The Case for Program Carriage Reform
by
Randolph J. May * and Seth L. Cooper **
[Below is the Introduction to this latest FSF Perspectives. A PDF version of the complete
The Federal Communications Commission's Section 616 program carriage regulations restrict cable operators' ability to negotiate the terms and prices with independent video programmers that want their programming carried on cable networks. In its May 28
Comcast v. FCC decision, the D.C. Circuit rejected a recent Commission assertion of even more regulatory power over program carriage decisions.
The outcome in Comcast v. FCC centered on the clear lack of evidence to support the Commission's 2012 Tennis Channel Order. The FCC granted a complaint filed by the Tennis Channel alleging unlawful discrimination by Comcast. In the middle of a contract term, the Tennis Channel demanded that Comcast move it to a broader distribution tier on Comcast's cable systems. The D.C. Circuit's rejection of far-fetched FCC arguments for sustaining its regulatory intervention in favor of the Tennis Channel could serve as precedent for staving off future regulatory overreach.
Moreover, a very important concurring opinion by Judge Brett Kavanaugh sheds critical light on how the FCC has grossly misinterpreted the program carriage statute to protect competitors rather than consumers. And Judge Kavanaugh highlighted the profound First Amendment problems raised by the FCC's restrictions on the editorial discretion of cable operators regarding programming decisions in a marketplace characterized by competition among various video platforms.
Comcast v. FCC should wake Congress and the FCC up to the reality that legacy cable regulations have long outlived the early 1990s market assumptions once said to rationalize them. The FCC now has opportunity to rethink its overly aggressive regulatory approach to program carriage. For several years, the FCC has sought ways to expand its regulatory control over video services. But now, with the D.C. Circuit's decision in hand, it is time for the FCC to consider a deregulatory, free market approach that takes into account the video choices that cable, DBS, telco entrants, over-the-air, mobile, and various Internet-based distributors now offer consumers.
Judge Kavanaugh's consumer welfare-focused interpretation of Section 616 and accompanying analysis of program carriage regulations is highly persuasive. And it may presage future federal court rulings regarding the continued lawfulness of early 1990s cable regulations, and, in particular, the newly-expanded program carriage regulations. In fact, a challenge to the FCC's program carriage "stand still" rule is now pending before the U.S. Court of Appeals for the Second Circuit.
But the FCC ought not wait for further court rulings. Now is the time for the FCC to reconsider its harmful competitor-welfare focused approach to program carriage regulation. After Comcast v. FCC, at a minimum, the Commission should reframe its regulations so that they are less intrusive and so that they interfere less with cable operators' editorial discretion - in other words, so that they comport with the consumer welfare and market power standard that the statute calls for and which the First Amendment demands.
* Randolph J. May is President of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland.
** Seth L. Cooper is a Research Fellow of the Free State Foundation.
A PDF of the complete Perspectives may be accessed here.
The Free State Foundation's new book,
Communications Law and Policy in the Digital Age: The Next Five Years is now available. You may order the book from the publisher,
Carolina Academic Press, or from
Amazon or
Barnes and Noble.
