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FCC determines AT&T streaming service 'effective competition' for cable

The U.S. Federal Communications Commission at its Oct. 25 open meeting determined that an over-the-top streaming service offers effective competition for cable in certain markets lacking access to direct broadcast satellite service.

The ruling paves the way to exempt petitioner Charter Communications Inc. from basic cable rate regulations in Kauai, Hawaii, and 32 Massachusetts communities. Under the Communications Act, if a cable company is subject to effective competition, rates are not regulated by the FCC or a state or franchising authority.

According to an FCC fact sheet, nearly all cable systems in the U.S. are presumed to be subject to effective competition from direct broadcast satellite service, with the exception of certain markets in Massachusetts and Hawaii. In the approved order, the commissioners determined that AT&T Inc.'s AT&T TV NOW streaming service is effective competition to Charter's cable systems in Kauai, Hawaii, and the Charter-specified Massachusetts communities.

FCC Chairman Ajit Pai said at the meeting that "it strains credulity" to suggest that cable operators do not face competition in today's video marketplace.

Democratic FCC Commissioner Geoffrey Starks said he voted for the order because he believes a narrow reading of the streaming service qualifies as competition under the statute, but he raised concerns that prices are likely to go up for consumers. He noted that services like AT&T TV Now are not accessible without the purchase of adequate internet service. "Only then can you purchase one of the several DIRECTV offerings — all of which are more expensive than the regulated basic cable service you may have originally wanted," Starks said.

The commission also approved an order that will make modifications to how the agency determines whether carriers that receive subsidies from its Connect America Fund high-cost program are building networks that meet FCC performance standards. The program is designed to help ensure consumers in rural and other hard-to-reach areas have access to communications services at affordable prices.

"We must ensure that both American taxpayers ... and rural consumers are getting their money's worth," said Pai.

Also approved at the meeting:

* A clarification to note that federal law prohibits state, local and tribal governments from issuing higher fees to voice over IP subscribers for 911 services.

* A notice of proposed rulemaking that will, in part, seek comment on whether the FCC should eliminate or revise rules that prohibit the grant or renewal of a license to an FM or TV station if the applicant or licensee operates an antenna "suitable for broadcasting" in the area and also does not make the site open for use from other similar licensees. Some FCC rules in this area date back to World War II, and the commission is looking to remove potentially outdated regulations.

* An order that aims to update the commission's filing rules on tariffs associated with intercarrier compensation.

* An item that eliminates certain requirements for the reconfiguration of the 800 MHz band, which Chairman Pai earlier said are no longer necessary.