Cable ops adapting to regulatory 'whiplash'

The cable industry's policy people have more than a plate full of issues to dine on these days. They're working through a smorgasbord of issues, including surprise litigation tied to the Universal Service Fund, a temporary stay on the return of network neutrality rules, tricky nuances tied to the Broadband Equity Access and Deployment (BEAD) program and even the recent temporary injunction slapped on a new sports streaming service.

Yet another course: a US Supreme Court decision in June that struck down the decades-old "Chevron" deference (a.k.a. the Loper Bright decision) that stands to curtail the limits on FCC authority to set and enforce network neutrality rules and other regulations.

Going forward, the shift on Chevron is "going to take volatility out of the FCC as administrations change" and eliminate headaches that can be associated with "performative policies," Brian Hurley, chief regulatory counsel for ACA Connects, said Wednesday at The Independent Show in Nashville on a panel that provided a regulatory roundup for small and midsized cable operators.

Plus, this is an election year, which could impact the leadership of individual agencies and various regulatory processes. "The White House is what will matter and drive a lot of this," Curtis Philp, senior VP at the Alpine Group, said.

Brian Hurley, chief regulatory counsel for ACA Connects, said the biggest, recent surprise was when the United States Court of Appeals for the Fifth circuit ruled that the Universal Service Fund (USF) is unconstitutional.

That story isn't over, he said, believing it will eventually head to the US Supreme Court. That means a definitive ruling might not arrive until 2025 or beyond. "It will be tremendously disruptive if [the circuit court ruling] is upheld," he explained.

But the stay on network neutrality rules represent a "tremendous victory for us," Hurley said. The court is on track to hear oral arguments this fall, with a decision likely to follow in 2025.

ACA Connects, an organization that represents independent operators, also views the recent temporary injunction slapped on Venu Sports, the streaming sports joint venture of Disney, Fox and Warner Bros. Discovery (WBD), as a victory for its members.

The injunction stems from a complaint by Fubo, a sports-focused virtual multichannel video programming distributor, on antitrust grounds. Fubo says it repeatedly has been denied the opportunity to build a sports-focused skinny bundle of its own without having to bolt on additional channels that fatten up the lineup and drive costs up.

"Getting a stay is not easy," as it needed to show a substantial potential to win on the merits in the case, Tom Cohen, a partner at Kelley Drye & Warren LLP, said. "It's a high hurdle" and a "big deal" when a court grants it, he said.

A trial could follow. But it's not clear how the JV will proceed. Cohen is skeptical that the programmers involved in the JV will cut a new deal with Fubo to help remedy the situation.

Bulk billing surprise

Yet another surprise emerged when the White House and the FCC announced a proposal to restrict or ban bulk billing in apartments, condos and other types of multiple-dwelling units (MDUs). Hurley said it was surprising in part that a Democrat-led FCC looked at this issue years ago and found that bulk billing arrangements are actually beneficial to consumers because they result in better rates and improved service.

Hurley says the issue has come up as the current administration sees potential wins by focusing on what it deems to be "junk fees." It's still not clear when the issue will go forward as the FCC has yet to vote on it and seek comments amid some reactions from consumer advocacy groups.

"This push back has at least stalled the proposal for now," Hurley said.

The bulk billing proposal and the recent demise of the Affordable Connectivity Program (ACP) delivers a "double-whammy" when it comes to broadband affordability, Grant Spellmeyer, ACA Connects CEO and session moderator, said. [Editor's note: Spellmeyer dug into the regulatory issues his members are grappling with in a podcast that Light Reading will post soon.]

BEAD not worth the trouble for some operators

Meanwhile, ACA Connects members are also figuring out how and if they will participate in BEAD projects. Some are ready to throw their hands up and not participate due to constraints on pricing for low-cost service options, delivering service to ultra-high-cost locations and dealing with prevailing wage restrictions.

Others are mulling whether they can toss their hats in the ring in areas that are deemed too large for a smaller operator to cover.

Cohen said some operators view these as major impediments, causing them to declare: "It ain't worth it."

But panelists also agreed that the NTIA, which is administrating the BEAD program, is listening to these issues and getting a better understanding of the critical issues that these Tier 2/3 operators are facing.