US FCC approves 30-pct limit on cable companies

(Adds background, quotes)

By Peter Kaplan

WASHINGTON, Dec 18 (Reuters) - The U.S. Federal Communications Commission voted on Tuesday to impose a limit on the size cable operators can reach on a nationwide basis.

The FCC voted, 3-2, to bar cable companies such as Comcast Corp (CMCSA.O), Charter Communications CHTR.O and Cablevision (CVC.N) from owning systems that have more than a 30-percent share of U.S. multichannel video subscribers.

The decision was supported by the two Democrats on the commission and by Republican Chairman Kevin Martin. The two other Republicans on the commission opposed it.

Consumer groups say a strict limit on cable television system ownership is needed to prevent them from dominating television programming and Internet services and from blocking video competitors.

Republican Commissioner Robert McDowell said the limit was unnecessary because cable operators face growing competition from telephone carriers such as Verizon Communications Inc (VZ.N) and AT&T (T.N). He predicted the new ownership cap would be overturned in federal court.

The business-friendly U.S. Chamber of Commerce also criticized the FCC action.

"Singling out the cable industry to limit its ability to achieve economies of scale only serves to skew the playing field, create regulatory uncertainty, hinder infrastructure investment, harm innovation, reduce consumer choice, and slow the deployment of new technologies," said William Kovacs, a chamber vice president.

The FCC action could affect merger deals among large cable operators like Comcast Corp (CMCSA.O), Charter Communications CHTR.O and Cablevision (CVC.N), according to analysis firm Stifel Nicolaus.

Six years ago, a federal appeals court threw out a similar FCC cable size rule on the grounds the agency did not have enough evidence to justify it.

(Reporting by Peter Kaplan; Editing by Tim Dobbyn)

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