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Friday, November 21, 2008

High Speed Dragnet
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dragnet_small.jpgThe FCC's Enforcement Bureau, at the direction of Chairman Martin, recently sent letters to 13 cable operators (who cumulatively serve more than 86 percent of the nation's cable customers) asking for information concerning cable prices and analog-to-digital channel movements and customer notification procedures. The letters requested extensive sensitive cable programming and cost data going back to 2006. A Comcast spokeswoman reportedly said the company estimated it would have taken over 1,500 man hours just to assemble the information for 2008. How long did these companies have to respond to the FCC's request? Fourteen days. Why, what's the rush? And when did cable programming rates become one of the agency's highest priorities?

In a short paper released yesterday, "Der Undue Prozess at the FCC: Part Deux," I identified at least four flaws in the FCC's investigation:

(1) the FCC has very limited authority to regulate cable rate levels; (2) to the extent lack of advance notice of channel moves is at issue, local franchising authorities (LFAs), not the FCC, are statutorily empowered to carry out enforcement activities; (3) the FCC has no rules either prohibiting cable operators from migrating cable programming channels from analog to digital transmission or requiring corresponding per-channel rate reductions; and (4) to the extent the FCC is required by Congress to collect data on the multichannel video programming distributor (MVPD) market and cable pricing generally, the agency is directed to do so by means of its annual video competition and price survey reports.
Thus, not only is the digital cable probe being conducted in a manner that calls into question the fundamental fairness of agency processes (with guilt virtually presumed), it seems to be pursuing goals hard to fathom. What the cable industry is doing in migrating its legacy analog cable services to digital transmission is unambiguously pro-consumer, and the FCC's probe will undoubtedly slow its progress. It is difficult to conceive of how consumers will benefit from this diversion of public and private resources as the nation approaches the critical switch-over from analog to digital television broadcasting just three short months from now. The public interest would be better served if the FCC would "stick to its knitting" and faithfully carry out its statutory mission. No more, and certainly no less.

The focus of the investigation, not explicitly stated in the letters but shared liberally with the press, is on cable rates changes operators may have made to their pricing and tiers of service, and suspicions that the cable industry is somehow using consumer confusion about the transition to digital television broadcasting to move subscribers to more expensive digital tier cable service. Of course, the FCC has previously recognized the benefits of cable's migration to digital transmission, and cable operators are required by FCC rules to send monthly notices to all of their customers about the digital broadcast transition. And, with less than 90 days before full-power television broadcast stations cease transmitting analog signals and switch to digital-only transmissions, there is much serious government work do be done to ensure that Americans who rely on over-the-air television can continue to receive signals on their analog TV receivers after the February digital cut-over. Why, then, is the FCC devoting its resources to investigating matters over which it has little or no regulatory authority? What is the agency really after?

One of the first to report on the probe, Amy Schatz, identified its purpose as: "FCC Opens Investigation Into Cable-TV Pricing." According to Todd Shields, Chairman Martin has said: "Listen, if I can think of anything that'll help lower prices for cable customers, I would move forward on it." But by seeking information concerning negotiated fees from wholesale programming suppliers, one suspects yet another back-door attempt to regulate such wholesale prices with an eye toward accomplishing the FCC Chairman's cable Holy Grail: a la carte programming offerings.

As I explain, this is an all-too familiar scenario, as once again the FCC's regular processes and procedures appear to have been perverted to ends not within the agency's delegated authority.

What is disturbing is the process the FCC's Chairman is using to pursue what might otherwise be a perfectly legitimate inquiry into a range of industry-wide practices in connection with the migration towards all-digital operations. This is no ordinary FCC enforcement action and it is difficult to conceive of how this use of agency resources will further two of the FCC's most pressing current goals: ensuring a smooth transition to digital television transmission and encouraging the speedy deployment of ever higher-speed broadband Internet services. In fact, the probe is more likely to slow progress on each front as enormous resources are diverted to producing and reviewing information relevant mostly to activities that lie outside the scope of the FCC's regulatory jurisdiction.
More importantly, consumers cannot possibly benefit, in the long run, when the government conducts its business using questionable procedures in a manner that strongly suggests a lack of impartiality, fairness and predictability, because there can be no confidence that the results of such actions will be fair and reasonable. If the cause of this government investigation is just, its outcomes can only gain, not lose, by scrupulous adherence to the rule of law.
Questionable processes, in short, are likely to produce questionable results. Let's hope that the next FCC Chairman (or Chairwoman) recognizes the critical importance of procedural fairness, regularity and predictability in administrative agency actions and restores the primacy of the rule of law to guide them.

The whole paper is posted here.

posted by Barbara Esbin @ 11:09 AM | Cable , The FCC

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I got rid of cable 3 years ago, it's just not worth the price anymore. With digital broadcasting I'm getting all I need to watch for free.

Posted by: Courtney at November 22, 2008 5:31 PM

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