Charter, Comcast, Cox have a lot at stake in FCC’s BDS review

Charter Communications, Comcast, Cox and other large cable MSOs that have ramped up their fiber and HFC investments in recent years are fearful that if FCC Chairman Tom Wheeler’s implements business data market (BDS) regulations on new competitors like cable it could cause more harm than good.

All of the major cable companies including Comcast, Time Warner Cable, Charter and Cox have invested heavily in their networks to become what the FCC says are “significant suppliers” of business data services.

Take Charter Communications: Just last week, the MSO took over third place in VSG's U.S. Ethernet rankings, edging out Verizon in terms of port share. The jump reflects the gains it made from its acquisitions of Time Warner Cable and Bright House Communications, which gave Charter a larger fiber and hybrid fiber-coax footprint to target small, medium and large businesses with Ethernet services.

Fellow cable operators Comcast and Cox, which also have large stakes in the business market, have cited concerns that any changes to BDS rate regulation could have a chilling effect on new investments.

Comcast said in a recent FCC filing that any proposed pricing rules could hinder future investments cable MSOs could make to support wholesale and business services. The cable MSO added that rate regulation on ILECs could have a broader effect for other services like fiber-based backhaul for upcoming 5G wireless deployments.  

Meanwhile, Cox petitioned the FCC to keep Ethernet over Hybrid Fiber Coax (EoHFC) out of the proposed BDS rules being considered by the FCC, arguing that the technology is best-effort and doesn’t meet the SLA requirements for wholesale-type broadband services required by many businesses.

The service provider told the FCC in a filing that EoHFC does not fall within the FCC’s defined product market for BDS regulation and should therefore be excluded. 

Jennifer Fritzsche, an analyst with Wells Fargo & Co., said the pending resolution of the FCC’s rework of the BDS market could have a large effect on cable operators. “It’s probably a bigger deal for cable,” Fritzsche said. “Even though AT&T has more exposure, cable is being very loud and speaking out against this because they’re not really regulated.”

The FCC proposed the rules on April 28, and received final comments from the public on Aug. 9. After completing its review, the next step would be for the regulator to cast a final vote, which could happen during the commission’s Sept. 29 or Oct. 27 meetings.

Cable’s concerns have also prompted USTelecom, an industry trade group representing the large ILECs, to chime in on the issue.

In a recent survey of business decision-makers, USTelecom found that 70 percent respondents said they were willing to consider cable, with only 12 percent saying they would not consider cable as a business service option.

For more:
- Bloomberg has this article
- USTelecom has this post

Related articles:
Comcast fears BDS regulations could hinder investments
Charter bumps out Verizon as third largest U.S. Ethernet provider
Cox Communications wants EoHFC kept out of BDS regulation