FCC clears path for MSOs’ purchase of telcos
A new FCC ruling will make it easier for smaller cable companies to invest in or outright buy a small phone company.
The FCC’s specific act was to grant forbearance on a section of the Communications Act of 1934 – Section 652(b) – which contains specific language that prevents cable operators from buying competitive local exchange carriers (CLECs).
The decision in essence normalizes the rules regulating acquisitions in this market, in that CLECs have had the latitude to buy cable companies. The rules specifically apply to non-dominant market participants. In other words, the law will only apply to smaller companies looking to combine forces in order to better compete with larger established companies, notably incumbent LECs (ILECs).
The move was promoted by both the NCTA and the ACA. The latter, which represents most of the small cable companies in the U.S., hailed the decision.
American Cable Association President and CEO Matthew Polka said, “ACA is pleased with today’s FCC decision sought by the National Cable & Telecommunications Association because Section 652 acted to inhibit transactions between cable operators and CLECs – transactions which have the potential to bring substantial benefits to consumers and further the public interest, including in smaller markets served by smaller providers.”