The Telecommunications Law Resource Center is the most comprehensive reference and news platform for communications law, covering broadcasting, cable, broadband, telephony and wireless;...
Cable operators and “competitive,” or non-incumbent, telephone companies may now go forward with plans to merge, the Federal Communications Commission has ruled (Petition for Declaratory Ruling to Clarify 47 U.S.C. § 572 in the Context of Transactions Between Competitive Local Exchange Carriers and Cable Operators, FCC, FCC 12-111, 09/17/12).
The agency formally approved a petition by the National Cable and Telecommunications Association, the cable industry's main trade association in Washington, to forbear from enforcing a section of the Telecommunications Act of 1996 that prohibits a local phone company and a local cable provider from merging.
“By bringing the review of cable-competitive local exchange carrier [CLEC] transactions in line with that of other similar transactions, while maintaining our own review and an important role for local authorities, we ensure that transactions that promote competition and expand broadband service deliver benefits to consumers more quickly,” FCC Chairman Julius Genachowski said in a statement accompanying the agency's order, both distributed electronically Sept. 17.
The association hailed the FCC's decision, noting that the Telecommunications Act has historically “deterred pro-competitive transactions.”
Under Section 652(a), local exchange carriers cannot acquire more than a 10 percent financial interest in any “cable operator providing cable service within the local exchange carrier's telephone service area.”
Likewise, under 652(b), cable operators cannot acquire more than a 10 percent financial interest in any “local exchange carrier providing telephone exchange service within such cable operator's franchise area.”
Section 652(c), meanwhile, stipulates that a “local exchange carrier and a cable operator whose telephone service area and cable franchise area … are in the same market may not enter into any joint venture or partnership to provide video programming directly to subscribers or to provide telecommunications services within such market.”
The FCC reasoned that Congress, in 1996, appeared to be most concerned with mergers and acquisitions between cable operators and larger, incumbent phone companies.
“We believe that Congress had little reason to be concerned about cable operator acquisitions of competitive LECs [local exchange carriers] when it adopted section 652 because competitive LECs, particularly in 1996, did not present a significant facilities-based alternative to incumbent LECs,” the FCC wrote. “In contrast to an incumbent LEC's acquisition of a cable operator, a cable operator's acquisition of a competitive LEC likely will not lead to one entity controlling all of the last-mile facilities, or reduce incentives to upgrade existing transmission facilities to enable carriage of new services.”
FCC Commissioner Robert McDowell, the senior Republican on the commission and former senior vice president and assistant general counsel of Comptel, a trade association that represents competitive local exchange carriers, said the order is “positive” and “constructive.” He urged the agency to undertake forbearance actions “on its own accord rather than waiting for outside parties to file costly petitions.”
“Not only would such initiative be a matter of good government, it is encouraged by the act,” McDowell wrote in a statement.
As part of Wireline Competition docket 11-118, the FCC had until Sept. 19 to rule on the cable association's petition; otherwise, it would have been deemed granted.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)