FCC Regulators Vote to Ease a Limit on TV Station Ownership

CNBC's Jon Fortt shown from behind speaks with FCC Chairman Ajit Pai

The Federal Communications Commission voted Thursday for new light-touch rules aimed at broad business broadband deregulation, loosening price caps and restrictions created to boost competition in the market that provides high-capacity internet to businesses, hospitals, libraries, schools, public safety offices, ATM networks, and cell phone networks. The EU's ambassador to the United States wrote to the FCC this week arguing the agency's move on business data services would favor US players in the industry worldwide, and could violate the United States' compliance with World Trade Organization regulatory norms.

"Price regulation - that is the government setting the rates, terms and conditions for special access services - is seductive", Pai said. "Instead, high-bandwidth applications, like video and teleconferencing, are driving demand for modern, high-speed Ethernet packet-based networks". He gave up on the attempt to stiffen regulations on the $45 billion market after the November election when Republican lawmakers urged him not to push controversial measures in the weeks before party control of the FCC switched. The growth of cable-based BDS is approximately 20 percent annually.

As a result, the BDS order adopts a competitive market test to determine where pricing regulations should remain.

"Ultimately, these price hikes will be passed on to consumers, and American families and businesses will pay dearly for the green light the FCC has given to the unfettered exercise of market power by dominant telecommunications providers", said Phillip Berenbroick, senior policy counsel at Public Knowledge, a digital rights group.

FCC said in counties that do not meet the competitive market test, the Order retains price regulation for lower speed TDM connections to end-users. He said companies that were calling for a delay were the same ones calling for the FCC to act when the reform proposal was that of his predecessor, Democratic chair Tom Wheeler.

Under FCC Chairman Pai's business broadband deregulation order, BDS markets with one competitor "nearby" or within "a half mile" will be deregulated, a move critics say essentially allows a duopoly and sometimes a monopoly to meet the new Republican FCC's standard for competition. The Order will permit incumbent telephone carriers to raise prices on business broadband customers across most of the United States.

Commissioner Mignon Clyburn, the agency's sole Democrat, said business broadband deregulation will lead to price hikes for hospitals, schools, libraries and police departments.

"The last thing we should do is penalize people like that with unnecessary regulatory burdens, particularly when those burdens could deter them from volunteering in the first place", Pai said.

It's a numbers game, but for the country's largest owners of TV stations, it's a very important scorecard.

Although the commission undertook a major data collection process created to inform any decision about business data services regulation, the FCC also drew upon other data sources, including outside databases of cable provider data, in crafting today's order.

"In reaching this decision, the FCC didn't examine whether the facts justified a more stringent cap or analyze whether the cap should have been raised at the same time the UHF cap was eliminated".

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