The Federal Communications Commission will soon release a new cable ownership order that would bar cable companies from serving over 30 percent of pay television subscribers in the US. If the order is adopted by the FCC, it would make the currently enforced 30 percent limit a matter of law.

The 30 percent cap stems from a 1992 change to the nation's cable-ownership regulations by the FCC. Spurred by a concern that cable networks would have too few distribution outlets if the cable industry consolidated, the FCC decreed that no single company could serve more than 30 percent of the homes passed by cable companies. A few years later, the homes-passed metric was dropped in favor of total cable subscribers, but the 30 percent cap was kept in place.

In 2001, a federal court overturned the FCC's ownership limit and told the Commission to come up with a new set of guidelines for cable ownership. The new order in the works is a belated response to the 2001 ruling; in the intervening period, the FCC has continued to enforce the 30 percent limit, refusing to approve mergers where the combined entity would serve more than three in ten cable subscribers.

Last month, Comcast formally challenged the FCC's unofficial limit, forcing the FCC's hand. Comcast argued that the rationale for limiting ownership—a lack of outlets for broadcasters—was a "relic that cannot be justified." The cable giant points to the growing number of alternatives in the video marketplace, including the Internet, mobile phones, P2P networks, satellite, and other on-demand services as evidence that the market has changed to the point where a cap is no longer necessary.

The National Cable Television Association is also opposed to the new rules. "Any FCC order adopting the same 30 percent cap tossed out by the courts would be astonishing," NCTA President & CEO Kyle McSlarrow told Ars. Pointing to the entry of Verizon and AT&T into the video market and the FCC's willingness to sign off on massive consolidation in the telecom industry (AT&T and BellSouth, Verizon and MCI), McSlarrow says that "in this day and age, given the competitive environment, the right answer is to say there is no cap."

Comcast is the largest cable provider in the US, currently serving around 28 percent of US cable subscribers, and may soon find itself bumping up against a 30 percent cap, be it formal or informal. Should that happen, Comcast would be forced to turn away new customers, and the cap rules out the possibility of the cable company purchasing anything other than a very small player in the cable market.

The TV landscape has changed in ways that the 1992 and even 2001 actions could not have envisioned, but it is not clear that opening the door to widespread consolidation in the cable television industry is going to make things better for consumers.