FCC commissioners voted unanimously to strip local governments of the ability to regulate the rates of cable operators.
The 5-0 vote ends the ability of states, cities and other local authorities to force cable operators to prove they have competition in their market in order to avoid rate regulation. Previously, operators had to seek recourse with the FCC to escape local rate regulation.
Now, however, with the FCC now presuming competition to cable from satellite operators DirecTV (NASDAQ: DTV) and Dish Network (NASDAQ: DISH) in virtually every market, these requests are almost always granted. Indeed, the agency has disallowed only four of 224 requests since 2013.
The vote ended a rule that had been in place since 1992, when the Cable Television Consumer Protection and Competition Act was adopted.
Since that time, "competition in the video marketplace has increased dramatically," FCC chairman Tom Wheeler wrote in the proposal to end the rule. "Direct broadcast satellite (DBS) providers, like DirecTV and Dish Network, now have a ubiquitous nationwide presence providing competition in virtually all markets. This is in addition to the competition increasingly being provided by other pay-TV providers. It should, therefore, come as no surprise that the Commission found, in almost all cases, that Effective Competition did exist and that most cable operators who petitioned the FCC met the statutory test."
Not surprisingly, the American Cable Association lauded the FCC decision. "The pay television market has changed dramatically over the past two decades, and the FCC should be commended for promptly and fully carrying out Congress' instruction (enacted last year) to streamline certain rules that were particularly harmful to smaller cable operators and their customers," said President and CEO Matthew Polka.
The National Association of Broadcasters offered a decidedly different reaction. It is "disappointing and surprising that as cable customer satisfaction ratings plunge to a record low, the FCC believes it is wise to gut the one protection that allows local municipalities a chance to protect consumers from abusive treatment and consistently skyrocketing rates," said NAB spokesman Dennis Wharton.
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