FCC in Order Says Cable Companies May Buy Some Phone Companies

Cable providers may buy telephone companies that serve customers in their franchise areas, the Federal Communications Commission said in an order published today.

The agency 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. (CMCSA), and No. 2 Time Warner Cable Inc.

The order concerned so-called competitive local exchange carriers, a class of companies that includes Cbeyond Inc. (CBEY) and TW Telecom Inc. (TWTC), and doesn’t include the largest U.S. telephone providers AT&T Inc. (T) and Verizon Communications Inc.

The deals 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 & Co., said in a Sept. 7 note.

“We commend the commission for removing outdated obstacles that have historically deterred pro-competitive transactions between cable operators and competitive local phone companies,” Michael Powell,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-mailed statement.

Commissioner Robert McDowell, a Republican, in a statement called the ruling “the right public policy outcome.”

“Consumers will benefit from the increased efficiencies springing from strategic combinations between cable companies and competitive local telecom companies,” McDowell said.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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