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FCC Trying on Bigger caps

FCC Trying on Bigger caps

Erik Wemple

The FCC will kick off a proceeding on Sept. 13 aimed at coming up with new restrictions on cable industry consolidation.

The FCC was forced to rework its ownership caps by a March 2 ruling by the U.S. Court of Appeals for the District of Columbia Circuit. The court vacated the FCC’s rule that limited any single cable company to 30% of the national market. It also knocked down a rule prohibiting cable providers from filling more than 40% of their first 75 channels with affiliated programming.

The FCC declined to appeal the ruling to the Supreme Court, a development that squares with FCC chairman Michael Powell’s skepticism toward government-imposed market caps and other interventionist ploys. Consumer groups, however, have asked the high court to review the appellate decision.

The upcoming FCC proceeding may progress even more slowly than the standard, glacial commission proceedings. That’s because the appeals court, in vacating the 30% and 40% caps, faulted the commission for failing to provide a strong rationale for either one. The court even suggested that the commission had pulled percentages out of “thin air.”

Whatever rationales the Powell commission fashions for the new caps, one outcome is certain: The limits will be much higher than the old ones. In its March ruling, the court suggested that a 60% national cap might be appropriate.

Although the FCC may not go that high, it will likely outpace even the cable industry’s race for consolidation. At the time of the March ruling, for instance, only AT&T Broadband, the nation’s largest cable operator, was in violation of the ownership cap, thanks to its spring 2000 acquisition of MediaOne. The company was under an FCC-imposed May 19 deadline to get under the cap, but the commission suspended that requirement following the court ruling.

Likewise, all the possible consolidation proposals bandied about in the cable sector these days–Comcast and AT&T or AOL Time Warner, for starters–will in all likelihood fall within the new FCC limits.

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