On January 31, the FCC approved Time Warner Cable's merger with Insight Communications. The FCC concluded that economy of scale and other efficiencies likely resulting from the deal would be in the public interest.
Insight provides competitive telecommunications service in addition to cable video services. Section 652 prohibits mergers involving competitive local exchange carrier (CLECs) absent consent of local franchising authorities (LFAs) such as city or county governments, at least in certain circumstances. But uncertainty exists over whether Section 652 applies specifically to cable operator/CLEC mergers. In the case of Time Warner/Insight, only two LFAs were at issue. And the FCC ultimately deemed Section 652's LFA-approval provision waived.
The FCC's waiver decision in Time Warner/Insight makes sense, as far as it goes. But when it comes to Section 652, the FCC should go even further. As I explained in an FSF Perspectives paper from August, the "Section 652 Cross-Ownership Ban Shouldn't Apply to Cable Operators and CLECs." The FCC now has before it petitions seeking declaratory or forbearance rulings on this point.
There are good reasons for concluding that Section 652 was never meant to apply to cable operator/CLEC mergers. In my Perspectives paper I also explain why there are no good reasons for giving LFAs a veto on such deals. (The 2010 Comcast/CIMCO merger, for instance, involved some 274 LFAs.) As my paper concludes:
If Chairman Julius Genachowski is serious about regulatory reform and directing the FCC's resources to "identifying outmoded or counterproductive rules," the Commission should address Section 652 without delay. One way or the other – through a declaratory ruling or regulatory forbearance – the FCC should make clear that Section 652's unnecessary regulatory restrictions do not apply to mergers between cable operators and CLECs.
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