Court strikes down cable ownership caps

A federal appeals court has struck down the FCC regulation stipulating that no cable system owner may control cable systems capable of serving more than 30% of the U.S. market.

The decision came in response to a lawsuit filed by AT&T, which with its acquisition of MediaOne Group in May 2000, eclipsed the cap.

The cap was set, in part, by theorizing that two large multi-system operators controlling both cable systems and programming assets could commit collusion in their programming decisions, thereby preventing the success of new programming entities and consequently harming consumers.

Arguing that the cap violated the first amendment, a brief from AT&T claimed the FCC did not base the 30% threshold upon facts, but upon circumstance and conjecture.

The court, in its written decision, agreed with this argument.

“The only justification that the FCC offers in support of its collusion hypothesis is the economic commonplace that, all other things being equal, collusion is less likely when there are more firms. …This observation will always be true, although marginally less so for each additional firm, but by itself it lends no insight into what the appropriate horizontal [cable system] limit is,” read the ruling.

In response to the decision Jim Cicconi, AT&T’s general council, issued the following statement: “We’re pleased that the D.C. circuit court of appeals agreed with the key argument we presented in this case. We are continuing to review the opinion carefully and plan no further comment at this time.”

A spokesman for the FCC said the commission is reviewing the decision and that no action has been taken at this time.