Black Friday, Regulation Tuesday?

Tomorrow, Nov. 27, the FCC is set to conduct a public meeting on media issues. Notable amongst the commission’s agenda items is a plan by FCC Chairman Kevin Martin to intensify regulation of the cable industry.

Martin’s plan is based on an obscure provision of the Communications Act of 1984, which states, in relevant part, should the FCC ever find that cable service is available to 70 percent of households and that greater than 70 percent of those households are cable subscribers, the FCC may "promulgate an additional rule necessary to provide diversity of information sources."

The latest FCC report, set for release during the Tuesday meeting, is expected to reveal that the cable industry has crossed both 70 percent thresholds and is thereby subject to new rules.

Officials have said the FCC aims to adopt regulations that will increase programming and reduce rates for consumers. One proposal would lower the rates charged by cable operators to lease channel space to independent programmers. Another would ease the process by which independent programmers complain to operators regarding revenue and distribution. Martin is also known to support limitations on the growth of individual cable operators (limiting any one company’s dominance to 30 percent of the market) while pushing them to adopt "a la carte" pricing.

Martin has justified these proposals by asserting that monopolistic players are dominating cable. The industry disagrees. A "relic" The NCTA, calling "70/70 rule" a "relic," responds by saying that while cable is available to 70 percent of households, all available data show that cable is purchased by significantly fewer than 70 percent of the households. The NCTA acknowledges that the goal of Congress was to ensure that one provider didn’t dominate the market but contends that today’s market is fully competitive. The NCTA argues that consumers can choose from among providers including at least one cable operator, two national satellite services, and increasingly, telephone companies and cable "overbuilders" that provide multichannel video services.

Some major content providers support cable’s position. NBC Universal‘s Jeff Zucker, News Corp.’s Peter Chernin, Disney‘s Robert Iger, and Viacom‘s Philippe Dauman wrote a joint letter to the FCC’s Kevin Martin in advance of the meeting. They argued "[B]ecause of the vibrant competition in both programming and distribution, and because of the myriad options and alternatives available to consumers, there is no conceivable justification for government intervention into this marketplace."

Has cable crossed the 70/70 threshold? If so, should this proposed regulation be enforced? We may find out tomorrow. Stay tuned. – Jennifer Rinaldi