Comcast Plans New Arguments to Overturn Boston Basic Rate Decision
Comcast said it plans to petition the FCC to reconsider a Media Bureau decision that would give Boston authority to again regulate the rates of its basic service tier. The bureau on Monday granted the city’s request to reinstate its basic-rate regulation authority (http://xrl.us/bm27k8). The bureau and full commission both found in 2001 that Comcast was subject to effective competition in Boston from RCN, which the bureau considered to be a LEC. Boston disagreed with that classification and the conclusion that RCN’s service area substantially overlapped with Comcast’s, and last year it asked the FCC to let it once again regulate Comcast’s basic service rates.
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The order granting Boston’s request won’t take effect for 30 days, and would be further stayed should Comcast petition for reconsideration, it said. A Comcast spokeswoman said it faces competition from DirecTV, Dish Network and RCN in Boston and expects it should easily meet the FCC’s “competing provider” test for determining effective competition. “We plan to refile as soon as possible under the FCC order,” she said. “Importantly, Boston cannot re-regulate until the Commission acts on that filing."
Still, Boston claimed a victory in this round of the dispute. “We're pleased that the FCC recognizes what we've been saying all along -- cable isn’t competitive in Boston,” Mayor Thomas Menino said. “Boston needs either cable choice or rate protection."
Monday’s order probably won’t result in any new rate regulations for Comcast, Guggenheim Partners analyst Paul Gallant wrote investors. “We suspect the FCC will reverse the ruling and that Comcast will remain free of rate regulation in Boston.” Comcast must show that competing satellite providers have at least 15 percent of the pay-TV market in Comcast’s territory, Gallant said. “As long as that is the case, we expect the FCC will grant Comcast’s request to remain free of basic tier rate regulations in Boston."
Last year the city asked the FCC to reconsider, saying RCN had failed to build out its service area there. “In this case, there is no realistic possibility of RCN building out further,” the order released Monday said. “The LEC’s one-third coverage of the incumbent’s franchise area combined with the impossibility of the LEC expanding are the decisive facts in this case,” it said. “They amount to a clear showing that the reasons for earlier revocation of the City’s authority are no longer valid.”