FCC OKs ownership rule that should ease buyouts

Owen Stevens
April 21, 2017

The FCC on Thursday reinstated the so-called UHF discount, which allows stations broadcasting on those higher-frequency airwaves - channels 14 to 83 - to count only half of their audience against the cap.

The Federal Communications Commission on Thursday accelerated its deregulation push under Republican control, voting to ease limits on broadcast TV ownership and prices that large telecom companies can charge businesses and governments for bulk broadband services.

The FCC voted along party lines to pass a report and order that it says recognizes competition in the business data services (BDS) market is robust, but critics maintain the action will drive up prices for small to medium businesses (SMBs).

"The commission just wrapped up and put a bow on a huge gift for those large broadcasters, with ambitious dreams of more consolidation", she said at the meeting.

Former Chairman Tom Wheeler took up the issue in an item circulated last summer and it was eliminated last fall. Other station owners: CBS (NYSE:CBS), Fox (FOX, FOXA), Nexstar Media Group (NASDAQ:NXST).

The commission said "this approach properly balances the commission's need to improve its broadcast ownership data with the potential chilling effects that a mandatory reporting requirement could have on participation in NCE station governance". More than a decade of FCC data revealed 73 percent of the BDS market is only served by one provider and 97 percent served by only one or two.

"Today, the FCC is wiping the slate clean", he said.

Pai, however, argued that the elimination of the discount needed to go hand-in-hand with an examination of the media ownership cap.

Pai, who was named by U.S. President Donald Trump to head the FCC in January, said it will begin a comprehensive review of the national cap this year. Frank Pallone of New Jersey, wrote to Pai this week opposing the change.

The FCC's decision to reduce price controls on bulk broadband access - known as business data services - came after Wheeler had proposed to tighten them a year ago.

Pai said FCC price controls were preventing existing providers from expanding their networks and discouraging new entrants, such as cable companies.

"Price regulation is seductive", he said. The regulations require incumbent local exchange carriers (ILECs) to lease portions of their networks to smaller competitive local exchange carriers (CLECs) like Sprint and Level 3 at regulated rates to boost competition.

The decision ends most regulatory requirements in almost all areas, but retains some price caps in areas with little competition. The changes will be phased in over three years. "Despite data collected by the FCC indicating that approximately 73 percent of BDS locations may only being served by one provider, and the Small Business Administration raising serious concerns about its impact on small businesses, the Commission has forged ahead to the detriment of consumers".

The European Union is concerned that this sudden change of course, followed by the rapid action that is foreseen in the draft Report and Order may be harmful for consumers and competition, and that it will further aggravate the imbalance in BDS regulatory practice that already exists between the U.S. and EU and other nations. "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".

Other reports by VgToday

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