October 8, 1999
I would have lifted the Commission's voluntary stay of its horizontal ownership rules. While the stay may have done little harm in 1993, when it was imposed, it now constitutes a serious threat to the orderly enforcement of our rules and an abdication of our responsibility to implement Congress' express statutory directives.
In the 1992 Cable Act, Congress provided that the Commission "shall . . . conduct a proceeding" to establish horizontal ownership limits. In 1993, shortly before the Commission issued its rules, the district court found the horizontal ownership provision of Section 613 unconstitutional on its face.(1) Importantly, the district court judge stayed the effect of his ruling, thereby permitting the Commission to adopt and enforce horizontal ownership rules. Nevertheless, when the Commission adopted its rules shortly thereafter, it voluntarily suspended enforcement pending outcome of the Daniels appeal. The Commission has not always been so quick to abandon Congress' mandates. For instance, although a district court judge found Sections 271-275 of the Communications Act to be an unconstitutional bill of attainder,(2) the Commission continued to enforce those provisions under circumstances similar to those here, until the appellate court eventually reversed the lower court decision.(3)
It has now been seven years since Congress expressly directed the Commission to establish horizontal ownership rules, and six years since the Commission opted to ignore that directive on its own motion. In 1993, the Commission's decision made little practical difference: no cable operator was close to the 30% limit and appellate review of the Daniels decision could be expected well before the limit was breached.
Times have changed. Now we are faced with the real possibility -- indeed, the virtual certainty, if all pending transactions are approved -- that a single cable operator, AT&T, will be significantly over the 30% cap, even under the liberalized rules being adopted today. Moreover, concentration issues will be squarely before us when we consider AT&T's proposed acquisition of MediaOne -- a decision that will likely come before the D.C. Circuit rules on the Daniels appeal. Without enforceable rules, the Commission will not be able to address the Section 613 ownership issue at the time of the merger review, but, assuming the merger is approved, will have to wait until the D.C. Circuit acts. Not to worry, the majority says: if the D.C. Circuit upholds the horizontal ownership limits, AT&T and others will be required to come into compliance within 180 days of the decision.
The majority's assurances give me little comfort because I do not believe its admonition about divestitures will ever be enforced.(4) This is not a criticism of the Commission, but a recognition of administrative reality. It is much easier to enforce rules on a going-forward basis than to reverse established "facts on the ground." Ultimately, to the extent that the Commission is forced to grant waivers or grandfather ownership interests that violate our rules, Congress' purposes in enacting Section 613 will be eviscerated.
It might be different if the Commission believed there were a substantial likelihood that it would lose on appeal, or if there were some reason to believe that the 30% cap had grown stale. But on August 13, 1999, the Commission filed a brief in the D.C. Circuit describing at length how, under the applicable standard established in the Supreme Court's Turner decisions (which the Daniels court did not have the benefit of), the horizontal ownership provisions and the Commission's implementing rules are clearly constitutional. Nor is the 30% cap out-of-date: today's Order reaffirms the 30% cap based on a fresh record.
In the end, the issue of lifting the stay boils down to whether the Commission is serious about implementing Congress' express directive to establish reasonable horizontal ownership limits. Today's decision indicates that it is not.
1 See Daniels Cablevision, Inc. v. United States, 835 F. Supp. 1 (D.D.C. 1993).
2 See SBC Communications, Inc. v. FCC, 981 F. Supp. 996 (N.D. Tex. 1997).
3 See SBC Communications, Inc. v. FCC, 154 F.3d 226 (5th Cir. 1998).
4 I note that the Commission's commitment appears to be waning already. In last year's Order on Reconsideration, the Commission insisted that cable companies be prepared to come into compliance with its rules within 60 days of a judicial decision upholding our rules. On its own motion, the Commission has extended that to 180 days.