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NCTA Gets Support on Cross-Ownership Petition

The National Cable & Telecommunications Association got support from small cable operators and others Monday for its June 21 petition to the FCC lift the cross-ownership restrictions on mergers between cable operators and competitive local exchange carriers (CLECs), while groups representing local franchise authorities and others took issue.

Aug. 22 was the deadline for comment on NCTA's request, which was based on the argument that cable/CLEC combos were pro-competitive.

The American Cable Association was solidly behind the proposal. "Because of their complementary capabilities, alliances between cable companies and CLECs can promote greater facilities-based competition with incumbent local exchange carriers (‘ILECs') and other providers, putting downward pressure on rates, increasing the offering of innovative services, and enhancing service quality," said the association in its comments.

Given the size of the incumbent large phone companies, "there is very little likelihood of antitrust concerns with such arrangements because both cable companies and CLECs are non-dominant providers of local telecommunications services," said ACA, which advised limiting the cross-ownership restrictions to cable operators and the larger, incumbent exchange carriers.

The National Taxpayers Union added its voice to that of the cable operators. "There is no basis to conclude that Congress intended to prohibit mergers between cable operators and competitive local exchange carriers," it told the Commission. "Rather, the evidence suggests that Congress intended to prevent any one entity from gaining sole control of the ‘last mile' to the home -- i.e. a cable operator, which owns the cable lines, merging with an ILEC, which owns the phone lines. As CLECs do not own any wire to the home, a cable-CLEC merger would have no effect on the control of the last mile," it wrote, a point NCTA also made in asking that the FCC either strike the cross-ownership rule as regards CLECs or forbear it (not enforce it).

Comcast, which is NCTA's largest member but filed separately, said that AT&T and Verizon remain "by far" the largest players, given the "limited role of cable operators and competitive LECs" in providing facilities-based competition to those large incumbents, it said, the public interest would be best served by granting NCTA's petition.

While it took no position on NCTA's reading of the rules on cable "buyouts" of CLECs, Public Knowledge in its comments said the FCC does approve NCTA's request, but it should make it clear that the FCC still has a responsibility to apply a public interest analysis on any proposed transactions in that space. And if it denies that primary request, it should not grant NCTA's alternative request for expanded forbearance authority. That point was echoed by the National Association of Telecommunications Officers and Advisers (NATOA) in their comments. Not surprisingly, since one of those expanded forbearance elements would be not enforcing the requirement that local franchising authorities (which NATOA represents) approve any cross-ownership waiver.

NATOA said the FCC should deny NCTA's petition, and should not expand its forbearance authority.  "It is indisputable that any merger between a cable operator and LEC will reduce the number of providers in a given jurisdiction by one -- thus, limiting competition," said NATOA.