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FCC Defends Carriage Order Against Cable Criticisms

The FCC defended the constitutionality and procedural soundness of its program carriage order Monday, specifically dismissing in its order cable arguments that the program carriage rules are constitutionally suspect and that the FCC's mode of changing them violated proper administrative procedures.

It also cited its own Comcast/NBCU deal approval as reason for the rule changes.

Time Warner Cable had argued that the rules are content-based and needed to be subject to strict First Amendment scrutiny they had not gotten. But the order counters that the rules do not disfavor speech based on content, but instead regulates speech based on "affiliation with a cable operator," which, the commission points out, are the same grounds on which the D.C. circuit upheld leased access.

Given that they are not content-based, said the order, the rules are only subject to intermediate scrutiny. "The program carriage rules, like the leased access requirements, promote diversity in video programming by promoting fair treatment of unaffiliated programming vendors and providing these vendors with an avenue to seek redress of anticompetitive carriage practices of MVPDs," said the FCC. "Thus, like the leased access rules, the program carriage rules would be subject to, and would withstand, intermediate scrutiny."

TWC also argued that given the D.C. Circuit language in another case--vacating horizontal ownership caps--that cable no longer had bottleneck control, the rules were no longer needed. The FCC countered that the court was talking about a "broad prophylactic rule," while program carriage was a case-by-case determination.

It was at this point in its argument that it added Comcast/NBCU to the mix, a deal it approved in January. "we note that the number of cable-affiliated networks recently increased significantly after the merger of Comcast and NBC Universal, thereby highlighting the continued need for an effective program carriage complaint regime.   The Commission noted that that transaction would 'result in an entity with increased ability and incentive to harm competition in video programming by engaging in foreclosure strategies or other discriminatory actions against unaffiliated video programming networks.' The Commission specifically relied upon the program carriage complaint process to address these concerns."

The commission also rejected TWC's argument that the rules violate the takings clause of the Fifth Amendment, an argument cable operators have made about the must-carry/retrans rules as well.

The FCC also takes aim at the National Cable & Telecommunications Association argument that the commission did not provide adequate notice for adopting a standstill and would need to issue a separate notice before adopting it as part of the order.

"When notice is required under the APA, the notice 'need not specify every precise proposal which [the agency] may ultimately adopt as a rule'; it need only "be sufficient to fairly apprise interested parties of the issues involved," said the order, quoting from a D.C. Circuit decision (the circuit with jurisdiction over FCC rules).

The FCC says it fairly apprised those parties in its initial NPRM, in which it asked whether it should "adopt additional rules to protect programmers from potential retaliation if they file a complaint."  It says that the standstill is a logical outgrowth of that.

Elsewhere, FCC Commissioner Robert McDowell took major issue with that defense.