In a big victory for cable operators large and small, a federal court has said the FCC was within its authority to make it easier for cable video service to shed basic rate regulations.

The U.S. Court of Appeals has upheld the FCC's decision, made under former chair Tom Wheeler, reversing the rebuttable presumption that cable operators are not subject to local competition, thereby making regulators prove there is a lack of competition or rate regs go away.

The onus had been on cable ops to prove there was competition, but the FCC concluded that the near-nationwide availability of direct broadcast satelllite service essentially represented that competition.

The commission, with the strong backing of cable operators -- the National Cable & Telecommunications Association and American Cable Association both intervened in the court challenge on the FCC's side -- last year voted to reverse the rebuttable presumption and assume cable systems face local market competition (primarily given the ubiquity of satellite TV) unless telecom regulators or other challengers could prove they did not.

A finding of effective competition lifts basic cable price regulations.

Writing for the three-judge panel that rejected the challenge to that decision by the National Association of Broadcasters, The National Association of Telecommunications Officers and Advisors and the Northern Dakota County Cable Communications Commission, Judge Donald Ginsburg said the FCC decision was within its authority.

"Because the Congress has not spoken directly to the question whether the Commission may use a rebuttable presumption in lieu of case-by-case findings of fact, we analyze the Commission’s decision under Chevron step two," said Ginsburg, referring to the multi-part test for courts deferring to the subject matter expertise of a regulatory agency.

"Based upon the strength of its nationwide data and the opportunity it gave each franchising authority to support the opposite conclusion [virtually none did], we hold the Commission’s use of a rebuttable presumption to comply with the statutory requirement that it make a finding on the state of competition in each franchise area is a permissible construction of the statutory requirement that the Commission 'find effective competition' before terminating rate regulation," he added.

Not surprisingly, the National Association of Telecommunications Officers and Advisors (NATOA) opposed the move and sued the FCC.

The NCTA and ACA, in a brief filed in support of the FCC, said the commission's decision to make franchise authorities petition to retain that regulation was a reasonable implementation of the Communications Act, was consistent with the relevant statute and squared with current market realities, and added that to retain the previous presumption would likely have been arbitrary and capricious.

The National Association of Broadcasters backed NATOA in the suit. It argued that reversing the presumption would lead to higher prices and cable operators pulling local TV station signals off the basic tier.

“We are gratified by the Court’s unanimous decision upholding the FCC’s effective competition order," said NCTA in a statement. "This decision further affirms that consumers are enjoying the benefits of a hyper-competitive video marketplace and that consumer interests are best served by relying on competition rather than outdated regulations built for a world that no longer exists.”

"ACA is pleased with the Court's decision affirming the FCC's 2015 Order that established a presumption that cable operators now face 'effective competition' nationally,' said American Cable Association President Matt Polka. "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. 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."

“While I disagreed with many of the FCC’s decisions during the Tom Wheeler-era, one of the most constructive, market-oriented actions the agency took was establishing a presumption that, on a national basis, the cable market is presumptively competitive," said free-market think tank Free State Foundation president Randolph May following the decision. "Of course, with competition from satellite and telephone company video providers, and increasingly mobile video services, it would have been blinking marketplace reality to have determined otherwise. Aside from the immediate impact of the court’s affirmance, the ruling ought to have a broader impact in pointing the way for the Commission to employ deregulatory evidentiary presumptions in other instances where there is effective, even if not ubiquitous, competition.”

Congress continues to weigh in on the Federal Communications Commission's proposal to presume cable operators are subject to competition absent a showing to the contrary. Currently, the presumption is that a local market is not competitive.

A finding of effective competition by the FCC relieves operators of local basic-cable rate regulation.

The latest salvos came from both sides of the aisle and the issue as the FCC is expected any day now to circulate an order on the proposal.

In a letter dated Wednesday (May 13), Rep. Anna Eshoo (D-Calif.), ranking member of the House Energy & Commerce Committee's Communication Subcommittee, joined with Rep. Steve Scalise (R-La.) to support the FCC's proposal to "update" the effective competition provision.

They pointed to legacy regulation as an impediment to enhanced flexibility and choice -- the presumption comes from the1992 Cable Act, which dates from a time when cable ops had a 95% MVPD market share, which is now down to a tad more than 50%.

Eshoo and Scalist also cited the time-consuming and costly requirement of the effective-competition provision and said it makes cable ops engage in long and costly proceedings to offer more flexible packaging options to consumers.

They also said saving FCC resources would be saving taxpayer dollars.

On the other side, Rep. Frank Pallone (D-N.J.), ranking member of the House Energy & Commerce Committee, in a letter also dated May 13, asked FCC chairman Tom Wheeler to think hard about the impact of reversing the presumption, pointing to a New Jersey franchising authority's concerns and the impact of the move on consumers.

Pallone said the FCC could simply streamline the petition process and leave the larger question about reversing the presumption for another day, basically inviting Wheeler to punt on the proposed reversal.

The FCC is under an early June congressional deadline to produce an order streamlining the process for smaller cable operators. It was that order the chairman proposed to use to streamline it for all operators by reversing the presumption.