Ma. Dept. of Telecomm & Cable v. FCC ( 2020 )

United States Court of Appeals
For the First Circuit
No. 19-2282
MASSACHUSETTS DEPARTMENT OF TELECOMMUNICATIONS AND CABLE,
Petitioner,
v.
FEDERAL COMMUNICATIONS COMMISSION,
Respondent,
and
CHARTER COMMUNICATIONS, INC.,
Intervenor.
PETITION FOR REVIEW OF AN ORDER OF
THE FEDERAL COMMUNICATIONS COMMISSION
Before*
LYNCH, Circuit Judge,
and SARIS,** District Judge.
David C. Kravitz, Deputy State Solicitor, with whom
Maura Healy, Attorney General, was on brief, for Petitioner.
James M. Carr, Counsel, with whom Makan Delrahim,
Assistant Attorney General, Michael F. Murray, Deputy Assistant
Attorney General, Robert B. Nicholson, Attorney, Steven J. Mintz,
Attorney, the United States Department of Justice, Ashley S.
Boizelle, Acting General Counsel, Richard K. Welch, Deputy
Associate General Counsel, Adam G. Crews, Counsel, and the Federal
* While this case was submitted to a panel that included
Judge Torruella, he did not participate in the issuance of the
panel's opinion. The remaining two panelists therefore issued the
opinion pursuant to 28 U.S.C. § 46(d).
** Of the District of Massachusetts, sitting by
designation.
Communications Commission were on brief, for Respondent.
Howard J. Symons, with whom Jessica Ring Amunson and
Jonathan A. Langlinais were on brief, for Intervenor.
Rick C. Chessen, Neal M. Goldberg, Mary Beth Murphy, and
Radhika Bhat on brief for NCTA – The Internet & Television
Association, amicus curiae.
December 18, 2020
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SARIS, District Judge. The Massachusetts Department of
Telecommunications and Cable ("MDTC") petitions for review of an
adverse FCC order dated October 25, 2019. The MDTC challenges the
FCC's determination that the cable system operated by Charter
Communications, Inc. ("Charter") in Massachusetts is subject to
"effective competition" in its franchise areas under the statutory
"Local Exchange Carrier" ("LEC") Test, Telecommunications Act of
1996, § 301(b)(3)(C), 47 U.S.C. § 543(l)(1)(D) (2018). Congress
prohibits cable rate regulation when the FCC makes this finding.
47 U.S.C. § 543(a). Charter has intervened in opposition to the
MDTC's petition. The Internet & Television Association has
submitted a brief as amicus curiae supporting the respondent-
intervenor and affirmance. We conclude that the petition for
review should be denied.
I. BACKGROUND
A. Statutes and Regulations
Congress created a framework for regulating cable
television in the Cable Communications Policy Act of 1984 ("1984
Cable Act") by adding Title VI to the Communications Act of 1934.
Pub. L. No. 98-549, 98 Stat. 2779 (codified as amended at 47 U.S.C.
§ 543 (2018)). As originally enacted, 47 U.S.C. § 543 directed
the FCC to "prescribe and make effective regulations which
authorize a franchising authority to regulate rates for the
provision of basic cable service in circumstances in which a cable
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system is not subject to effective competition." Id. § 2 (codified
as amended at 47 U.S.C. § 543(b)(1)). Congress left the definition
of "effective competition" to the FCC's regulations. Id.
(codified as amended at 47 U.S.C. § 543(b)(2)(A)). Under the
FCC's 1985 regulations, "cable systems in approximately 96 percent
of all communities were not rate regulated." H.R. Rep. No. 102-
628, at 31 (1992). From 1986 to 1992, "average monthly cable
rate[s] . . . increased almost 3 times as much as the Consumer
Price Index." Cable Television Consumer Protection and
Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460,
§ 2(a)(1) ("1992 Cable Act").
In response, Congress enacted the 1992 Cable Act. While
Congress "strongly prefer[red] competition and the development of
a competitive marketplace to [rate] regulation," H.R. Rep. No.
102-628, at 30 (1992), it acknowledged that there was "no
certainty" that "competition to cable operators with market power
[would] appear any time soon." S. Rep. No. 102-92, at 18 (1991).
The amended 47 U.S.C. § 543 included a paragraph entitled
"PREFERENCE FOR COMPETITION" stating: "If the Commission finds
that a cable system is subject to effective competition, the rates
for the provision of cable service by such system shall not be
subject to regulation by the Commission or by a State or
franchising authority under this section." Pub. L. No. 102-385,
106 Stat. 1460, § 3(a) (codified as amended at 47 U.S.C.
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§ 543(a)(2)). Under the statute, effective competition exists
where one of three tests is met: 1) the Low Penetration Test, (2)
the Competing Provider Test, and (3) the Municipal Provider Test.
Id. (codified as amended at 47 U.S.C. § 543(l)(1)). The FCC's
1993 regulations adopted a rebuttable presumption that cable
operators were "not subject to effective competition."
Implementation of Sections of the Cable Television Consumer
Protection and Competition Act of 1992: Rate Regulation, 8 FCC Rcd
5631, 5670 ¶ 43 (1993). A cable operator had the burden to rebut
the presumption "with evidence of effective competition" in its
franchise area. Id. at ¶ 42.
Congress "expanded[ed] the effective competition test
for deregulating" cable rates under 47 U.S.C. § 543 in the
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
("1996 Act"). S. Rep. No. 104-230, at 170 (1996) (Conf. Rep.);
see 47 U.S.C. § 521(6) (enumerating as one of the purposes to
"promote competition in cable communications and minimize
unnecessary regulation that would impose an undue economic burden
on cable systems"). As the Supreme Court stated, "its primary
purpose was to reduce regulation and encourage the rapid deployment
of new telecommunications technologies." See Reno v. ACLU, 521
U.S. 844, 857 (1997) (pointing out that the statute was designed
to promote, among other things, competition in the multi-channel
video market). The 1996 Act added a fourth effective competition
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test focusing on competition from providers of local telephone
service. Called the Local Exchange Carrier Test, it provides that
effective competition exists when
a local exchange carrier or its affiliate (or any
multichannel video programming distributor using the
facilities of such carrier or its affiliate) offers
video programming services directly to subscribers by
any means (other than direct-to-home satellite services)
in the franchise area of an unaffiliated cable operator
which is providing cable service in that franchise area,
but only if the video programming services so offered in
that area are comparable to the video programming
services provided by the unaffiliated cable operator in
that area.
47 U.S.C. § 543(l)(1)(D). The LEC Test is the effective
competition test at issue in this case.
The FCC's regulations provide that a competing video
programming service will be "deemed offered" under the LEC Test if
(1) the distributor is "physically able to deliver service to
potential subscribers, with the addition of no or only minimal
additional investment by the distributor, in order for an
individual subscriber to receive service," and (2) "no regulatory,
technical or other impediments to households taking service exist,
and potential subscribers are reasonably aware that they may
purchase" the competing service. 47 C.F.R. § 76.905(e)(1)-(2)
(2020). The regulations define "comparable" service as offering
"at least 12 channels of video programming, including at least one
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channel of nonbroadcast service programming." Id. § 76.905(g).1
A cable operator can "file a petition for a determination
of effective competition with the [FCC]." 47 C.F.R. § 76.907(a).
With respect to franchise areas where cable rate regulation is
contested, the cable operator "bears the burden of demonstrating
the presence of such effective competition." Id. § 76.907(b).
B. The FCC Order
On September 14, 2018, Charter, a cable operator, filed
a petition with the FCC seeking a determination that it faces
effective competition in its franchise areas in Massachusetts and
Kauai, Hawaii. See id. § 76.907(a). Charter's petition alleged
1 In 2015, the FCC amended its regulations to adopt a
rebuttable presumption that effective competition exists in each
franchise area under the Competing Provider Test. Amendment of
the Commission's Rules Concerning Effective Competition, 30 FCC
Rcd 6574, 6577-82 ¶¶ 6-10 (2015); see Nat'l Ass'n of Telecomms.
Officers & Advisors v. FCC, 862 F.3d 18, 29 (D.C. Cir. 2017)
(rejecting petition challenging the amendment). The Competing
Provider Test is satisfied where "at least two unaffiliated
multichannel video programming distributors each . . . offer[]
comparable video programming to at least 50 percent of the
households in the franchise area" and more than fifteen percent of
households in the franchise area subscribe "to programming
services offered by multichannel video programming distributors
other than the largest multichannel video programming
distributor." 47 U.S.C. § 543(l)(1)(B). That test is not at
issue in this case. The FCC did not adopt a presumption that the
other statutory tests for effective competition were satisfied.
Id. at 6582 ¶ 10. Only Kauai, Hawaii and thirty-two franchise
areas in Massachusetts rebutted the Competing Provider
presumption. Petition for Determination of Effective Competition
in 32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd
at 10230. Cable rate regulation thus continued only in those
franchise areas.
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that the availability of DIRECTV NOW2 in those franchise areas
constitutes effective competition under the LEC Test. DIRECTV NOW
is a video programming service that provides live television and
on-demand programs via a broadband internet connection. DIRECTV
NOW is offered by DIRECTV, which is an affiliate of AT&T.
Charter argued that DIRECTV NOW satisfies the LEC Test
because (1) DIRECTV is a subsidiary of AT&T and therefore
affiliated with LECs owned by AT&T; (2) DIRECTV is physically able
to deliver DIRECTV NOW "to any current Charter-serviced household
that wishes to subscribe" given that broadband internet service is
"available to virtually 100 percent of Charter's customers in the
Franchise Areas," and customers are reasonably aware of its
availability; and (3) DIRECTV NOW is comparable to Charter's cable
service because DIRECTV NOW "offers subscribers a minimum of 65
channels."
The Massachusetts Department of Telecommunication and
Cable and the State of Hawaii filed oppositions to Charter's
petition. Charter filed a reply to those oppositions. During
meetings with FCC staff, Charter confirmed that if its petition
were granted, it would raise the monthly rate for its basic cable
service to $23.89. Then current regulated monthly rates ranged
from $12.49 to $23.99. In contrast, the lowest price of a DIRECTV
2
According to Charter, DIRECTV NOW was recently
rebranded as AT&T TV NOW.
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NOW package was $40 per month. The FCC granted Charter's petition
on October 25, 2019 and issued a Memorandum Opinion and Order
concluding that Charter had proven effective competition under the
LEC Test in Kauai, Hawaii and the thirty-two franchise areas in
Massachusetts. 3 Petition for Determination of Effective
Competition in 32 Massachusetts Communities and Kauai, HI
(HI0011), 34 FCC Rcd 10229, 10229 (2019). It made the following
key findings:
First, the FCC found that DIRECTV NOW is provided by a
"LEC affiliate" due to AT&T's common ownership of DIRECTV NOW and
LECs. Id. at 10232. MDTC does not dispute this finding.
Second, the FCC found that DIRECTV NOW is "offered" in
the franchise areas because "DIRECTV is 'physically able' to
deliver DIRECTV NOW to subscribers via existing broadband
facilities in the Franchise Areas" and "no regulatory, technical
or other impediments to households taking" DIRECTV NOW exist in
the franchise areas. Id. at 10233–34; see 47 C.F.R.
§ 76.905(e)(1)-(2). The FCC found that the cost of broadband
service is not an impediment to households subscribing to DIRECTV
NOW.
The FCC found that DIRECTV NOW is offered "directly to
subscribers" because DIRECTV has "an unmediated relationship" with
3 This appeal involves only the Massachusetts
communities.
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subscribers through direct marketing, subscription, billing, and
payment. Petition for Determination of Effective Competition in
32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at
10237. In the FCC's view, there is no facilities-based
restriction on how a LEC affiliate delivers service given the
provision that a LEC or its affiliate can provide effective
competition by offering video programming service "by any means,"
the term used in the statute. Id. at 10241.
Third, the FCC found that DIRECTV NOW is "comparable" to
Charter's cable service because DIRECTV NOW "provides packages
starting with access to 45 channels" including "both local
broadcast channels and nonbroadcast channels." Id. at 10238; see
47 C.F.R. § 76.905(g) (regulation defines comparable as offering
at least twelve channels with one nonbroadcast channel). The FCC
determined that the term "channels" in the FCC regulation "can
refer to 'programming sources'" based on its "colloquial meaning."
Petition for Determination of Effective Competition in 32
Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at
10243.
II. STANDARD OF REVIEW
Under the Administrative Procedure Act ("APA"), a court
"may only overturn" an agency decision if the court finds the
decision "was 'arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.'" City of Taunton v. EPA,
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895 F.3d 120, 126 (1st Cir. 2018) (quoting 5 U.S.C. § 706(2)(A)
(2018)). "'[T]he APA standard affords great deference to agency
decision making' and 'the [agency's] action is presumed valid.'"
Int'l Jr. Coll. of Bus. & Tech. v. Duncan, 802 F.3d 99, 106 (1st
Cir. 2015) (quoting Associated Fisheries of Me., Inc. v. Daley,
127 F.3d 104, 109 (1st Cir. 1997)).
When an issue "turns on questions implicating an
agency's construction of the statute which it administers," we
"apply the principles of deference described in Chevron, USA, Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 . . .
(1984)." Garcia v. Sessions, 856 F.3d 27, 35 (1st Cir. 2017)
(cleaned up). At the first step we "ask whether 'Congress has
directly spoken to the precise question at issue.'" Succar v.
Ashcroft, 394 F.3d 8, 22 (1st Cir. 2005) (quoting Chevron, 467
U.S. at 842). "If so, courts, as well as the agency, 'must give
effect to the unambiguously expressed intent of Congress.'" Id.
(quoting Chevron, 467 U.S. at 842–43). "[I]f the statute is silent
or ambiguous with respect to the specific issue," we proceed to
the second step of the analysis. Chevron, 467 U.S. at 843. At
the second step, "if the implementing agency's construction is
reasonable, Chevron requires a federal court to accept the agency's
construction of the statute." Nat'l Cable & Telecomms. Ass'n v.
Brand X Internet Servs., 545 U.S. 967, 980 (2005). The MDTC does
not dispute this standard.
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The Supreme Court has long followed a deferential
standard in reviewing an agency's interpretation of its own
regulation. See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,
414 (1945). In Auer v. Robbins, the Supreme Court reiterated that
an agency's interpretation of its own regulation is "controlling
unless plainly erroneous or inconsistent with the regulation."
519 U.S. 452, 461 (1997) (cleaned up). In a split decision, the
Supreme Court further explained the standard for judicial review
of an agency's interpretation of its own regulation:
[A] court must apply all traditional methods of
interpretation to any rule, and must enforce the plain
meaning those methods uncover. There can be no thought
of deference unless, after performing that thoroughgoing
review, the regulation remains genuinely susceptible to
multiple reasonable meanings and the agency's
interpretation lines up with one of them. And even if
that is the case, courts must on their own determine
whether the nature or context of the agency’s
construction reverses the usual presumption of
deference. Most notably, a court must consider whether
the interpretation is authoritative, expertise-based,
considered, and fair to regulated parties.
Kisor v. Wilkie, 139 S. Ct. 2400, 2419 (2019).
III. ANALYSIS
A. Offer Video Programming Directly to Subscribers
The MDTC argues that the FCC erred because DIRECTV NOW
does not "offer" video programming services "directly to
subscribers" as the LEC Test required, and that is because the
FCC's own regulations provide that the word "offer" encompasses
the delivery of video. See 47 C.F.R. § 76.905(e)(1). Because
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DIRECTV NOW is delivered via broadband internet service provided
by a third party, the MDTC contends that DIRECTV NOW is providing
services indirectly and cannot satisfy this requirement.
Specifically, the MDTC argues a LEC affiliate must use its own
facilities in the franchise area to offer a competing service to
satisfy the LEC Test. DIRECTV NOW's reliance on third-party
delivery matters, the MDTC explains, because the requirement of
direct delivery reflects the "purpose of the LEC Test: to recognize
the competitive threat from local telephone companies, which are
already hardwired into most households."
In its Order, the FCC concluded that DIRECTV NOW met the
statutory requirement that the competing video programming service
must be offered in the franchise area. Petition for Determination
of Effective Competition in 32 Massachusetts Communities and
Kauai, HI (HI0011), 34 FCC Rcd at 10232. It did so by applying
the definition of "offer" in its regulation. Under the first part
of the regulatory definition of "offer," a competing provider must
be "physically able to deliver service to potential subscribers,
with the addition of no or only minimal additional investment by
the distributor, in order for an individual subscriber to receive
service." 47 C.F.R. § 76.905(e)(1). Because "DIRECTV is
'physically able' to deliver DIRECTV NOW to subscribers via
existing broadband facilities in the Franchise Areas," the FCC
concluded that DIRECTV NOW satisfies this delivery requirement.
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Petition for Determination of Effective Competition in 32
Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at
10233.
The FCC rejected the argument that a LEC affiliate must
directly deliver its service using its own facilities to satisfy
the LEC Test. Id. at 10233, 10241. The FCC pointed out that the
word "facilities" appears in the statutory provision inside a
parenthetical that refers to "any multichannel video programming
distributor using the facilities" of a LEC or its affiliate --
that is, those distributors that are not themselves LECs or LEC
affiliates. Id. at 10239 n.65; see 47 U.S.C § 543(l)(1)(D). In
contrast, the FCC emphasized that the provision broadly provides
that a LEC or LEC affiliate may offer "services directly to
subscribers by any means (other than direct-to-home satellite
services)." Petition for Determination of Effective Competition
in 32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd
at 10241; see 47 U.S.C § 543(l)(1)(D) (emphasis added); see
generally SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018)
(holding that the word "any" carries "an expansive meaning"
(citation omitted)). The MDTC's argument is unpersuasive. Most
importantly, as the FCC points out, the statute contains no
facilities-based test, and Congress expressly provided that video
programming services could be offered "by any means." 47 U.S.C.
§ 543(l)(1)(D). The MDTC's interpretation of the parenthetical
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would defeat the operative term of the statute "by any means."
Cf. Chickasaw Nation v. United States, 534 U.S. 84, 94–95 (2001)
(quoting Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984,
990 (4th Cir. 1996)) ("A parenthetical is, after all, a
parenthetical, and it cannot be used to overcome the operative
terms of the statute."). The MDTC cites to earlier versions of
the legislation and report language to support its position, see
S. Rep. 104-230, at 170 (Conf. Rep.) (providing four examples of
means of delivery that satisfied the LEC test, "all of which were
facilities-based"), while the FCC underscores other portions of
the same report, see id. (indicating that the language "'by any
means' includes any medium (other than direct-to-home satellite
service) for the delivery of comparable programming," including
various kinds of distributor services) (cleaned up). Here the
plain language of the statute, "by any means," precludes a
facilities-based test.4 See Succar, 394 F.3d at 22 (stating that
"courts, as well as the agency, 'must give effect to the
4
In its brief, citing Brand X, the FCC suggests that
terms like "offer" are ambiguous because they admit of "two or
more reasonable usages." See Brand X, 545 U.S. at 989. Given
that ambiguity, the FCC argues that its reading of the term "offer"
in Section 543(l)(1)(D) is entitled to deference. See Chevron,
467 U.S. at 843. Charter disagrees and argues that the term
"offer" is not ambiguous in the LEC Test. Regardless of whether
the term is ambiguous in some contexts, here the term is defined
by regulation, and no one has argued that the regulation is
unreasonable.
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unambiguously expressed intent of Congress'" (quoting Chevron, 467
U.S. at 842–43)).
The parties also debate the meaning of the word
"directly." While acknowledging that "directly" is not defined
in the statute, the FCC concluded in its Order that the "best
reading" of the requirement that a LEC or LEC affiliate offer video
programming service "directly to the subscribers" is that the LEC
affiliate "must have (or offer to have) a direct customer
relationship with consumers in the franchise area." Petition for
Determination of Effective Competition in 32 Massachusetts
Communities and Kauai, HI (HI0011), 34 FCC Rcd at 10237(internal
quotation marks omitted). In light of the context that "directly"
modifies "offer" (i.e. "offers video programming directly to
subscribers") the FCC concluded that "Congress intended for there
to be an unmediated relationship between the LEC affiliate and the
customer." Id.
The MDTC interprets "directly" as modifying the
regulatory definition of "offer," requiring the physical delivery
of services by the LEC or its affiliate without a third party
broadband provider. The MDTC argues that the FCC's statutory
interpretation of "directly to subscribers" should not be given
deference because the FCC applied it to a definition of "offer"
that is different from the definition in its regulation. However,
the FCC's focus here is on the words "directly to subscribers."
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Petition for Determination of Effective Competition in 32
Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at
10236. The plain meaning of those words supports the FCC's
interpretation of the statute. See American Heritage Dictionary
257 (3rd. ed. 1992) (defining "directly" as "in a direct line or
manner" or "without anyone or anything intervening"). Further,
as the MDTC concedes, Congress uses the "by any means" adverbial
phrase to refer to various means by which video can be delivered
to subscribers. Even if the MDTC's interpretation of the term
"directly to subscribers" were "reasonable" under Chevron Step
Two, the Court must defer to the FCC's reasonable construction.
See Chevron, 467 U.S. at 843.
B. Cost as Impediment
The MDTC argues that the FCC acted arbitrarily and
capriciously by failing to consider "the affordability of internet
service" in addition to the cost of the DIRECTV NOW service as an
impediment to customers relying on basic cable service. Without
regulation by Massachusetts, the MDTC emphasizes, Charter's basic
cable rates are likely to double for some consumers. The MDTC
emphasizes that subscribers to basic cable are often the poorest
segment of the population and vulnerable to losing cable access
due to a price increase. The problem is exacerbated because
DIRECTV NOW requires subscribers to have a broadband internet
subscription, which costs significantly more than basic cable.
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The MDTC contends that roughly twenty percent of households in the
franchise areas do not have broadband internet service. For this
reason, the MDTC argues that cost is an impediment for the poorest
subscribers to basic cable.
In its Order, the FCC concluded that DIRECTV met the
second part of the "offer" rule –- that "no regulatory, technical
or other impediments to households taking service exist" because
no regulatory or technical barriers "prevent or inhibit consumers
from subscribing." Petition for Determination of Effective
Competition in 32 Massachusetts Communities and Kauai, HI
(HI0011), 34 FCC Rcd at 10234. Specifically, it found that the
cost of broadband internet service was not an impediment to
households taking DIRECTV NOW in the franchise areas. While it
recognized that "some consumers may not want or be able to" pay
for broadband, the FCC noted that the record showed that the vast
majority of households in Massachusetts and Hawaii already have
broadband. Id. at 10235.
Further, the FCC concluded that a consumer's
expenditures on "additions" such as a broadband internet
connection to receive programming are not an impediment to service.
Id. at 10235–36. Rather, it found that the LEC Test can be met
"in circumstances that require reasonable customer–provided
additions . . . to receive programming." Id. It relied on an
earlier ruling that "requiring customers to purchase a satellite
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dish to receive satellite service" was not "an impediment to
finding that the competing service was offered in the franchise
areas." Id. at 10235; see Implementation of Section of the Cable
Television Consumer Protection and Competition Act of 1992: Rate
Regulation, 8 FCC Rcd at 5659–60.5
Based on this precedent, and widespread internet
availability, the FCC reasonably concluded that a household's need
to purchase broadband internet service to access DIRECTV NOW is
not an "impediment[]" within the meaning of its regulation.
Petition for Determination of Effective Competition in 32
Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at
10234–35. Importantly, the FCC did not take the position that the
cost of a customer-provided addition could never be an impediment
within the meaning of its regulation. Id. Rather, it reasonably
found that the widespread use of broadband undermines the argument
that the customer-provided investment to gain broadband access was
an "impediment[]" within the meaning of the regulation. Id. Thus
the FCC did not act arbitrarily and capriciously in determining
5
The MDTC criticizes the FCC because it provided no
information about the cost of satellite dishes. The FCC responded
that the MDTC had to file a motion for reconsideration pursuant to
47 U.S.C. § 405(a) to raise this point. The Court need not address
this argument because the FCC stated that "the fact that broadband
access constitutes a separate cost does not mean" that DIRECTV NOW
is not offered under the LEC test. Petition for Determination of
Effective Competition in 32 Massachusetts Communities and Kauai,
HI (HI0011), 34 FCC Rcd at 10244.
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that no "impediment[]" exists. See Motor Vehicle Mfrs. Ass'n of
U.S., 463 U.S. at 43.
C. "Channels"
The parties duel over the meaning of the word "channels."
The MDTC argues that the FCC's finding is arbitrary because DIRECTV
NOW does not provide "channels" as that term is defined in one
provision of the 1984 Cable Act, which is stated in terms of an
electromagnetic frequency spectrum. See 47 U.S.C. § 522(4)
("[T]he term 'cable channel' or 'channel' means a portion of the
electromagnetic frequency spectrum which is used in a cable system
and which is capable of delivering a television channel."). It
relies on American Civil Liberties Union v. FCC, which held that
the FCC did not have discretion "to adopt, as part of its
regulations implementing the Cable Act, a definition of a
particular term that is at odds with a definition of that very
term contained in the Act itself." 823 F.2d 1554, 1567 (D.C. Cir.
1987).
The LEC Test provides that the video programming
services offered by the LEC or its affiliate must be "comparable
to the video programming services provided by the unaffiliated
cable operator in that [franchise] area." 47 U.S.C.
§ 543(l)(1)(D). As can be seen, the statutory test does not use
the term "channels." Id. The FCC regulation defines "comparable"
video programming as "at least 12 channels of video programming,
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including at least one channel of nonbroadcast service
programming." 47 C.F.R. § 76.905(g). In its Order, the FCC found
that DIRECTV NOW offered comparable programming to Charter because
it provided packages with access to forty-five channels including
both broadcast channels and nonbroadcast channels. Petition for
Determination of Effective Competition in 32 Massachusetts
Communities and Kauai, HI (HI0011), 34 FCC Rcd at 10237–38.
The MDTC's argument is unpersuasive on this point.
Congress left the definition of "comparable" under the LEC Test to
the FCC's regulations. See 47 U.S.C. § 543(b)(2). In its order,
the FCC interpreted the term "channels" in its regulations using
the term's "colloquial meaning." Petition for Determination of
Effective Competition in 32 Massachusetts Communities and Kauai,
HI (HI0011), 34 FCC Rcd at 10243. The FCC was not unreasonable
when it looked to the ordinary meaning of the regulatory term
rather than the statutory definition of channel used for a
different purpose in the 1984 Cable Act. See Kisor, 139 S. Ct.
at 2415–18. American Civil Liberties Union is easily
distinguishable. In deciding comparability of programming
sources, the FCC is reasonable in concluding consumers are choosing
between competing video programming providers like NBC, CBS, or
ESPN, not transmission paths. See id.; Petition for Determination
of Effective Competition in 32 Massachusetts Communities and
Kauai, HI (HI0011), 34 FCC Rcd at 10243. Further, the FCC
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reasonably argues that using electromagnetic frequency "which is
used in a cable system" would be a meaningless way to assess
effective competition to "cable operators." Finally, in a related
context, the FCC has consistently understood comparability to
refer to programming sources. Implementation of Section of the
Cable Television Consumer Protection and Competition Act of 1992:
Rate Regulation, 8 FCC Rcd at 5667 n.130 ("With respect to switched
networks, we construe comparability to mean at least twelve
different programming sources."). Accordingly, the agency's
interpretation based on the plain meaning of its own regulation is
reasonable. See Kisor, 139 S. Ct. at 2415–18.
IV. CONCLUSION
The Court DENIES the petition. Each party is to bear
its own costs.
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