The United States Court of Appeals for the District of Columbia Circuit has affirmed the FCC’s decision to shift the burden of justifying the need for basic cable rate regulation from cable systems to local franchise authorities (LFAs) that desire to regulate cable system rates. The Communications Act allows LFAs to regulate the rates for basic cable service in communities where the cable system is not subject to effective competition. Originally, the FCC adopted a presumption that effective competition did not exist in most communities but allowed cable systems to demonstrate the existence of effective competition in response to LFAs seeking FCC certification to regulate basic service rates. Based on changes in the marketplace for multichannel video programming services in the years following, including the nationwide availability of such services by direct-to-home satellite service providers such as Dish Network and DirecTV, the FCC concluded that sufficient evidence now exists to support a presumption that effective competition is present in most communities. On appeal, the court found sufficient authority in the statute for the FCC to establish a legal presumption that effective competition exists, and that the FCC’s decision was supported by a substantial record documenting changes in the video distribution marketplace. The court also found that LFAs remain free to rebut that presumption in their particular communities in cases where where circumstances support a lack of competition.
