A federal appeals court gave limited approval yesterday to rules deregulating the cable television industry, effectively prohibiting most U.S. communities from setting caps on cable rates.
In a unanimous panel ruling, the U.S. Circuit Court of Appeals for the District of Columbia affirmed the bulk of rules adopted by the Federal Communications Commission in implementing the Cable Communications Policy Act of 1984.
But the ruling also found several aspects of the rules, which took effect in January, "are either arbitrary or inconsistent with the act" and must be rewritten.
"Based on our careful review of the FCC orders and the arguments advanced by the parties, we conclude that the rules adopted by the FCC are, for the most part, reasonable and consistent with the provisions of the Cable Act," the court said in an unsigned opinion.
"With certain exceptions ... the FCC addressed the significant comments made in the rulemaking proceeding, articulated the basis for its conclusions and adopted rules that are at a minimum 'reasonable,' " the court added.
In the 1984 cable law, Congress directed the FCC to make rules governing regulation of cable television rates. The rules were to allow rate regulation in any community in which a cable system "is not subject to effective competition."
The FCC, during its rulemaking procedure, determined that competition existed in any region served by at least three television channels, which is estimated to be about 75 percent of the country.
Various municipalities, the American Civil Liberties Union and other parties had objected to the rules on several grounds, including the definition of effective competition, which they felt unnecessarily prohibited regulation and could lead to rate hikes for many cable consumers.
The appeals court, however, found that the rules generally complied with the will of Congress, with the exception of three areas: The definition of "basic cable service," the standards used for determining how many signals are available in an area, and the allowance of automatic rate increases whenever the costs of providing basic service rise.
Jim Mooney, president of the National Cable Television Association, praised the ruling, which he said "affirmed the basic ground rule of the commission's deregulation order."
Paul Ryerson, who represented the city of New York and other parties in challenging aspects of the rules, said he hoped the FCC would respond to the ruling by "taking a hard look at the regulation generally."