DoJ, Telecom Reach Settlement on Cable Competition

A telecommunications carrier cannot enforce agreements with two cable television carriers that prevent them from offering competing voice services in parts of Pennsylvania, according to a settlement with the U.S. Department of Justice.

Citizens Communications, which offers telecom services under the Frontier brand in 23 states, had inherited the agreement on voice competition restrictions when it acquired Commonwealth Telephone Enterprises in March for US$1.29 billion. In 2006, Commonwealth had obtained settlements restricting cable providers Blue Ridge Communications and Service Electric Cablevision from offering voice service in parts of rural Pennsylvania during a regulatory fight.

The petitions by Blue Ridge and Service Electric to offer voice service presented the first change for widespread competition in the areas of eastern Pennsylvania they cover, the DoJ said in a Monday announcement.

Blue Ridge, in 2006, and Service Electric, in 2005, requested authority for their telephone affiliates to provide local telecommunications services in Commonwealth's service area. Commonwealth filed protests with the Pennsylvania Public Utility Commission. The 2006 settlements between Commonwealth and the two cable providers restricted the geographic scope of their voice offering in exchange for Commonwealth agreeing to withdraw its protects.

The DoJ's antitrust division informed Commonwealth of its concerns over the effect on competition before the company was acquired by Citizens.

The agreement that removes the geographic restrictions is a "good result for rural telephone customers in Pennsylvania," Thomas Barnett, the assistant attorney general in charge of the DoJ's antitrust division, said in a statement. "Cable companies and other...competitors should be able to enter telecommunications service markets without facing unnecessary barriers."

Although such private agreements are related to state regulatory proceedings, they are not immune from federal antitrust laws, the DoJ said.

Citizens, based in Stamford, Conn., has made commitments not to oppose future applications by either cable company to provide voice telephone services using their own facilities. Citizens has also given all cable providers in Pennsylvania the rights to enforce a separate private settlement that it will not protest future applications to provide telephone services in its territory.

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