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OMB Kicks Out FCC’s Leased-Access Rules

The Federal Communications Commission has run into more trouble with its new cable leased-access rules.

Last Wednesday, the Office of Management and Budget ruled that the FCC’s policies were inconsistent with the Paperwork Reduction Act, a law designed to minimize the burden of bureaucratic red tape on unregulated industries.

OMB repeatedly faulted the agency for failing to take into account the additional costs, additional staffing, and risks to proprietary information that the rules would impose on cable operators.

The action by OMB was a setback for leased-access programmers that have been seeking better terms and conditions from cable operators.

“I fail to understand where there is any proprietary and confidential information they will be required to disclose that isn’t already available,” said Leased Access Programmers Association president Charlie Stogner.

OMB’s decision was a rare event for the FCC, especially because the FCC and OMB are key departments run by appointees of President Bush. An FCC spokesman did not have an immediate comment.

According to a cable attorney, the FCC has the authority to vote to overturn OMB’s action, but such a move is considered unlikely because a federal appeals court in Cincinnati stayed all the rules in May. Comcast, Time Warner Cable and the American Cable Association were among the cable entities that petitioned OMB for relief.

Under federal law, large-capacity cable operators have to set aside 15% of their channels for lease by commercial programmers. The FCC regulates the lease rates. The court stay came after the cable industry complained that the FCC had cut lease rates to the bone, producing zero revenue in some examples, and violated the law in doing so.

OMB, for example, invalidated the FCC’s decision to reduce from 15 days to 3 days the amount of time the cable operators have to provide terms and conditions to would-be programmers.

It also faulted the FCC for failing to demonstrate:

  • [It had] taken reasonable steps to minimize the burden on [cable], ... who will be required to hire new staff in order to maintain the capacity to comply with the reduced deadline for leased access requests.”
  • “There are reasonable mechanisms in place to protect proprietary and confidential information respondents will be required to provide potential programmers, regardless of the legitimacy of the request.”
  • “[It had] taken reasonable steps to minimize the burden on [cable operators], who due to reduced pricing, will be required to hire new staff in order to maintain the capacity to respond to an increased number of inquiries.”