Comcast (Nasdaq: CMCSA) may face new rate regulations in Boston, after the FCC said Monday that the city can once again regulate cable rates because of a lack of competition from cable overbuilder RCN.
The ruling is a setback for Comcast in Boston, where cable rates have been deregulated since 2001. Boston mayor Thomas Menino had filed an FCC petition last year, complaining that Comcast rates have increased by more than 80 percent since a price control agreement the city struck with Comcast predecessor AT&T Broadband expired in 2008.
While Comcast had argued that it faces competition from RCN, in addition to satellite providers DirecTV (Nasdaq: DTV) and Dish Network (Nasdaq: DISH), the FCC noted that RCN passes just 32.1 percent of households in Boston with its pay TV product. "At present, RCN has neither an obligation to expand the geographic scope of its system nor any prospect of doing so," the FCC noted in the order.
Once the FCC rules that a cable operator faces effective competition in a local market, it's very unusual for the commission to re-certify a city to regulate cable rates, as it has done in Boston. The ruling will likely generate some lively debate next month at The Cable Show convention, which will be held in Boston.
But it may be several weeks or months before Boston could regulate Comcast cable rates in the city. According to the FCC order, Boston would be re-certified to regulate Comcast's basic rates in 30 days. Comcast could file a petition for reconsideration, which will "stay the recommencement of basic service tier rate regulation in Boston pending the FCC review of Comcast's petition, the FCC said.
Comcast officials downlplayed the FCC ruling. "Comcast faces real competition every day in Boston from DirecTV, Dish Network, and RCN. With the amount of competition in the city, we expect to easily meet the so-called ‘competing provider' test, and we plan to refile as soon as possibleas provided under the FCC order," Comcast spokeswoman Sena Fitzmaurice said in a prepared statement Monday. "Importantly, Boston cannot re-regulate until the Commission acts on that filing. With the level of competition in the city, prices should be set by market forces, not by regulation."
- see the FCC order
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