FCC Planning New Cable Industry Regulations

The FCC is expected shortly to push for a host of new constraints on the cable industry, including a dramatic cut in the rates cable operators can charge programmers for access to their spare channels as well as an acquisitions cap. The FCC's campaign is based on its assertion that the cable industry has crossed a key threshold in terms of market share. An FCC regulation from 1984 stipulates that if 70% of households have access to cable systems with 36 or more channels, and 70% of those households subscribe to cable, the FCC has the right to step in. In the FCC's soon-to-be-released annual review of the state of competition in cable TV, the Commission concluded that the 70/70 threshold had been met, an assertion the industry disputes. "The provision itself is a relic of decades-old regulation and there is no basis for reviving it now," said Kyle McSlarrow, president of the National Cable & Telecommunications Association. Independent market analysts SNL Kagan forecast that by year-end 2007, cable companies will hold 67% of the market of households that subscribe to some form of pay TV. "Cable's market share has been on the downward trend since satellite television began to make a meaningful impact a decade ago," said SNL Kagan's Ian Olgeirson. "It's difficult to see an environment where cable's market share is going to increase."

Sources: New York Times, Wall Street Journal, Broadcast Newsroom, 24/7 Wall Street
Commentary: Comcast Slips As Verizon Shows Growth in FiOS • Cable vs. Satellite TV Slugfest – But Watch Out for Fiber Optic • Comcast Feeling The Heat From AT&T, Verizon
Stocks to watch: CMCSA, TWX. Competitors: DTV, DISH, T, VZ. ETFs: XLY, HHH, PTE
Earnings call transcripts: Comcast Q3 2007, Time Warner Q3 2007, EchoStar Q2 2007, DirecTV Q3 2007, Verizon Q3 2007, AT&T Q3 2007

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