August 29, 2009

Court eliminates 30 percent ownership rule

Large cable operators will no longer be restricted on the percentage of all subscribers they may serve, a U.S. appeals court in Washington ruled.

The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of large cable companies such as Comcast Corp. and Time Warner Cable and against the Federal Communications Commission, The Wall Street Journal reported.

The FCC first imposed a 30 percent ownership cap in 1993 to limit the number of subscribers large cable operators could serve. The court struck down that limit in 2001, saying it was unconstitutional, but the FCC brought it back in 2007 saying allowing large cable companies to grow would harm customers.

Cable companies challenged the cap several times citing competition of satellite TV and the video services offered by phone companies. The cap meant no single company could serve more than 30 percent of the market.

The court said the FCC did not take into consideration the impact of the newer service providers when it reinstated the cap.

Only Comcast is close to reaching the 30 percent limit and it was the strongest opponent of the cap.