In an action that is intended to stimulate competition and streamline the FCC’s processes, the FCC released an order on Monday that grants limited forbearance from Section 652(b) of the 1996 Telecommunications Act with respect to acquisitions of competitive local exchange carriers (CLECs) by cable operators. Section 652(b) prohibits cable operators from acquiring interests of greater than ten percent in CLECs that serve the same region. Acting on a petition filed by the National Cable & Telecommunications Association (NCTA), the FCC’s five members agreed that mergers between cable operators and CLECs would serve the FCC’s competitive goals and would comply with the intent of Congress in adopting Section 652(b). In assessing the intent of Congress, the FCC determined that the main concern of lawmakers was to prevent an incumbent local exchange carrier (ILEC) from acquiring a cable operator “and thereby eliminating its only competitor with last-mile facilities.” In contrast to mergers between cable operators and ILECs, the FCC concluded that a cable operator’s acquisition of a CLEC “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.” The FCC further predicted that cable-CLEC mergers “will strengthen facilities-based competition for telecommunications services, which will in turn provide customers with better service and functionality and lower prices.” As FCC Chairman Julius Genachowski proclaimed that the FCC’s order “reflects our commitments to streamline processes and promote competition,” FCC Commissioner Robert McDowell applauded the order as one that “is consistent with my continued call for FCC policies that promote consumer choice offered through competition and abundance rather than through regulation and its unintended consequences.” Observing that “Congress entrusted the Commission with forbearance authority to eliminate counterproductive regulatory schemes,” Commissioner Ajit Pai said, “I am glad we are exercising our authority today to do just that.” NCTA President Michael Powell, meanwhile, commended the FCC “for removing outdated obstacles that have historically deterred procompetitive transactions between cable operators and competitive local phone companies,” as he asserted that the cable industry “provides millions of American businesses and consumers with competitive digital voice services.”
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FCC to permit cable companies to acquire CLECs
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