In 2007, the Federal Communications Commission found that exclusive contracts between cable companies and owners of multiple-dwelling units (e.g., apartment complexes) cause significant harm to competition and consumers. The FCC therefore banned exclusivity.
The D.C. Circuit today upheld the order. Nat'l Cable & Telecomm. Ass'n v. Federal Comm. Comm'n, No. 08-1016, slip op. at 3 (D.C. Cir. May 26, 2009). The cable industry arguments it rejected included a narrow reading of a broad statute -- section 628(b) of the Communications Act. As the court explained:
The provision at issue here . . . makes it unlawful "for a cable operator . . . to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers."
Id., slip op. at 3 (quoting 47 U.S.C. 548(b)). The cable group urged that "providing" programming (TV shows) really means "obtaining" it. The court said no.
The court also found the FCC adequately explained its reasons for changing its mind about exclusive contracts. The agency's earlier refusal to bar exclusive dealings, the court noted, turned on the sparser record it had at the time (in 2003). Things change.
See the opinion for other interesting tidbits peculiar to the cable business, the FCC, and rulemaking.
The decision comes at a bad time for the cable behemoths. In 2007 and 2008, the FCC seemed, at last, to start finding the means, and the will, to begin reining in anticompetitive cable practices. That trend will likely gain strength in the new administration.
And the industry's insistence that section 628(b) covers denying access to programming? The FCC has taken steps to issue rules to end cable companies' withholding of "must-have" content like regional sports programming. Cable will now have an even harder time showing that such rules as those fall outside of section 628(b) bounds.