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Policy

Three Years Later, Still No Cable Rules

3/01/2004 7:59 AM Eastern

Three years ago Tuesday (March 2), a federal court tossed out cable-ownership rules and told the Federal Communications Commission to go back to the drawing board.

The FCC must like doodling, because the agency has failed to produce any new rules, much to the dismay of consumer groups that want to keep cable consolidation in check.

Under chairman Michael Powell, the commission inherited a problem more than one decade old that culminated with a ruling by a panel of the U.S Court of Appeals for the D.C. Circuit that limiting a cable company to no more than 30% of pay TV subscribers was unconstitutional.

The court scrapped, on the same ground, another rule that required a cable company to reserve 40% of its first 75 channels for unaffiliated programmers.

This FCC's approach to drafting new rules has been novel in some respects.

To understand cable’s market power in the program-acquisition market, the agency hired an outside economist who staged laboratory experiments that mimicked real-life cable transactions -- say, between Comcast Corp. and various programming vendors.

But Powell was reportedly unimpressed with the lab results and with a later Media Bureau proposal calling for a flexible cap that would rise or fall depending on the scope of a particular MSO's programming interests.

He was also reluctant to endorse ownership rules because he felt that the FCC's record on which they were based was thin.

An FCC spokeswoman Monday said the agency continues to work on the rules but does not have a specific completion date.

She added that the agency's new chief economist, Martin Perry, is now working with other commission staff in studying the effects of vertical integration (such as MSO ownership of programming networks) on the pay TV market.

September