Opinion ID: 697242
Heading Depth: 3
Heading Rank: 2

Heading: Regulatory Treatment of Equipment Used By Subscribers

Text: The 1992 Cable Act provides that: 96 The regulations prescribed by the Commission under [the basic service tier] subsection shall include standards to establish, on the basis of actual cost, the price or rate for-- 97 (A) installation and lease of the equipment used by subscribers to receive the basic service tier, including a converter box and a remote control unit and, if requested by the subscriber, such addressable converter box or other equipment as is required to access [video programming offered on a per channel or per program basis.] 98 47 U.S.C. Sec. 543(b)(3). Because this provision limits to actual costs the rate that a cable operator may charge for equipment, its scope is of considerable economic importance. The Commission has interpreted it to cover all equipment that a subscriber uses to receive the basic service tier in a system not subject to effective competition; that includes equipment that is also used to receive other cable services. Rate Order, 8 F.C.C.R. at 5800. Not surprisingly, the cable companies offer a more narrow interpretation; they argue that the provision does not extend to any equipment that is used in part to receive cable programming service. Equipment used in part to receive cable programming service would, under the cable companies' view, be regulated in accordance with the general rate regime for cable programming service, meaning only that the rates for such equipment may not be unreasonable. Although the statute is far from clear, the Commission's interpretation is a permissible one, and therefore must prevail. 99 The cable petitioners' interpretation is suspect for two reasons. First, it does violence to the natural meaning of the term used: that term is not normally understood to mean used exclusively, which is effectively the interpretation they propose. Second, and more important, because the actual cost provision expressly includes equipment required to access unregulated video programming offered on a per channel or per program basis, the cable petitioners' interpretation would produce the rather anomalous result that equipment used to receive unregulated channels would be regulated at actual cost while equipment used in part to receive regulated cable programming service channels would be regulated more leniently, viz., only to prohibit rates that are unreasonable. The cable petitioners have not been able to offer a convincing explanation for why the Congress would have intentionally created such an odd arrangement. 100 The cable petitioners are not, however, without some support in the statute for their position. They note that cable programming service is defined as: 101 any video programming 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. 102 47 U.S.C. Sec. 543(l )(2). They make much of the phrase equipment used for the receipt of such video programming, arguing that it means that any equipment used to receive cable programming service falls within the unreasonable rate standard of regulation applicable to cable programming service, see 47 U.S.C. Sec. 543(c), rather than the actual cost standard of Sec. 543(b)(3). Although focusing upon that phrase might at first seem to help the petitioners' cause, it begs the ultimate question; both Sec. 543(b)(3) and Sec. 543(l )(2) refer to the equipment used to receive programming, so the question is which one effectively means used exclusively? The cable petitioners and the Commission each have their candidate, of course--the Commission wins if Sec. 543(l )(2) receives the additional modifier, the cable companies if that limitation applies to Sec. 543(b)(3)--and neither suggestion is unreasonable. 103 Although each side cites snippets of legislative history, neither can point to anything remotely close to dispositive. We are therefore left with a virtual dead heat, save for the observation that the cable petitioners' interpretation would produce the more anomalous result. Obviously, the Congress did not address the specific issue before us. Therefore, the FCC having offered a permissible interpretation of the statute, we are bound to accept it. Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82.