According to a piece over on Vision2Mobile, the FCC will soon grant cable MSOs relief from regulations that limit their ability to buy CLEC assets. A petition by the NCTA is pending, and the FCC has until next Wednesday - with at least one analyst expecting forbearance to be granted. So if this happens, then might we see a wave of cable/CLEC mergers?
The cable MSOs have become increasingly interested in business revenues, making inroads with metro Ethernet in many markets and taking SME share from some competitive operators. That certainly suggests they might be interested in the scale, expertise and fiber assets to go after larger prey. V2M specifically mentioned tw telecom as a target, which by proxy might extend to other metro fiber operators from small to large.
With all the M&A activity in the metro fiber space over the past few years, the one thing we haven't seen much of is activity by cable operators. True, there was Comcast's purchases of Cimco and NGT. And Cablevision's Optimum Lightpath division did snap up 4Connections in New Jersey. But these were small potatoes in comparison to what they might have done and are now well in the past. With bandwidth at the edge growing faster than anywhere in the network, one would think the cable MSOs would have been more active even with FCC rules as they currently stand.
There are a few obstacles though even if the FCC grants forbearance on this particular item. The first is overlapping coverage areas, as cable MSOs tend to have territory maps that bear little if any resemblence to fiber maps and can be hard to match up for the purposes of synergy. The second is valuations, which have remained high enough to cause a lull in the M&A activity for anyone not named Zayo. And third is the lack of urgency - the cable MSOs have been doing quite well with their current infrastructure and have plenty of room to grow organically.
For those reasons, I still doubt we're going to see an explosion of cable MSOs buying national metro fiber footprints. However, if the FCC follows through with the relaxed rules I do think that single market or regionally focused assets might match up with more specific cable MSO plans.
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