Charter says new Ethernet regulations would hinder SMB Ethernet competition

charter spectrum (charter)

Charter has joined the chorus of service providers that say the FCC should refrain from regulating Ethernet pricing as it would drive cable MSOs to rethink offering lower speed offerings, hampering competitive choices for cash-strapped small businesses.

In an FCC filing (PDF) that emerged before the FCC gets ready to rule on its business data services (BDS) proposal during the regulator’s monthly meeting tomorrow, the cable MSO said that regulating Ethernet pricing could hinder future network investments.

“Regulating Ethernet on this record would not only be arbitrary and capricious and counter to Commission precedent but also could fundamentally harm and alter this dynamic and evolving market,” Charter said in the FCC filing. “The Ethernet market is healthy and vibrant, with tremendous investment and falling prices.”

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Charter has been aggressively expanding its BDS capabilities since the beginning of 2013, extending its fiber to buildings and cell sites. In tandem with building out its network into more places, Charter said that Ethernet pricing has continued to drop.

Specifically, the cable MSO revealed that legacy Time Warner Cable's average regional per-month price for 10-Mbps Ethernet service has dropped by about 23 percent from 2013 to the first quarter of 2016. Similarly, the monthly price for legacy Time Warner Cable's 5-Mbps Ethernet service dropped by about 29 percent during the same period.

The cable MSO said that its investments and pricing illustrate “emerging competition” in the Ethernet market at speeds "above and below 50 Mbps."

Charter said “if the Commission were to rate regulate below 50 Mbps, Charter would likely reassess providing services at those speeds, which could eliminate a competitive option for small businesses.”

Charter continues to see positive gains in its commercial segment. During the third quarter, the cable MSO reported that commercial, SMB and enterprise revenue combined grew by 12.1 percent year over year to $1.38 billion.

Tom Rutledge, CEO of Charter, said during the third-quarter earnings call that commercial growth was “a bit slower than last quarter, driven by lower cell tower growth and one-time benefit at NaviSite last year.”

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