As explained more fully in the body of these comments, the Supreme Court's First Amendment jurisprudence holds that government cannot tell speakers what they must say. Nevertheless, legacy cable regulation, including leased access regulation, historically has been upheld because of perceived "bottlenecks" in the distribution of video programming. In the late 1980s and early 1990s, most consumers had little choice for pay-TV services other than their local cable operator. But since then, the video services landscape has been transformed dramatically by new technologies and other market developments, so that choice among competing providers offering a diverse array of content is now prevalent.
Today, most consumers can choose between a cable provider and two direct broadcast satellite (DBS) providers. Many consumers also have access to a former "telco" video services provider, such as Verizon FiOS. At the end of 2017, cable operators served 51.8 million or 55.2% of multi-channel video programming distributor (MVPD) subscribers, DBS served nearly 33.5%, and a "telco MVPD" serviced 11.3%. Recent reports indicate that MVPD subscriptions have declined every year from 2013 to the present. Meanwhile, in 2018 antenna use for over-the-air broadcast TV increased to its highest level since 2005, as 31% of U.S. households had an antenna on at least one TV.
Furthermore, and perhaps most significantly, the video landscape has also been reshaped by the emergence of online video distributor (OVD) services, especially Netflix, Amazon Prime Video, HBO Now, and Hulu, with additional streaming services, such as Disney Plus, on the way. Whereas MVPD subscriptions totaled 94 million at year's-end 2017, in early 2019, Netflix had over 60 million U.S. subscribers to its streaming video service, while Amazon Prime and Hulu had 101 million and 28 million, respectively. Much of the MVPD subscriber losses has been attributed to the quick rise of online streaming services.
Based on late 80s and early 90s perceptions about cable "bottlenecks," legacy cable regulatory restrictions on video service providers' free speech were subjected to intermediate level scrutiny by the Supreme Court and lower courts. It is not surprising that, in recent years, lower federal courts have challenged, or at least questioned, the legacy bottleneck rationale for free speech restrictions imposed on cable services.
Since the factual underpinning for the old rationale that was used to support legacy cable regulation no longer holds up, strict scrutiny is the correct legal standard by which cable leased access regulation should be evaluated. Strict scrutiny requires that a statute or agency rule further a compelling government interest that is narrowly tailored to accomplish that interest. Today, there is no compelling government interest in regulating or limiting the editorial discretion of cable operators to program their services as they wish. Given the video market's competitiveness and the low demand for leased channel capacity, there is no evidence that leased access regulation advances any supposed compelling government interest in a narrowly tailored manner as the First Amendment requires.
Accordingly, in light of the Court's relevant First Amendment decisions and the dynamic changes to the video services marketplace over more than two decades, the Commission accurately has perceived the constitutional problem posed by continued leased access regulation. The Commission's leased access rules can no longer survive scrutiny under First Amendment free speech jurisprudence and the agency should refrain from enforcing them.
A PDF of the complete FSF comments, with footnotes, is
here
.
