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Comcast and FCC Spar At D.C. Circuit Court of Appeals - Broadcasting & Cable

Comcast and FCC Spar At D.C. Circuit Court of Appeals

Judges raise key questions about 30% cap on cable companies' subscribers
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A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit engaged in active and often probing questions as Comcast and the FCC took turns attacking and defending the commission's December 2007 decision to re-impose a 30% cap on any one cable companies' subscribers.

Comcast took the FCC to court over the decision to re-impose the cap, saying it had not justified the re-imposition of the cap, which the same D.C. court had required it to do.

Asked how he thought it had gone, Andrew Jay Schwartzman of Media Access Project, who was an intervener on the side of the FCC, said: "It went better than I might have feared, but it clearly is a very close case for the court."

It may have gone better, but cable still had a lot to be happy with in the line of questioning from a panel most observers expected to be sympathetic to Comcast's arguments.

Among the issues the judges raised:

1. Why the FCC did not include cable carriage of TV stations in their calculation of the programming market
2. The age of the data the FCC based its decision on
3. Whether programming diversity had already essentially been achieved

But also on the table were:

4. Whether DBS is actually an alternative for viewers who can't receive a cable network
5. The degree of latitude the FCC has in interpreting the statute, which goes to the deference to its expertise

Comcast attorney Miguel Estrada argued that the FCC had misread its own test for coming up with the 30% cap. He spent a lot of time attacking the data it relied on as out of date. That data came from 1984-2001, which did not include the rise of DBS competition, which the same court in 2001--in throwing out the cap as insufficiently justified--said it needed to take into account.

Judge A. Raymond Randolph suggested that DBS was not the only factor, and asked whether the FCC hadn't provided justification for cable market power in other ways, bundling of services, for example, which the FCC argued was a factor in DBS not being as strong a competitor. Courts as a general rule give deference to the expertise of regulatory agencies.

On the issue of DBS as cable competition, Randolph said that the issue was whether customers switched to DBS if they could not get a channel they wanted on cable. "People may switch from Comcast to satellite because Comcast service is terrible," he said, evincing a wince from some of the cable audience, "but that is not the question."

DBS had its "wince" moment, too. Estrada was arguing that once DBS got its hooks into a customer, it didn't want to let go, requiring year-long contracts. Judge Douglas Ginsburg said he had read that evidence as suggesting it was tougher to switch from cable to DBS because of that requirement. Ginsberg suggested his point was that subscribers tend to remain with DBS like "the Hotel California." "More like the Roach Motel," Ginsburg Quipped back.

The most cable-friendly seeming questioner on the panel, at least by the tenor of his questions, was Judge Brett Kavanaugh.

He suggested a wealth of competition, citing the 500 channel universe on several occasions, and volunteered when the issue of DBS competition came up that DBS' Sunday Ticket had drawn a lot of customers from cable.

One of the FCC's arguments for the 30% cap was preserving program diversity, but Kavanaugh, again citing all those channels, said there seemed to be a profusion of programming diversity. He pondered whether "incremental diversity"--increasing from say 565 to 567 channels--would be a sufficient government interest to justify the FCC's actions.

Kavanaugh at one point asked if cable and DBS were considered speakers--FCC attorney James Carr conceded they were--whether he thought it would be OK to limit other speakers, like allowing Barnes & Noble to sell only 30% of books, or confine the Washington Post to only 30% of home subscribers to promote the diversity of editorial page opinion. Carr said he doubted it.

But he also said in this case, it was not about what cable wasn't allowed to say, about not letting other voices say anything, by which he meant the potential power of a cable operator with more than 30% of subscribers to kill a network by not giving it carriage.

Estrada argued that the FCC was off base in focusing on networks, and that the real affected group was program producers, who have access to hundreds of networks. He also said that the FCC, in re-imposing the cap, seemed stuck on the same number like a stopped clock. Carr said that this time around a lot more work had gone into arriving at the same figure.

At one point Kavanaugh suggested that the gatekeepers were not cable operators, but networks like ESPN or programmers like PBS.

At one point, Judge Randolph asked what evidence there was that the 30% cap has had any beneficial effect. Carr pointed to the expansion of channels, but Randolph called that an "enormous, unproven and probably un-provable assumption."

One issue that seemed to perplex all three judges was why the FCC confined its study to cable channels rather than the TV stations carried on cable. Carr said that if Congress had wanted to stop with broadcasting in terms of insuring programming got carried, it could have gone no further than must-carry. Broadcasting can't be enough, he said.

It may not be enough, responded Ginsburg, "but it is something and you count it as nothing."

The court is not expected to make a decision before July, said one veteran court observer.

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