NCTA: MSOs Might Exit if Telcos Come

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A

cable
company
facing
unfair
competition
from
a
telephone
company
might
need
to
abandon

l

ocal
market

s skewed economically by

lopsided

regulations

,
according
to

t

he
National

C

able

& Telecommunications

Association

.

Allowing
phone
companies

to cream-skim

cable
markets
instead
of
providing
service
to
every
household

could

put
some
cable
systems
at
a
large
economic
disadvantage

, the N

CTA

said

in
a
Federal
Communications
Commission
filing
Monday

.

Poorly
crafted
video
-entry
rules
for
phone
companies
could
force
a
cable
company
to
make
some
tough
choices

, the trade group

added
.

“It may

even
be
the
case
that
,
given
it

s sunk costs

and
the
regulatory
disparity
,
a
cable
operator
would
be
so
disadvantaged
that

it

eventually
was
forced
to
exit
the
entire
franchise
area
-
-
again
,
for
reasons
that
had
nothing
to
do
with
marketplace
inefficiency
or
competitive

inferiority,” the NCTA said.

Over
cable

’s

strong
objections
,
SBC
Communications

Inc. and Verizon Communications Inc.

want
to
provide

video products free of any

local
build

out requirements, arguing that construction mandates just slow competitive entry.

In
the
FCC
filing

, the NCTA said that an economic consultant it hired concluded in a study that cable

compan

ies

that

have been

required
to

offer service to every

household
in
a
community

for social-policy reasons might

not

have

a
cost
structure

capable of

withstand

ing

competition
from

a deep-

pocket

ed rival employing a

strategy
that
ignores
low-income
consumers

.

“Cable

operators
could
not
continue
to
compete
effectively
in
the
areas
served
by

telcos while

still
sustaining

the

high

er

costs
of
serving

the

areas
that
the

telco

chose
not
to
enter

. As [our consultan

t] shows,
a
cable

operator

will
not

be able

to
upgrade
service
in
those
areas
or

might not be able to

continue
serving
them

at

all

,” the NCTA said.

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