telephone, satellite and cable companies, the case for a 30% cap is even weaker than when the courts rejected it six years ago,” said Mr. Cohen. He also called “perplexing” such concern about cable concentration from a commission that allowed rival Bell company mega-mergers.

“These FCC decisions have strengthened the hands of our Bell competitors. It is unthinkable that the government would constrain the ability of cable companies like Comcast to compete with these colossal companies,” he said.

Consumer groups argue that cable price hikes show true competition doesn’t really exist.

“It’s not like the markets for TV sets, where there are lots of choices,” said Chris Murray, senior legal counsel for Consumers Union. “By and large there is one cable operator, and the satellite competition hasn’t changed that much. The phone companies are rolling out systems, but aren’t nationwide yet, and in the meantime the cable industry has been able to raise rates double the rate of inflation. They have shown themselves to have a great deal of market power.”