## Facts

- Congress directed the FCC to issue rules preventing cable operators from exercising “undue market power” in video programming markets and from unfairly impeding the flow of programming to consumers.  
- The FCC adopted a rule limiting any single cable operator to serving no more than 30% of national cable subscribers, aiming to prevent an operator from using subscriber access to deter carriage of new or independent networks.  
- The D.C. Circuit previously remanded an earlier version of the cap, instructing the FCC to reconsider it in light of increased competition in multichannel video distribution, including growth in direct-broadcast satellite (DBS).  
- The FCC re-adopted the 30% cap with revised reasoning.  
- Comcast petitioned for review, arguing the revised cap still lacked adequate justification under the Administrative Procedure Act (APA).

## Issues

1. Whether the FCC’s retention of a national 30% cable-subscriber cap was arbitrary and capricious under the APA.  
2. Whether the FCC adequately accounted for competitive developments (including DBS and other multichannel video programming distributors) when concluding that a 30% cap was necessary to prevent “undue market power.”

## Decision

- The court granted the petition for review and vacated the 30% subscriber-cap rule.  
- The court held the FCC’s rule was arbitrary and capricious because the agency failed to provide a reasoned, evidence-based justification tied to current market conditions and the statutory standard.  
- The court found the FCC did not satisfactorily explain why an operator exceeding 30% would possess bottleneck power sufficient to block network entry given non-cable alternatives.  
- The court criticized the lack of empirical support for selecting 30% rather than another threshold.  
- A separate opinion concurred in the judgment while disagreeing with part of the majority’s analysis, but agreed the cap could not stand under APA review.

## Legal Principles

- Under APA arbitrary-and-capricious review, an agency must examine relevant data and provide a reasoned explanation showing a rational connection between the facts found and the choice made.  
- When an agency regulates based on market-power concerns, it must account for material changes in competitive conditions that bear on whether the regulated entities retain the asserted power.  
- Quantitative caps require more than conclusory assertions; the agency must justify the selected threshold with reasoning and support that fit the statutory objective.  
- A statutory standard aimed at preventing “undue market power” requires analysis of actual competitive constraints, not reliance on outdated assumptions about market structure.  
- An agency’s failure to address prior judicial concerns and to remedy identified analytical gaps can support vacatur as arbitrary and capricious.

## Conclusion

The D.C. Circuit vacated the FCC’s 30% national cable-subscriber cap because the agency did not provide a sufficiently reasoned and evidence-supported explanation, particularly in light of increased competition that undermined the FCC’s gatekeeper rationale and its choice of the 30% threshold.


Comcast Corp. v. FCC, 579 F.3d 1 (D.C. Cir. 2009)