The FCC imposed a cable company cap on the amount of market share any one cable company can obtain. The cap prevents any MSO from serving more than 30 percent of subscription multi-channel video customers nationwide. As of today, the cap really only impacts Comcast as a stand alone company, with their existing subscriber base of 24 million. Although FCC chairman Kevin Martin also made a point of emphasizing these rules apply to a consortium of companies as well. The main rub from the cable industry is that their key competitors, namely big telcos, seem to have unfettered access to huge merger approvals from the FCC, while this new cap prevents them from doing the same in their industry. Companies like Comcast would like to reserve the option of growth through acquisition to more effectively compete with the AT&T and Verizon’s of the world.
In some regard, I can understand this argument. But this cap, should it hold up to court challenges, may be a blessing in disguise to the cable industry. It may force them to diversify their acquisition strategies and focus on acquisition targets other than just more MSOs. For example, wouldn’t it be a smarter move for Comcast to focus their next major acquisition on a wireless company, and not another cable company? Seems to me, they need diversification of talent and expertise in all areas of telecom in order to compete with telecom behemoths. I’m not sure buying another cable company will accomplish that. Would it be a smarter long term move for Comcast to buy Sprint, than say Cox? Maybe Cox would have an interest in buying XO Communications – after all they’ve been recently toting their success in growing their enterprise telecom business. I may be over simplifying a lot of complex issues here, and for all I know, there may be some obscure regulatory rule that prevents these type of mergers as well. But my fundamental point is the real growth opportunity for cable lies in acquiring more telecom market share, not more cable TV share. This new FCC cap may just help create such a scenario.