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E-mail Print FCC Chairman Declares War on Cable


By: Daniel R. Ballon, Ph.D
11.27.2007

The Federal Communications Commission meets today to consider regulating the cable industry.  FCC chairman Kevin Martin hopes to invoke an obscure loophole from 1984 to micromanage who cable providers can serve, what they can charge, and which programs they can offer.  Why would Chairman Martin reverse his commitment to "deregulatory, not regulatory" policies, opting instead to force higher prices and fewer choices on cable consumers?

 

This move is the latest attempt by Martin to punish cable providers for failing to implement one of his key policy priorities: "a la carte" pricing.  As a warrior against broadcast indecency, Martin wants to give parents the ability to pick and choose individual channels, rather than subscribe to a bundled package.  One of Martin's first acts as chairman was to discredit a 2004 FCC report which concluded that a la carte pricing would increase cable prices by 14-30%.  After secretly reworking the numbers, Martin released a new report showing that prices would actually decrease by 3-13%.

 

When the cable industry still refused to budge, Martin increased the pressure by delaying approval for mergers, and enacting policies costing cable operators hundreds of millions of dollars.  This overt anti-cable hostility prompted Rep. Joe Barton (R-TX), ranking member of the House Committee on Energy and Commerce, to accuse Martin of "picking on" cable operators, further writing that "with respect to the cable industry, you appear to be making proposals that are leading the Commission precisely down the road of intrusive regulation when it is least justified."

 

Martin has even joked openly about his tactics, musing that he is considering a new voicemail message at the FCC: "Hi, you've reached the FCC. If this is AT&T, please press one for our merger-approval hotline.  If this is the cable industry...your call is very important to us. [Extended pause.] Goodbye."

 

At this morning's FCC meeting, Martin plans to up the ante.  While Congress largely deregulated the cable industry in 1996, a long-forgotten provision buried in the 1984 Cable Communications Policy Act grants the FCC authority to "promulgate any additional rules necessary to provide diversity of information sources" if the industry grows too large.  Specifically, the FCC gains this blanket regulatory authority when cable is available to 70 percent of U.S. households and 70 percent of these households subscribe.

 

A 2006 FCC report concluded that only 56.3 percent of eligible households subscribe, and this number is falling in the face of increasing competition from satellite providers and video services offered by telephone companies.  Despite this evidence, Martin will reportedly release new figures demonstrating that the 70 percent threshold has been crossed.

 

If the commission approves this finding, the FCC would be granted nearly limitless authority to regulate the cable industry.  In addition to imposing his long-sought a la carte pricing scheme, Chairman Martin could arbitrarily cap the growth of cable operators, impose price controls, and dictate which channels providers must carry.

 

Martin's determination to re-regulate an increasingly competitive industry to serve his personal agenda has elicited bipartisan opposition.  Troubled by the sudden jump in cable subscription rates, Democratic FCC Commissioner Jonathan Adelstein declared that "I don't think the FCC should be voting on this on what's expedient, but what the facts are."  Republican commissioners Robert McDowell and Deborah Tate expressed doubts over the "trustworthiness, truthfulness and viability" of Martin's data.  Even Rev. Jesse Jackson Sr. opposes new regulations, referring to Martin's plan as "an anti-diversity agenda" with "no political support from either progressives or conservatives."

 

Most importantly, these dangerous new regulations contradict the will of Congress.  Last week, 23 Republicans on the House Energy and Commerce Committee complained that invoking the 1984 provision is "inappropriate at best and contradicts the statute at worst."  A group of senators wrote to Martin yesterday that "it was Congress' intent that the marketplace, and not regulatory fiats, should govern wherever possible."   

 

Last year, the Senate Commerce Committee issued a resounding bipartisan rejection of a la carte programming.  Bundling channels together allows operators to provide more choices at substantially lower cost.  The FCC's stated mission as a "government agency, directly responsible to Congress," is to implement law, not create it.  The FCC should vote today to block a rogue regulator with personal motives from using dubious data to nullify the will of Congress.


 

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