This week an FCC Administrative Law Judge (ALJ) ordered Comcast to carry The Tennis Channel in the same tier and channel neighborhood as The Golf Channel and Versus, another sports channel.
- Given the deep flaws in the ALJ's highly-intrusive, and micro-managing decision, there are several good reasons the FCC should overturn the ALJ's decision upon appeal.
1. Implements Obsolete Law: The section of law at issue here, Section 616 of the 1992 Cable Act, is predicated on early 1990s market conditions of cable being a monopoly video distributor with large ownership interests in cable channels. Two decades later, that market assessment predicate is obsolete as cable now has only 60% of the video distribution market and dramatically less ownership interests in cable channels. At core the FCC has to decide if it is fair, sound or legitimate competition policy to completely ignore current competition facts.
2. Abrogates A Commercially-Negotiated Contract: Amazingly, the ALJ ignored the fact that Comcast and The Tennis Channel are currently operating under a commercially-negotiated 2005 contract, and that The Tennis Channel's complaint violates the terms of that contract. Does the FCC want to create a new FCC precedent and policy that the FCC can look-back and unilaterally break longstanding commercially-negotiated contracts? What would be the limiting standard for the FCC to judge which contracts or provisions to break and which to deem satisfactory? Does the FCC want to create the substantial business/investment uncertainty that such a precedent could create? Why should companies continue to commercially negotiate programming contracts if they are not really contracts at all, but just a draft for the FCC to approve or disapprove unilaterally at its discretion? Does the FCC think it wise and productive to establish a new FCC precedent that effectively supplants market forces, competition policy, and contract rule of law?
3. Picks Programming Winners & Losers: The ALJ in mandating that Comcast carry The Tennis Channel on the tier and channel neighborhood that the ALJ thinks it should, does not seem to appreciate the ripple effects of that decision on other channels not in the proceeding. If the ALJ rules the Tennis Channel wins, what about the displaced program that loses? Does the FCC understand the slippery slope here of mandating one channel change that then encourages the displaced channels to seek FCC relief from being displaced by the FCC's prior decision, and then that aggrieved channel seeks FCC relief...?
4. Deems FCC Programmer in Chief: Does the FCC really want to hurtle itself down the path where the FCC begins deciding what programs should be on what channels and what tiers? Isn't that the central skill, role, and job of the owners/managers of private programming companies? If the FCC deems itself the de facto final decider of what tiers and channel neighborhoods consumers should get in a competitive market, what would stop the FCC from deeming itself the final arbiter of what video programs show at what time on a given channel? Or what content or point of view those programs or channels should espouse to what audience? Whose distribution network is this anyway? Comcast's as all the legal documents and contracts prove? Or the FCC's on loan to Comcast as interpreted by the ALJ?
5. Tramples on Constitutional Free Speech: How is the FCC telling Comcast what channel they can sell at what tier price, and what their channel placements should be, not like telling a publisher or editor of a newspaper what newspaper sections they can sell to which subscriber and what order the newspaper should assign the national news, business news, sports news, and local news? Not only does Comcast have the commercial freedom to program its own channel line up and commercial offerings, but Comcast also has the Constitutional free speech right to program its own channel line up and commercial offerings as it sees fit.
6. Hidden FCC Reprogramming Tax on Video Consumers: If the FCC gets into the practice of deciding which channels, or types of channels like sports, should be in what economic tier of programming, such FCC micromanagement of competitive video economics eventually could resemble a type of hidden price regulation that creates substantial hidden market inefficiencies and costs that ultimately have to be passed onto video consumers as a de facto FCC reprogramming tax.
In sum, this unprecedented ALJ decision is deeply flawed on the facts, the merits, and on Constitutional grounds. The FCC should summarily reject this wrongheaded precedent that could hurtle the FCC down a slippery slope of regulatory overreach into an unnecessary regulatory thicket that ill serves video consumers.
The FCC Commissioners need to see the big picture here. Does the FCC really want to slip down the path towards becoming the Federal Video Programming Commission?
