Court Upholds FCC Ban on Exclusive Cable Contracts

(CN) - The Federal Communications Commission "acted well within the bounds" of the law when it banned cable operators from striking exclusive deals with the owners of apartment buildings, the D.C. Circuit ruled.

The contracts allowed a cable company to wire a multi-unit building in exchange for the exclusive right to provide service to the residents.

The FCC determined that these contracts had an anti-competitive effect on the market, and banned cable operators from entering new exclusivity contracts or enforcing old ones.

Associations of cable operators and apartment building owners challenged the FCC's decision, claiming the agency overstepped its authority. They also argued that Congress enacted the Communications Act to target program hoarding, not exclusivity contracts.

But the federal appeals court in Washington, D.C., upheld the agency's authority to regulate the contracts.

"[W]hile the statute's text, structure, and history do support the proposition that Congress was, in fact, principally concerned with program hoarding, none suggests that Congress chose its language to limit the Commission to regulating that evil alone," Judge Tatel wrote.

The court also rejected the petitioners' hypothetical argument that the FCC's ban would not be able to stand if the phrase "satellite cable programming" were replaced with "Spanish-language programming." In other words, they argued that the FCC couldn't bar building owners from using Telemundo simply because competitors were unable to provide Spanish-language programming to the building.

Judge Tatel rejected this hypothetical on the basis that basic cable service, unlike Spanish-language programming, "is hardly a niche."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit