Appeals Court upholds FCC effective competition ruling

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The U.S. Court of Appeals has upheld a 2015 FCC decision ending the ability of states, cities and other local authorities to force cable operators to prove they have competition in their market in order to avoid rate regulation on video services. 

The National Association of Broadcasters (NAB), the National Association of Telecommunications Officers and Advisors (NATOA) and the local Minnesota Franchise Authority filed suit in federal court two years ago seeking to stop the FCC’s "effective competition" ruling, which presumes competition for cable operators in every market.

Under previous Communications Act law, cable operators had the burden of showing the FCC that satellite and telecom operators competed with them in at least 15% of their footprint. 

“That was an expensive process for smaller pay-Tv providers, especially when the point was to demonstrate a well-established fact that Dish and DireCTV had become formidable competitors across the nation,” noted the American Cable Association in a statement

RELATED: NAB, others sue to block FCC's ruling on 'effective competition' for cable operators

“In today's market, consumers have at least three choices for traditional pay-television service and can elect to subscribe to many online video services, like Netflix and Hulu,” the ACA added. “There is no longer any good reason that cable operators should remain subject to burdensome rate regulation. ACA is also pleased to see that broadcasters' attempts to maintain unnecessary and unwarranted regulatory handcuffs on cable operators have been thwarted.”

The ruling could have major implications for broadcast retransmission negotiations. 

With the decision, it now becomes questionable as to whether cable operators are still required to maintain 100% broadcast signal penetration in the regions they operate. Carriage of local stations has long been optional for satellite TV operators, but not MSOs.