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Cable Technology Feature Article

September 17, 2012

FCC Gives Green Light to Cable Companies to Buy Local Telephone Companies

By Tracey E. Schelmetic, TMCnet Contributor

Should cable companies be able to buy phone companies? (What could possibly go wrong?)

Turns out, under some circumstances, they can. Cable providers may buy telephone companies that serve customers in their franchise areas, the Federal Communications Commission said in an order published today.

In it, the FCC (News - Alert) granted a request from the National Cable & Telecommunications Association, a Washington-based trade group with members including the largest U.S. cable provider, Comcast Corp., and number-two company, Time Warner (News - Alert) Cable, Inc.

The order concerned CLECs, or competitive local exchange carriers, a class of companies that includes Cbeyond, Inc. and TW Telecom, Inc. but doesn’t include the largest U.S. telephone providers – AT&T Inc. and Verizon (News - Alert) Communications, Inc.

Any deals struck would still be subject to FCC review, and they could help cable companies move into business services, David Kaut, a Washington-based analyst for Stifel Nicolaus (News - Alert) & Co., told Bloomberg.

“We commend the commission for removing outdated obstacles that have historically deterred pro-competitive transactions between cable operators and competitive local phone companies,” Michael Powell, president of the Washington-based trade group, said in an e-mail.

The decision to allow the acquisitions "will likely speed the entry of cable operators into the market for telecommunications services provided to business customers," FCC staff wrote in the ruling. "Alliances between competitive LECs and cable operators can merge these entities' complementary capabilities, resulting in increased facilities-based competition."

Supporters of the ruling say that consumers will benefit from the increased efficiencies springing from strategic combinations between cable companies and competitive local telecom companies. 

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2012, taking place Oct. 2-5, in Austin, TX. Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Braden Becker

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