Opinion ID: 721443
Heading Depth: 2
Heading Rank: 1

Heading: Authority to Regulate Rates

Text: 17 Adelphia argues that the text, the purpose, and the legislative history of the Cable Act plainly deny the Commission authority to regulate the rate a cable system operator may charge for a discounted package of premium programming that it also offers a la carte. Adelphia also asks us not to defer under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), to the Commission's current interpretation of the Act, because the agency has not adequately explained the reason for abandoning its original interpretation. None of Adelphia's arguments has merit. 18 The FCC may regulate the rate an operator charges for cable programming service. 47 U.S.C. § 543(a)(2)(B). The question whether the FCC has the authority it claims to regulate a package of premium programming all the elements of which are also offered a la carte turns upon the meaning of the quoted phrase, which is defined in § 543(l)(2) as: 19 any video programming provided over a cable system, regardless of service tier, including installation or rental of equipment used for the receipt of such video programming, other than (A) video programming carried on the basic service tier, and (B) video programming offered on a per channel or per program basis. 20 The emphasized term service tier is in turn defined as a category of cable service or other services provided by a cable operator and for which a separate rate is charged by the cable operator. 47 U.S.C. § 522(16). 21 By joining the phrases regardless of service tier and other than video programming offered on a per channel or per program basis, Adelphia reads § 543(l)(2) as though it excluded from the definition of cable programming service (and thus from the reach of rate regulation) not only individual premium services offered a la carte but also a service tier--i.e., a package--of such offerings. Far from finding this proposition so patent as to preclude the contrary interpretation adopted by the Commission, we think Adelphia's construction is strained and implausible; indeed, Adelphia's reading is almost the opposite of what § 543(l)(2) actually says. 22 Still, Adelphia insists that the Commission's interpretation of § 543(l)(2) renders superfluous § 543(h), which grants the agency authority to prevent [regulatory] evasions, including evasions that result from retiering. Adelphia offers no reason to believe, however, what its argument necessarily implies, namely that the Congress created this authority solely because it was concerned that cable operators would shift programming from regulated tiers to unregulated a la carte packages. The House Report pretty clearly suggests otherwise. See H.R.Rep. No. 628, 102d Cong., 2d Sess. (1992)(For example, the Committee intends for the FCC to view a change in cable service from one tier offering a broad package of programming for $15/month or two tiers offering the same programming for $5/month (for the basic service tier) plus $15/month (for an expanded basic tier) as a$5/month increase). 23 [319 U.S.App.D.C. 192] Adelphia points to nothing in the legislative history of the Act nor to any purpose of the Act the fulfillment of which requires a non-literal reading of § 543(l)(2). Its reference to a House Committee statement concerning multiplexed premium services is way off the mark: multiplexing there refers to the practice of offering multiple channels of commonly-identified video programming as a separate tier (e.g., HBO1, HBO2, and HBO3), id. at 80, not the packaging of unrelated premium services. And while deregulation of the rates charged for premium packages might well call forth an increase in the supply of a la carte offerings--which, considered in isolation, would serve the statutory purpose of promoting competition and consumer choice, id. at 90; S.Rep. No. 92, 102d Cong., 1st Sess. 77 (1991)--Adelphia offers no reason to doubt the Commission's judgment that the benefit to consumers of having more a la carte offerings could be more than offset by the increased prices that cable system operators would charge if the rates for premium packages were not regulated. 24 What we have said above renders Chevron deference to the Commission's interpretation of the Act somewhat beside the point; the Commission's reading of § 543(l)(2) is not only reasonable, it is far more reasonable than Adelphia's. We pause only briefly, therefore, to comment upon Adelphia's charge that the FCC has forfeited its entitlement to deference because it did not give a reasoned analysis for its about-face regarding the application of the Cable Act to premium packages. Not only did the Commission provide a reasoned analysis based upon its experience under the Second Order on Reconsideration, it turned somewhat less than 180 degrees from its original interpretation of the statute. 25 The Commission has always recognized that § 543(l)(2), read literally, requires regulation of the rates charged for premium packages. Because the Commission anticipated that such regulation might serve the purpose of the statute less well than would an unregulated market, however, it initially decided not to apply § 543(l)(2) literally. Experience soon dispelled the basis for that decision; the resulting opportunities for regulatory evasion exceeded what the Commission anticipated or could adequately address case by case. As the Commission explained in other words, when the facts changed, the agency changed its position. Even if we do not defer at all to the Commission's authority, therefore, we defer to the force of its reasoning. To do otherwise would be to insist upon a foolish consistency indeed.