Communications Daily is a service of Warren Communications News.

FCC Grants More Cable Rate Exemptions, as Requests Surge

The FCC is granting more exemptions from local cable rate regulation, after being inundated with requests by operators seeking to escape certain rules. The number of petitions seeking a determination of effective competition has jumped almost eightfold over the previous year, to about 300 in the past 12 months, said an FCC official. In a normal year, the FCC receives about 40 such requests, taking 9 months to a year to act on each. Cable observers said the Commission could act more quickly were administrative burdens for approval eased. They said Congressional plans, which may shift regulation away from cities to the federal govt., could add to delays.

Sign up for a free preview to unlock the rest of this article

Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!

Since Feb. 1, the FCC relieved such cable operators as Charter, Cox and Time Warner of local franchise authority (LFA) control over monthly rates for basic cable service and gear such as remote controls and set-top boxes in areas with more than 2.3 million homes. The pace of exemptions has risen the past 3 months, our research shows. The Media Bureau found effective competition in markets with more than 1.4 million homes between June 1 and Sept. 28. This week alone, it approved petitions affecting about 700,000 households. Between Feb. 1 and May 31, the bureau granted exemptions for cable systems in areas with 900,000-plus homes. “The fact that we've gotten so many [petitions] in is the reason you are seeing so many [orders] come out,” the FCC official said. “We're trying to get them out as quickly as possible.” The number of petitions approved by the FCC in the past 3 months rose 26% to 120. The Commission approved 95 requests in the preceding 3 months, ended May 31.

One spur for the petition surge is DBS penetration rising to the level necessary for effective competition, the official said. Cable providers can escape local rate regulation in places with at least 2 pay TV rivals with at least 15% of the market. “A lot of areas that might have been under the numbers they needed may have just flopped over to where they can file a credible petition,” the person said. Most are in suburban and rural areas, with a few in cities like Tucson, where the FCC this week released Cox from basic rate regulation (CD Sept 28 p9). Wed., the FCC said it released Mediacom from rate regulation in 81 LFAs in states including Ill. and Wis., in areas with some 100,000 homes.

FCC assessment of rate exemption requests may be rendered more complicated if some lawmakers succeed in adding telecom services to those subject to federal rules, said Alex Netchvolodoff, vp-public policy Cox Enterprises. Broadband video services would be regulated federally under a draft House Commerce Committee telecom update bill released this month (CD Sept 16 p1). “Obviously the FCC is slow in resolving issues, and that’s because they have so much” to do, Netchvolodoff said: “One of the things that troubles me about federalizing things is that you are putting more rather than less burden on the FCC to do this kind of work.”

One way to speed exemption requests would be to impose a deadline by which orders take effect unless the FCC objects, said attorney Michael Hazzard. Franchising authorities oppose only about 25% of bids for rate exemptions, the source said. “If no one is going to oppose it, there shouldn’t be any reason to slow it down or hold it up,” Hazzard said. “There is a backlog because there hasn’t been a lot of dissatisfaction with this. If cable was pounding the table, there could be a lot of change.” An augury of improved approval speed is the return in recent months of normal levels of rate exemption requests, the source said.