983 F.3d 28
1st Cir.2020Background
- The Massachusetts Department of Telecommunications and Cable (MDTC) petitioned for review of an FCC Memorandum Opinion and Order finding Charter's Massachusetts cable systems subject to "effective competition" under the Telecommunications Act's Local Exchange Carrier (LEC) Test.
- Charter argued that AT&T/DIRECTV's OTT service (DIRECTV NOW / AT&T TV NOW), an affiliate of local exchange carriers (LECs), constituted competing video programming "offered" in the franchise areas.
- FCC concluded DIRECTV NOW: (1) was provided by a LEC affiliate, (2) was "offered" in the franchise areas because it could be delivered via existing broadband with no regulatory or technical impediments, and (3) was "comparable" because packages included many channels.
- MDTC argued (a) "directly to subscribers" requires facilities-based delivery by the LEC/affiliate (no third‑party broadband), (b) broadband cost/affordability is an impediment for low‑income households, and (c) "channels" must be defined by the statutory electromagnetic‑spectrum definition.
- The court reviewed under the APA with Chevron/Auer/Kisor principles and denied MDTC's petition, upholding the FCC's interpretations and findings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a LEC affiliate must deliver service over its own facilities to "offer video programming directly to subscribers" under the LEC Test | MDTC: "Directly" requires facilities‑based delivery (no third‑party broadband); purpose was to capture LECs already hardwired into homes | FCC/Charter: statute allows offering "by any means"; "directly" means an unmediated customer relationship, not ownership of last‑mile facilities | Held: FCC reasonably read statute—"by any means" precludes a facilities‑based requirement; "directly" satisfied by a direct customer relationship; defer to FCC under Chevron/Kisor |
| Whether the cost/affordability of broadband is an "impediment" that prevents FINDING service is "offered" | MDTC: many low‑income households lack broadband or cannot afford it; requiring broadband is a practical/financial impediment to switching from basic cable | FCC: record shows broadband widely available in the franchise areas; customer‑provided additions (like broadband or a satellite dish) are not per se impediments | Held: FCC acted reasonably in finding broadband cost was not an impediment here given widespread availability; not arbitrary or capricious |
| Whether "channels" in the FCC regulation must use the 1984 Cable Act's electromagnetic‑spectrum definition | MDTC: regulatory "channels" should track the statutory electromagnetic frequency definition | FCC/Charter: Congress left "comparable" to FCC regulation; "channels" can be interpreted colloquially as programming sources | Held: FCC reasonably interpreted "channels" to mean programming sources for comparability; statutory spectrum definition is inapposite |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (agencies are entitled to deference when statute is ambiguous and agency interpretation is reasonable)
- National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (agency interpretations of ambiguous statutory terms can resolve competing reasonable readings)
- Kisor v. Wilkie, 139 S. Ct. 2400 (limits and clarifies deference to agency interpretations of their own regulations)
- Motor Vehicle Manufacturers Ass'n v. State Farm, 463 U.S. 29 (arbitrary and capricious review standard for agency rulemaking and factfinding)
- American Civil Liberties Union v. FCC, 823 F.2d 1554 (agency may not adopt a regulatory definition that conflicts with a statutory definition in the Act)
- Succar v. Ashcroft, 394 F.3d 8 (courts must give effect to unambiguous congressional intent when interpreting statutes)