On June 2, 2015, the FCC adopted an Order implementing Section 111 of the STELA Reauthorization Act of 2014 (STELAR), which required the FCC to streamline its longstanding effective competition rules for small cable operators. Under the Communications Act, local franchising authorities (LFAs) may regulate basic cable service tier rates and equipment for a cable operator only if the Federal Communications Commission (FCC) finds that the cable operator is not subject to “effective competition.”
The existing rules (dating back to 1993) have presumed the absence of effective competition such that LFAs have had the authority to regulate basic cable service tier rates and equipment unless and until the cable operator challenges and rebuts the presumption. In its recent Order the FCC, reversed this approach and instead adopted a rebuttable presumption that cable operators are subject to effective competition under the “Competing Provider” test. This amendment reflects current marketplace realities, in which DBS providers have achieved a combined nationwide distribution level more than double the 15% penetration level required to satisfy the Competing Provider effective competition test.
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