A Bad Bit of Timing For RCN — Public Comment Opens On Merger Day After Blocking Goes Public.

Welcome back everyone to the new and improved Wetmachine.com! I beg everyone’s indulgence while I figure out our new interface.

Every now and then, the universe hands you some lousy timing. Case in point for RCN. Back in March, when RCN announced its pending acquisition by Yankee Group, no one gave it a second thought. It all looked very uncontroversial and part of the natural consolidation for the few survivors of the debacle we call “intermodal competition.” But in what RCN can only view as the worst possible timing, the FCC put the deal out for public comment right after several stories that RCN had settled a class action for blocking p2p applications in a manner reminiscent of Comcast. (RCN “vigorously denies all wrongdoing,” but it is unclear whether they deny blocking or whether they deny they did anything wrong by blocking.)

Why does this matter? Because RCN has just become the prime opportunity for the FCC to answer the question “What’s our authority after the Comcast/BitTorrent case?

If you are a small company with a relatively uncontroversial transaction pending at the Bureau level, the last thing you want is some obnoxious public interest guy (*ahem*) pointing out to the world that this transaction gives the public another opportunity to (a) not only find out what actually happened in the case you settled, but (b) become the test case for any agency that has a desperate need to find out the limits of its ability to “protect the open internet.” Because, with the RCN blocking settlement hanging out there, all anyone has to do is click here and enter Docket No. 10-97, fill out the web form, and write something like “Dear FCC, before you approve this merger, please make RCN file in detail exactly what they did about blocking p2p, or any other application or content for that matter, and make them accept as a merger condition that they will not block or degrade any other effort by a subscriber to run any lawful application or legally access any content — subject to reasonable network management.”

Now you may ask, does the FCC have the authority to do that? Good question! I know I, for one, am very curious about this very issue. Certainly the FCC has the authority to ask RCN to make full disclosure. The unanswered question is whether the FCC needs to go through the same Title I exercise under its merger authority, or whether its authority under Section 214 and Section 310(d) give it authority to impose NN conditions (as we argued about incessantly back during the AT&T/BellSouth Merger). OTOH, it’s absolutely certain that the FCC has the authority to ask for details about what went on here, not merely under its merger authority, but under Section 218.

To be clear, I have no objection to the underlying transaction.  But I do think before the FCC can genuinely determine whether this transaction serves “the public interest, convenience and necessity” (in the words of Section 310(d)) or even the “public convenience and necessity” (in the words of Section 214), the FCC needs to know what actually happened here, and whether the new owners plan to continue it — whatever it is.

Stay tuned . . . .

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