Court Opinion

ID: 4644627
Source: CourtListenerOpinion
Date Created: 2020-12-18 16:00:17.090551+00
Date Added: 2024-06-11T08:00:47.043575
License: Public Domain

United States Court of Appeals
                          For the First Circuit

No. 19-2282

    MASSACHUSETTS DEPARTMENT OF TELECOMMUNICATIONS AND CABLE,
                               Petitioner,
                                      v.
                FEDERAL COMMUNICATIONS COMMISSION,
                               Respondent,
                                   and
                    CHARTER COMMUNICATIONS, INC.,
                               Intervenor.

                 PETITION FOR REVIEW OF AN ORDER OF
               THE FEDERAL COMMUNICATIONS COMMISSION

                                 Before*

                        LYNCH, Circuit Judge,
                     and SARIS,** District Judge.

          David C. Kravitz, Deputy State Solicitor, with whom
Maura Healy, Attorney General, was on brief, for Petitioner.
          James M. Carr, Counsel, with whom Makan Delrahim,
Assistant Attorney General, Michael F. Murray, Deputy Assistant
Attorney General, Robert B. Nicholson, Attorney, Steven J. Mintz,
Attorney, the United States Department of Justice, Ashley S.
Boizelle, Acting General Counsel, Richard K. Welch, Deputy
Associate General Counsel, Adam G. Crews, Counsel, and the Federal

          * While this case was submitted to a panel that included
Judge Torruella, he did not participate in the issuance of the
panel's opinion. The remaining two panelists therefore issued the
opinion pursuant to 28 U.S.C. § 46(d).
          **   Of   the    District    of   Massachusetts,   sitting   by
designation.
Communications Commission were on brief, for Respondent.
          Howard J. Symons, with whom Jessica Ring Amunson and
Jonathan A. Langlinais were on brief, for Intervenor.
          Rick C. Chessen, Neal M. Goldberg, Mary Beth Murphy, and
Radhika Bhat on brief for NCTA – The Internet & Television
Association, amicus curiae.

                        December 18, 2020

                              - 2 -
            SARIS, District Judge.           The Massachusetts Department of

Telecommunications and Cable ("MDTC") petitions for review of an

adverse FCC order dated October 25, 2019.                 The MDTC challenges the

FCC's determination that the cable system operated by Charter

Communications, Inc. ("Charter") in Massachusetts is subject to

"effective competition" in its franchise areas under the statutory

"Local Exchange Carrier" ("LEC") Test, Telecommunications Act of

1996, § 301(b)(3)(C), 47 U.S.C. § 543(l)(1)(D) (2018).                       Congress

prohibits cable rate regulation when the FCC makes this finding.

47 U.S.C. § 543(a).     Charter has intervened in opposition to the

MDTC's   petition.     The     Internet         &    Television     Association    has

submitted a brief as amicus curiae supporting the respondent-

intervenor and affirmance.           We conclude that the petition for

review should be denied.

                                I.        BACKGROUND

  A. Statutes and Regulations

            Congress   created       a    framework        for    regulating    cable

television in the Cable Communications Policy Act of 1984 ("1984

Cable Act") by adding Title VI to the Communications Act of 1934.

Pub. L. No. 98-549, 98 Stat. 2779 (codified as amended at 47 U.S.C.

§ 543 (2018)).      As originally enacted, 47 U.S.C. § 543 directed

the   FCC   to   "prescribe    and       make       effective    regulations    which

authorize   a    franchising    authority           to   regulate    rates   for   the

provision of basic cable service in circumstances in which a cable

                                         - 3 -
system is not subject to effective competition." Id. § 2 (codified

as amended at 47 U.S.C. § 543(b)(1)).                   Congress left the definition

of    "effective         competition"       to    the    FCC's    regulations. Id.

(codified as amended at 47 U.S.C. § 543(b)(2)(A)).                                Under the

FCC's 1985 regulations, "cable systems in approximately 96 percent

of all communities were not rate regulated."                       H.R. Rep. No. 102-

628, at 31 (1992).             From 1986 to 1992, "average monthly cable

rate[s] . . . increased almost 3 times as much as the Consumer

Price     Index."           Cable        Television      Consumer       Protection        and

Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460,

§ 2(a)(1) ("1992 Cable Act").

              In response, Congress enacted the 1992 Cable Act.                         While

Congress "strongly prefer[red] competition and the development of

a competitive marketplace to [rate] regulation,"                             H.R. Rep. No.

102-628,      at    30    (1992), it        acknowledged         that    there     was    "no

certainty" that "competition to cable operators with market power

[would] appear any time soon."                  S. Rep. No. 102-92, at 18 (1991).

The   amended      47     U.S.C.    §     543    included    a     paragraph       entitled

"PREFERENCE FOR COMPETITION" stating: "If the Commission finds

that a cable system is subject to effective competition, the rates

for the provision of cable service by such system shall not be

subject    to      regulation       by    the    Commission       or    by    a   State    or

franchising authority under this section."                       Pub. L. No. 102-385,

106   Stat.     1460,      §   3(a)      (codified      as   amended      at      47   U.S.C.

                                            - 4 -
§ 543(a)(2)).        Under the statute, effective competition exists

where one of three tests is met: 1) the Low Penetration Test, (2)

the Competing Provider Test, and (3) the Municipal Provider Test.
Id. (codified as amended at 47 U.S.C. § 543(l)(1)).                            The FCC's

1993    regulations       adopted      a   rebuttable         presumption     that    cable

operators     were        "not      subject        to    effective          competition."

Implementation       of    Sections        of   the     Cable    Television        Consumer

Protection and Competition Act of 1992: Rate Regulation, 8 FCC Rcd

5631, 5670 ¶ 43 (1993).           A cable operator had the burden to rebut

the presumption "with evidence of effective competition" in its

franchise area. Id. at ¶ 42.

            Congress "expanded[ed] the effective competition test

for    deregulating"      cable       rates     under    47    U.S.C.   §    543     in   the

Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56

("1996 Act").     S. Rep. No. 104-230, at 170 (1996) (Conf. Rep.);

see 47 U.S.C. § 521(6) (enumerating as one of the purposes to

"promote    competition          in    cable       communications       and        minimize

unnecessary regulation that would impose an undue economic burden

on cable systems").          As the Supreme Court stated, "its primary

purpose was to reduce regulation and encourage the rapid deployment

of new telecommunications technologies."                       See Reno v. ACLU, 521
U.S. 844, 857 (1997) (pointing out that the statute was designed

to promote, among other things, competition in the multi-channel

video market).       The 1996 Act added a fourth effective competition

                                           - 5 -
test focusing on competition from providers of local telephone

service.      Called the Local Exchange Carrier Test, it provides that

effective competition exists when

      a local exchange carrier or its affiliate (or any
      multichannel video programming distributor using the
      facilities of such carrier or its affiliate) offers
      video programming services directly to subscribers by
      any means (other than direct-to-home satellite services)
      in the franchise area of an unaffiliated cable operator
      which is providing cable service in that franchise area,
      but only if the video programming services so offered in
      that area are comparable to the video programming
      services provided by the unaffiliated cable operator in
      that area.

47   U.S.C.    §   543(l)(1)(D).         The   LEC   Test   is   the     effective

competition test at issue in this case.

              The FCC's regulations provide that a competing video

programming service will be "deemed offered" under the LEC Test if

(1) the distributor is "physically able to deliver service to

potential subscribers, with the addition of no or only minimal

additional      investment   by    the    distributor,      in   order    for   an

individual subscriber to receive service," and (2) "no regulatory,

technical or other impediments to households taking service exist,

and potential subscribers are reasonably aware that they may

purchase" the competing service.               47 C.F.R. § 76.905(e)(1)-(2)

(2020).    The regulations define "comparable" service as offering

"at least 12 channels of video programming, including at least one

                                     - 6 -
channel of nonbroadcast service programming." Id. § 76.905(g).1

          A cable operator can "file a petition for a determination

of effective competition with the [FCC]."   47 C.F.R. § 76.907(a).

With respect to franchise areas where cable rate regulation is

contested, the cable operator "bears the burden of demonstrating

the presence of such effective competition." Id. § 76.907(b).

  B. The FCC Order

          On September 14, 2018, Charter, a cable operator, filed

a petition with the FCC seeking a determination that it faces

effective competition in its franchise areas in Massachusetts and

Kauai, Hawaii.   See id. § 76.907(a).   Charter's petition alleged

          1 In 2015, the FCC amended its regulations to adopt a
rebuttable presumption that effective competition exists in each
franchise area under the Competing Provider Test. Amendment of
the Commission's Rules Concerning Effective Competition, 30 FCC
Rcd 6574, 6577-82 ¶¶ 6-10 (2015); see Nat'l Ass'n of Telecomms.
Officers & Advisors v. FCC, 862 F.3d 18, 29 (D.C. Cir. 2017)
(rejecting petition challenging the amendment).       The Competing
Provider Test is satisfied where "at least two unaffiliated
multichannel video programming distributors each . . . offer[]
comparable video programming to at least 50 percent of the
households in the franchise area" and more than fifteen percent of
households in the franchise area subscribe "to programming
services offered by multichannel video programming distributors
other   than    the   largest    multichannel   video   programming
distributor."    47 U.S.C. § 543(l)(1)(B).    That test is not at
issue in this case. The FCC did not adopt a presumption that the
other statutory tests for effective competition were satisfied.
Id. at 6582 ¶ 10.     Only Kauai, Hawaii and thirty-two franchise
areas   in   Massachusetts    rebutted   the   Competing   Provider
presumption. Petition for Determination of Effective Competition
in 32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd
at 10230.    Cable rate regulation thus continued only in those
franchise areas.

                              - 7 -
that the availability of DIRECTV NOW2 in those franchise areas

constitutes effective competition under the LEC Test.                     DIRECTV NOW

is a video programming service that provides live television and

on-demand programs via a broadband internet connection.                      DIRECTV

NOW is offered by DIRECTV, which is an affiliate of AT&T.

             Charter argued that DIRECTV NOW satisfies the LEC Test

because   (1)       DIRECTV      is   a   subsidiary    of   AT&T   and    therefore

affiliated with LECs owned by AT&T; (2) DIRECTV is physically able

to deliver DIRECTV NOW "to any current Charter-serviced household

that wishes to subscribe" given that broadband internet service is

"available to virtually 100 percent of Charter's customers in the

Franchise        Areas,"   and    customers    are     reasonably   aware     of   its

availability; and (3) DIRECTV NOW is comparable to Charter's cable

service because DIRECTV NOW "offers subscribers a minimum of 65

channels."

             The Massachusetts Department of Telecommunication and

Cable and the State of Hawaii filed oppositions to Charter's

petition.        Charter filed a reply to those oppositions.                  During

meetings with FCC staff, Charter confirmed that if its petition

were granted, it would raise the monthly rate for its basic cable

service to $23.89.            Then current regulated monthly rates ranged

from $12.49 to $23.99.            In contrast, the lowest price of a DIRECTV

             2
            According to              Charter,    DIRECTV     NOW   was     recently
rebranded as AT&T TV NOW.

                                          - 8 -
NOW package was $40 per month.              The FCC granted Charter's petition

on October 25, 2019 and issued a Memorandum Opinion and Order

concluding that Charter had proven effective competition under the

LEC Test in Kauai, Hawaii and the thirty-two franchise areas in

Massachusetts.      3        Petition     for     Determination      of    Effective

Competition     in      32     Massachusetts      Communities       and   Kauai,   HI

(HI0011), 34 FCC Rcd 10229, 10229 (2019).                   It made the following

key findings:

            First, the FCC found that DIRECTV NOW is provided by a

"LEC affiliate" due to AT&T's common ownership of DIRECTV NOW and

LECs. Id. at 10232.         MDTC does not dispute this finding.

            Second, the FCC found that DIRECTV NOW is "offered" in

the franchise areas because "DIRECTV is 'physically able' to

deliver    DIRECTV       NOW     to   subscribers     via     existing     broadband

facilities in the Franchise Areas" and "no regulatory, technical

or other impediments to households taking" DIRECTV NOW exist in

the     franchise       areas. Id.    at    10233–34;      see     47   C.F.R.

§ 76.905(e)(1)-(2).           The FCC found that the cost of broadband

service is not an impediment to households subscribing to DIRECTV

NOW.

            The FCC found that DIRECTV NOW is offered "directly to

subscribers" because DIRECTV has "an unmediated relationship" with

            3   This         appeal     involves     only     the     Massachusetts
communities.

                                         - 9 -
subscribers through direct marketing, subscription, billing, and

payment.   Petition for Determination of Effective Competition in

32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at

10237.     In     the   FCC's     view,     there   is   no   facilities-based

restriction on how a LEC affiliate delivers service given the

provision that a LEC or its affiliate can provide effective

competition by offering video programming service "by any means,"

the term used in the statute. Id. at 10241.

           Third, the FCC found that DIRECTV NOW is "comparable" to

Charter's cable service because DIRECTV NOW "provides packages

starting   with    access    to   45    channels"    including     "both    local

broadcast channels and nonbroadcast channels." Id. at 10238; see

47 C.F.R. § 76.905(g) (regulation defines comparable as offering

at least twelve channels with one nonbroadcast channel).               The FCC

determined that the term "channels" in the FCC regulation "can

refer to 'programming sources'" based on its "colloquial meaning."

Petition   for    Determination        of   Effective    Competition       in   32

Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at

10243.

                            II.   STANDARD OF REVIEW

           Under the Administrative Procedure Act ("APA"), a court

"may only overturn" an agency decision if the court finds the

decision "was 'arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.'"             City of Taunton v. EPA,

                                       - 10 -
895 F.3d 120, 126 (1st Cir. 2018) (quoting 5 U.S.C. § 706(2)(A)

(2018)).   "'[T]he APA standard affords great deference to agency

decision making' and 'the [agency's] action is presumed valid.'"

Int'l Jr. Coll. of Bus. & Tech. v. Duncan, 802 F.3d 99, 106 (1st

Cir. 2015) (quoting Associated Fisheries of Me., Inc. v. Daley,

127 F.3d 104, 109 (1st Cir. 1997)).

           When   an   issue   "turns   on   questions   implicating    an

agency's construction of the statute which it administers," we

"apply the principles of deference described in Chevron, USA, Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 . . .

(1984)."   Garcia v. Sessions, 856 F.3d 27, 35 (1st Cir. 2017)

(cleaned up). At the first step we "ask whether 'Congress has

directly spoken to the precise question at issue.'"           Succar v.

Ashcroft, 394 F.3d 8, 22 (1st Cir. 2005) (quoting Chevron, 467
U.S. at 842).     "If so, courts, as well as the agency, 'must give

effect to the unambiguously expressed intent of Congress.'"            Id.

(quoting Chevron, 467 U.S. at 842–43).       "[I]f the statute is silent

or ambiguous with respect to the specific issue," we proceed to

the second step of the analysis.        Chevron, 467 U.S. at 843.       At

the second step, "if the implementing agency's construction is

reasonable, Chevron requires a federal court to accept the agency's

construction of the statute."      Nat'l Cable & Telecomms. Ass'n v.

Brand X Internet Servs., 545 U.S. 967, 980 (2005). The MDTC does

not dispute this standard.

                                 - 11 -
              The    Supreme    Court    has   long   followed   a   deferential

standard      in    reviewing   an   agency's    interpretation      of   its   own

regulation.        See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,

414 (1945).        In Auer v. Robbins, the Supreme Court reiterated that

an agency's interpretation of its own regulation is "controlling

unless plainly erroneous or inconsistent with the regulation."

519 U.S. 452, 461 (1997) (cleaned up).                In a split decision, the

Supreme Court further explained the standard for judicial review

of an agency's interpretation of its own regulation:

       [A] court must apply all traditional methods of
       interpretation to any rule, and must enforce the plain
       meaning those methods uncover. There can be no thought
       of deference unless, after performing that thoroughgoing
       review, the regulation remains genuinely susceptible to
       multiple   reasonable    meanings   and   the   agency's
       interpretation lines up with one of them. And even if
       that is the case, courts must on their own determine
       whether the nature or context of the agency’s
       construction   reverses    the  usual   presumption   of
       deference. Most notably, a court must consider whether
       the interpretation is authoritative, expertise-based,
       considered, and fair to regulated parties.

Kisor v. Wilkie, 139 S. Ct. 2400, 2419 (2019).

                                     III. ANALYSIS

  A. Offer Video Programming Directly to Subscribers

              The MDTC argues that the FCC erred because DIRECTV NOW

does    not    "offer"     video     programming      services   "directly       to

subscribers" as the LEC Test required, and that is because the

FCC's own regulations provide that the word "offer" encompasses

the delivery of video.           See 47 C.F.R. § 76.905(e)(1).            Because

                                        - 12 -
DIRECTV NOW is delivered via broadband internet service provided

by a third party, the MDTC contends that DIRECTV NOW is providing

services    indirectly         and    cannot       satisfy     this    requirement.

Specifically, the MDTC argues a LEC affiliate must use its own

facilities in the franchise area to offer a competing service to

satisfy the LEC Test.               DIRECTV NOW's reliance on third-party

delivery matters, the MDTC explains, because the requirement of

direct delivery reflects the "purpose of the LEC Test: to recognize

the competitive threat from local telephone companies, which are

already hardwired into most households."

            In its Order, the FCC concluded that DIRECTV NOW met the

statutory requirement that the competing video programming service

must be offered in the franchise area.                Petition for Determination

of   Effective    Competition        in    32   Massachusetts      Communities    and

Kauai, HI (HI0011), 34 FCC Rcd at 10232.                  It did so by applying

the definition of "offer" in its regulation. Under the first part

of the regulatory definition of "offer," a competing provider must

be "physically able to deliver service to potential subscribers,

with the addition of no or only minimal additional investment by

the distributor, in order for an individual subscriber to receive

service."        47   C.F.R.    §    76.905(e)(1).           Because   "DIRECTV    is

'physically      able'   to    deliver      DIRECTV    NOW    to   subscribers    via

existing broadband facilities in the Franchise Areas," the FCC

concluded that DIRECTV NOW satisfies this delivery requirement.

                                          - 13 -
Petition    for     Determination    of    Effective      Competition    in    32

Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at

10233.

            The FCC rejected the argument that a LEC affiliate must

directly deliver its service using its own facilities to satisfy

the LEC Test. Id. at 10233, 10241.       The FCC pointed out that the

word "facilities" appears in the statutory provision inside a

parenthetical that refers to "any multichannel video programming

distributor using the facilities" of a LEC or its affiliate --

that is, those distributors that are not themselves LECs or LEC

affiliates. Id. at 10239 n.65; see 47 U.S.C § 543(l)(1)(D).               In

contrast, the FCC emphasized that the provision broadly provides

that a LEC or LEC affiliate may offer "services directly to

subscribers by any means (other than direct-to-home satellite

services)."       Petition for Determination of Effective Competition

in 32 Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd

at 10241;     see 47 U.S.C § 543(l)(1)(D) (emphasis added);                    see

generally SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018)

(holding    that    the   word   "any"    carries   "an   expansive     meaning"

(citation omitted)). The MDTC's argument is unpersuasive.                     Most

importantly, as the FCC points out, the statute contains no

facilities-based test, and Congress expressly provided that video

programming services could be offered "by any means."                 47 U.S.C.

§ 543(l)(1)(D).       The MDTC's interpretation of the parenthetical

                                    - 14 -
would defeat the operative term of the statute "by any means."

Cf. Chickasaw Nation v. United States, 534 U.S. 84, 94–95 (2001)

(quoting Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984,

990     (4th       Cir.   1996))      ("A     parenthetical    is,   after     all,     a

parenthetical, and it cannot be used to overcome the operative

terms of the statute.").                   The MDTC cites to earlier versions of

the legislation and report language to support its position, see

S. Rep. 104-230, at 170 (Conf. Rep.) (providing four examples of

means of delivery that satisfied the LEC test, "all of which were

facilities-based"), while the FCC underscores other portions of

the same report,            see id. (indicating that the language "'by any

means' includes any medium (other than direct-to-home satellite

service) for the delivery of comparable programming," including

various kinds of distributor services) (cleaned up).                          Here the

plain    language         of   the    statute,    "by   any   means,"   precludes       a

facilities-based test.4               See Succar, 394 F.3d at 22 (stating that

"courts,       as    well      as    the    agency,   'must   give   effect    to     the

               4
            In its brief, citing Brand X, the FCC suggests that
terms like "offer" are ambiguous because they admit of "two or
more reasonable usages." See Brand X, 545 U.S. at 989. Given
that ambiguity, the FCC argues that its reading of the term "offer"
in Section 543(l)(1)(D) is entitled to deference. See Chevron,
467 U.S. at 843.     Charter disagrees and argues that the term
"offer" is not ambiguous in the LEC Test. Regardless of whether
the term is ambiguous in some contexts, here the term is defined
by regulation, and no one has argued that the regulation is
unreasonable.

                                             - 15 -
unambiguously expressed intent of Congress'" (quoting Chevron, 467
U.S. at 842–43)).

             The    parties      also     debate      the   meaning        of   the   word

"directly."        While acknowledging that "directly" is not defined

in the statute, the FCC concluded in its Order that the "best

reading" of the requirement that a LEC or LEC affiliate offer video

programming service "directly to the subscribers" is that the LEC

affiliate    "must       have    (or    offer    to     have)    a    direct    customer

relationship with consumers in the franchise area."                         Petition for

Determination       of    Effective       Competition       in       32    Massachusetts

Communities and Kauai, HI (HI0011), 34 FCC Rcd at 10237(internal

quotation marks omitted).              In light of the context that "directly"

modifies    "offer"      (i.e.    "offers       video    programming        directly   to

subscribers") the FCC           concluded that "Congress intended for there

to be an unmediated relationship between the LEC affiliate and the

customer." Id.

             The    MDTC    interprets          "directly"       as       modifying    the

regulatory definition of "offer," requiring the physical delivery

of services by the LEC or its affiliate without a third party

broadband provider.             The MDTC argues that the FCC's statutory

interpretation of "directly to subscribers" should not be given

deference because the FCC applied it to a definition of "offer"

that is different from the definition in its regulation.                        However,

the FCC's focus here is on the words "directly to subscribers."

                                         - 16 -
Petition   for   Determination    of    Effective   Competition     in   32

Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at

10236.     The plain meaning of those words supports the FCC's

interpretation of the statute.         See American Heritage Dictionary

257 (3rd. ed. 1992) (defining "directly" as "in a direct line or

manner" or "without anyone or anything intervening").             Further,

as the MDTC concedes, Congress uses the "by any means" adverbial

phrase to refer to various means by which video can be delivered

to subscribers.    Even if the MDTC's interpretation of the term

"directly to subscribers" were "reasonable" under Chevron Step

Two, the Court must defer to the FCC's reasonable construction.

See Chevron, 467 U.S. at 843.

  B. Cost as Impediment

           The MDTC argues that the FCC acted arbitrarily and

capriciously by failing to consider "the affordability of internet

service" in addition to the cost of the DIRECTV NOW service as an

impediment to customers relying on basic cable service.            Without

regulation by Massachusetts, the MDTC emphasizes, Charter's basic

cable rates are likely to double for some consumers.              The MDTC

emphasizes that subscribers to basic cable are often the poorest

segment of the population and vulnerable to losing cable access

due to a price increase.         The problem is exacerbated because

DIRECTV NOW requires subscribers to have a broadband internet

subscription, which costs significantly more than basic cable.

                                 - 17 -
The MDTC contends that roughly twenty percent of households in the

franchise areas do not have broadband internet service.                   For this

reason, the MDTC argues that cost is an impediment for the poorest

subscribers to basic cable.

             In its Order, the FCC concluded that DIRECTV met the

second part of the "offer" rule –- that "no regulatory, technical

or other impediments to households taking service exist" because

no regulatory or technical barriers "prevent or inhibit consumers

from   subscribing."         Petition   for    Determination       of    Effective

Competition     in    32    Massachusetts      Communities      and     Kauai,   HI

(HI0011), 34 FCC Rcd at 10234.           Specifically, it found that the

cost of broadband internet service was not an impediment to

households taking DIRECTV NOW in the franchise areas.                    While it

recognized that "some consumers may not want or be able to" pay

for broadband, the FCC noted that the record showed that the vast

majority of households in Massachusetts and Hawaii already have

broadband. Id. at 10235.

             Further,      the    FCC   concluded        that     a     consumer's

expenditures     on     "additions"     such    as   a     broadband      internet

connection to receive programming are not an impediment to service.
Id. at 10235–36.        Rather, it found that the LEC Test can be met

"in    circumstances       that   require     reasonable       customer–provided

additions . . . to receive programming." Id.    It relied on an

earlier ruling that "requiring customers to purchase a satellite

                                    - 18 -
dish to receive satellite service" was not "an impediment to

finding that the competing service was offered in the franchise

areas." Id. at 10235; see Implementation of Section of the Cable

Television Consumer Protection and Competition Act of 1992: Rate

Regulation, 8 FCC Rcd at 5659–60.5

            Based     on   this   precedent,    and    widespread     internet

availability, the FCC reasonably concluded that a household's need

to purchase broadband internet service to access DIRECTV NOW is

not   an   "impediment[]"    within    the   meaning    of   its   regulation.

Petition    for     Determination     of   Effective    Competition    in     32

Massachusetts Communities and Kauai, HI (HI0011), 34 FCC Rcd at

10234–35.       Importantly, the FCC did not take the position that the

cost of a customer-provided addition could never be an impediment

within the meaning of its regulation. Id.     Rather, it reasonably

found that the widespread use of broadband undermines the argument

that the customer-provided investment to gain broadband access was

an "impediment[]" within the meaning of the regulation. Id.     Thus

the FCC did not act arbitrarily and capriciously in determining

            5
            The MDTC criticizes the FCC because it provided no
information about the cost of satellite dishes. The FCC responded
that the MDTC had to file a motion for reconsideration pursuant to
47 U.S.C. § 405(a) to raise this point. The Court need not address
this argument because the FCC stated that "the fact that broadband
access constitutes a separate cost does not mean" that DIRECTV NOW
is not offered under the LEC test. Petition for Determination of
Effective Competition in 32 Massachusetts Communities and Kauai,
HI (HI0011), 34 FCC Rcd at 10244.

                                    - 19 -
that no "impediment[]" exists.               See Motor Vehicle Mfrs. Ass'n of

U.S., 463 U.S. at 43.

  C. "Channels"

            The parties duel over the meaning of the word "channels."

The MDTC argues that the FCC's finding is arbitrary because DIRECTV

NOW does not provide "channels" as that term is defined in one

provision of the 1984 Cable Act, which is stated in terms of an

electromagnetic      frequency         spectrum.        See    47    U.S.C.    §   522(4)

("[T]he term 'cable channel' or 'channel' means a portion of the

electromagnetic frequency spectrum which is used in a cable system

and which is capable of delivering a television channel.").                              It

relies on American Civil Liberties Union v. FCC,                       which held that

the   FCC   did    not    have    discretion      "to    adopt,      as     part   of   its

regulations       implementing         the   Cable   Act,      a    definition      of    a

particular term that is at odds with a definition of that very

term contained in the Act itself."              823 F.2d 1554, 1567 (D.C. Cir.

1987).

            The     LEC    Test      provides     that    the       video    programming

services offered by the LEC or its affiliate must be "comparable

to the video programming services provided by the unaffiliated

cable    operator         in    that     [franchise]          area."         47    U.S.C.

§ 543(l)(1)(D).       As can be seen, the statutory test does not use

the term "channels." Id.   The FCC regulation defines "comparable"

video programming as "at least 12 channels of video programming,

                                         - 20 -
including    at     least       one        channel     of        nonbroadcast        service

programming."      47 C.F.R. § 76.905(g).              In its Order, the FCC found

that DIRECTV NOW offered comparable programming to Charter because

it provided packages with access to forty-five channels including

both broadcast channels and nonbroadcast channels.                            Petition for

Determination      of    Effective          Competition          in   32     Massachusetts

Communities and Kauai, HI (HI0011), 34 FCC Rcd at 10237–38.

            The    MDTC's      argument      is     unpersuasive        on    this    point.

Congress left the definition of "comparable" under the LEC Test to

the FCC's regulations.          See 47 U.S.C. § 543(b)(2).                   In its order,

the FCC interpreted the term "channels" in its regulations using

the term's "colloquial meaning."                  Petition for Determination of

Effective Competition in 32 Massachusetts Communities and Kauai,

HI (HI0011), 34 FCC Rcd at 10243.                    The FCC was not unreasonable

when it looked to the ordinary meaning of the regulatory term

rather   than     the   statutory      definition           of    channel     used    for   a

different purpose in the 1984 Cable Act.                         See Kisor, 139 S. Ct.

at   2415–18.           American      Civil       Liberties           Union    is    easily

distinguishable.          In     deciding         comparability         of     programming

sources, the FCC is reasonable in concluding consumers are choosing

between competing video programming providers like NBC, CBS, or

ESPN, not transmission paths.               See id.; Petition for Determination

of   Effective    Competition         in    32    Massachusetts         Communities     and

Kauai, HI (HI0011), 34 FCC Rcd at 10243.                              Further, the FCC

                                           - 21 -
reasonably argues that using electromagnetic frequency "which is

used in a cable system" would be a meaningless way to assess

effective competition to "cable operators."         Finally, in a related

context, the FCC has consistently understood comparability to

refer to programming sources.          Implementation of Section of the

Cable Television Consumer Protection and Competition Act of 1992:

Rate Regulation, 8 FCC Rcd at 5667 n.130 ("With respect to switched

networks,   we    construe   comparability    to   mean   at   least   twelve

different   programming      sources.").      Accordingly,     the   agency's

interpretation based on the plain meaning of its own regulation is

reasonable.      See Kisor, 139 S. Ct. at 2415–18.

                               IV.    CONCLUSION

            The Court DENIES the petition.         Each party is to bear

its own costs.

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