Tales of the Sausage Factory

Apparently, Program Access Rules Are Toast — Another Kill for the DC Circuit.

Last week I posted that if the FCC were going to extend the Program Access Rules, or was still thinking about what to do, then it ought to buy itself some time to proceed in an orderly fashion. That same day, according to this article in Broadcasting and Cable, Chairman Genachowski circulated a draft Order allowing the rules to sunset. According to the article, the FCC will still address outright discrimination on a case-by-case basis under the Section 628(b) general prohibition on “unfair or deceptive acts or practices.” Hopefully, the Order will spell out what this means.

To be honest, I am having a hard time feeling worked up about this given that the competing MVPDs did not put a heck of a lot of effort into protecting the rules. Given that the D.C. Circuit made it clear that it was unlikely to bless a further renewal, the folks in the industry that rely on the Program Access rules should have known they were going to have to make a strong case to preserve the rules in some way shape or form. But lobbying around this issue has been fairly anemic, despite the fact that the October 5, 2012 date has been circled in red for the last five years.

Mind you, I am still sympathetic to a lot of the little guys, like American Cable Association, who don’t have a lot of lobbying resources and are really in a position to feel a squeeze. The NPRM had proposed some targeted relief for them, which could still get considered under the FCC’s general authority even if the main rules expire. But it is frankly very hard to predict with certainty how this impacts he market. I absolutely expect the vertically integrated players to start pushing the boundaries on pricing and exclusions — particularly with regard to things like internet-based distribution rights. It will probably also be even harder for any new entrant with even a slightly different business model to get programming, so if someone wanted to try a mix of traditional and online delivery, they are screwed. But since it wasn’t clear that such a competitor would emerge anytime soon anyway, it is kind of hard for the FCC to use that as a justification for maintaining the existing rule.

What really bugs me is that this is a classic example of how the DC Circuit goes all activist and conceives its role as being overall manager of agencies like the FCC, rather than as a court deciding actual cases. The DC Circuit dropped a pretty large hint to the FCC that it better not try to renew the rule, so the FCC tremblingly obeys whatever the merits. Because lets face it, no one wants to waste time creating rules that are going to get reversed on appeal. Congress never intended the D.C. Circuit to act as some sort of Uber-Agency enforcing an anti-regulatory agenda while mouthing the language of deference. But so it has become. The result is a great deal of regulatory uncertainty as agencies and practitioners spend the time wondering what will appeal to the prejudices of particular D.C. Circuit judicial panels rather than focusing on the actual law or facts.

Stay tuned . . . .

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Tales of the Sausage Factory

Will The Program Access Rules Expire On October 5?

Back in March, the FCC released a Notice of Proposed Rulemaking on whether to extend the “program access rules” for another five years, either as they exist now or in some modified form.  For those unfamiliar with the program access rules, they require a cable or satellite provider that also owns programming to make that programming available to rivals on commercially reasonable terms. For example, Cablevision has to sell AMC to Verizon for at least a facially reasonable price, even if it would rather not sell AMC to Verizon at all.

Congress required the FCC to create the program access rules as part of the 1992 Cable Act. Because Congress did not particularly trust the FCC to do a good job fighting cable market power, it gave the FCC very explicit instructions in Section 628(c) (codified at 47 U.S.C. 548(c)). But it also said the rules would expire after 10 years, unless the FCC extended them. The FCC extended the rules for 5 years in 2002, and again in 2007. Without another extension, the Program Access Rules will expire on October 5, 20122.

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