FCC Turns the Tables on Local Cable Rate Regulation

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For the first time in more than twenty years, the FCC has revised the effective competition standard that governs the local regulation of basic cable rates.  Under the Communications Act, local franchising authorities  may regulate the rates charged for basic cable service in communities that are not subject to effective competition.  In implementing cable rate regulation, the FCC has presumed that effective competition does not exist in any community until the local cable operator demonstrates that effective competition is present in a particular community and obtains a ruling from the FCC to that effect.  Until such a ruling is procured, a local franchising authority which has been certified to regulate basic cable rates may continue to do so.  Based upon changes in market conditions that have occurred since cable rate regulation was enacted in 1992, and the fact that the FCC has granted over 99% of cable operator petitions seeking an effective competition finding in their communities, the FCC  has adopted a presumption that effective competition exists in all communities based on the existence of a competing service provider unless demonstrated otherwise.  The change is also attributable in part to the FCC’s obligation under the STELA Reauthorization Act of 2014, enacted on December 4, 2014, to provide an expedited process for small cable operators to obtain relief from local cable regulation.   The FCC recognizes that changing the effective competition presumption might adversely impact communities that have chosen to regulate cable rates in jurisdictions where the local cable operator has never sought an FCC effective competition ruling. Accordingly, the revised rules will not become effective until they are approved by the Office of Management and Budget.  Additionally, once the rules become effective, local franchising authorities that are currently certified to regulate rates will have 90 days to file a petition for rate regulation authority that must be accompanied by information sufficient to rebut the new effective competition presumption. A timely filed petition will allow the local authority’s existing rate regulation certification to remain in place until the petition is decided.

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