Court Gives Cable TV Giants Room to Grow

Aug. 28, 2009 — -- Comcast has won a major legal battle to erase limits on the size of pay TV companies.

A federal court today sided with Comcast and tossed out an FCC cap on the percentage of TV subscribers that can be served by any one company.

The largest cable provider in the nation had argued it was an unconstitutional violation of free speech rights for the FCC to forbid cable companies from serving more than 30 percent of the subscribers in the United States.

A three-judge panel of the U.S. District Court of Appeals for the District of Columbia Circuit agreed in a strongly worded opinion that cast the FCC limit as "egregious" as well as "arbitrary and capricious."

The FCC had set the rules early in the Clinton administration as an effort to prevent any single provider from altogether taking over the pay TV market. But the judges argued cable companies are no longer the only game in town for expanded TV services.

"Much has changed in the subscription television industry since 1993," Judge Douglas Ginsburg wrote for the court. "The number of networks has increased five-fold and satellite television companies, which were bit players in the early '90s, now serve one-third of all subscribers."

Ginsburg also noted fiber optic video providers have emerged and "grown in market share."

The court had kicked the rules back to the FCC in 2001, asking the agency to recognize that the cable industry was starting to feel the heat from satellite providers.

"We expressly instructed the agency ... to consider fully" that competition, Ginsburg wrote. The FCC's "dereliction" in not doing so, he wrote, was "particularly egregious."

"The 30 percent subscriber cap has limited the ability of cable operators to communicate with the public for some 16 years, despite our determination eight years ago that a prior version of the rule was unconstitutional," Ginsburg wrote.