Smit: FCC Biz Broadband Regulation Counterintutive

Comcast President Neil Smit says it is "counterintuitive" for the FCC to regulate cable business broadband service, as it has signaled it wants to do.

On a call with analysts Wednesday, April 27, Smit pointed out that FCC Chairman Tom Wheeler had recently claimed competition in so-called special access service.

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Wheeler has proposed to regulate the rates of whoever is providing business broadband, incumbent telcos, competitive telcos, or cable operators--if the FCC concludes there is insufficient competition.

"I can say that we compete every day for that business, and it seems kind of counterintuitive that the FCC would want to impose regulations on a new entrant such as us, who's bringing more competition to the business," he said.

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But he added that not having seen the proposal yet, it was premature to say anything more.

The FCC is planning to vote Thursday, April 28 on Wheeler's proposal.

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The FCC is proposing to phase out the presumption of regulating the historically "dominant carriers" -- the ILECs (incumbent local exchange carriers) -- to boost competition from nondominant" CLECs (competitive local exchange carriers) and cable competitors, and instead regulate either or all, as it deems necessary, in the name of boosting price and service competition for the "special-access" services.

Special-access lines are dedicated connections used by businesses and institutions to deliver voice and data traffic, including for ATMs and credit card transactions. The regs have been applied to the ILECs — Verizon, AT&T, CenturyLink and Frontier — but the chairman thinks they should apply across the board where more competition is needed.

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Wheeler has called that a tech-neutral approach. The National Cable & Telecommunications Association has called it off base, though it was referring to a compromise special-access proposal from Verizon and INCOMPAS along similar lines.

"[A]ny finding that competitive entry has been insufficient to affect the prices offered to consumers (e.g., because competitors do not offer the same range of services or their networks have limited geographic reach) necessarily means that the incumbent LEC remains dominant and should be regulated accordingly," the NCTA said.

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Cable operators aren't particularly pleased with being in the FCC's rate reg sights.

The FCC is basing its special-access reforms on a major, years-long data-collection effort. The NCTA, which has had issues with that collection in the past, has said it would be "wholly inappropriate for the commission to reach any tentative conclusions about the state of the marketplace or the appropriate course for regulation based on a non-public analysis prepared by a single entity."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.