The FCC's vote Thursday to change the definition of broadband from 4 Mbps to 25 Mbps makes official another regulatory hurdle to Comcast's (NASDAQ: CMCSA) proposed merger with Time Warner Cable (NYSE: TWC).
With the change, an additional 13.1 percent of U.S. homes, many subscribing to copper-based telecom ISP services, do not qualify as having broadband. In fact, nearly 20 percent of American homes don't have the minimum 25 Mbps download speed threshold.
For Comcast, the trouble is in the math--since so much of its service footprint is DOCSIS 3.0-enabled and exceeds base-limit speeds of 25 Mbps downstream and 3 Mbps upstream, the change significantly increases the conglomerate's market share of U.S. homes that do fall under the definition of "broadband."
Under the old math, Comcast's share of the broadband market is 35.5 percent. But a combined Comcast-TWC operating under the new definition would serve 54.9 percent of wired broadband homes.
"This is obvious fodder for those who would argue Comcast's high end-user market share would afford them market power," media analyst Craig Moffett wrote in a recent investor note.
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