After nearly ten years, the United Church of Christ Office of Communications, Inc. (“UCC”) finally withdrew its petition asking the Federal Communications Commission (“FCC”) to override an Office of Management and Budget (“OMB”) Notice disapproving the information collection requirements associated with the FCC’s 2008 Leased Access Order. The FCC’s 2008 Order was controversial because, in addition to imposing extensive reporting requirements, it would have dramatically reduced the rates that cable operators could charge commercial leased access programmers. The withdrawal and resulting Order of Dismissal may indicate that the FCC is finally ready to abandon once and for all the controversial leased access rule changes promulgated by the FCC under then-Chairman Kevin Martin.
The amended leased access rules, the subject of a consolidated appeal in the Sixth Circuit, never went into effect. They were initially stayed by the Sixth Circuit and subsequently held in abeyance after the OMB disapproved the rules. Had the amended rules gone into effect, they would have reduced the rates cable operators could have charged for leased access channels. Specifically, the rules established a 10-cent-per-subscriber-per-month cap on leased access rates and also created a complicated formula that had the potential to produce actual CLA rates well below that amount (and a rate of zero in many cases). The 2008 Order also sought to impose stringent customer service and annual reporting requirements on cable operators, which the OMB found to be contrary to the Paperwork Act Reduction Act. The FCC reinstated its prior leased access rules in 2013 but did not vacate the 2008 Order, which remains on appeal in a consolidated case pending before the Sixth Circuit.
The extent to which the federal leased access regime, enacted as part of the 1984 Cable Act and amended in 1992, remains justifiable in today’s highly competitive video programming distribution marketplace merits attention. Programmers now have many more options for distribution than were available decades ago when Congress established the current leased access regime. Even then, Congress acknowledged that the leased access model – which requires programmers to pay for, rather than be paid, for carriage, as is typically the case – might not be sustainable. Today, aspiring programmers and burgeoning networks can stream their content directly or using one of the many established internet streaming sites.
The FCC’s order dismissing UCC’s petition may portend interest at the Commission in revisiting both the rules promulgated under Chairman Martin and the current leased access rules. While Congress established core CLA obligations in Section 612 of the Communications Act, the FCC has flexibility in setting CLA rates, terms and conditions, and may even forbear from enforcing certain statutory obligations under the right circumstances. Given Chairman Pai’s commitment to reducing regulation, leased access may be an area where we see some relief for cable companies in the coming year.