Proposed Conditions Abound From Opponents, Skeptics of Charter/TWC/BHN

Much of the pushback against Charter/TWC/BHN takes the form of proposed conditions that would make the deal more palatable, a cable attorney said. Another said the abandoned Comcast acquisition of TWC likewise saw plenty of conditional opposition but it has been a bit surprising how much opposition to has come up now.

Fighting the $89.1 billion deals are the Alliance for Communications Democracy, the Alliance for Community Media, the American Cable Association, Comptel, Dish Network, Free Press and the Writers Guild of America, West. Many of them raised worries about too much concentration in the broadband market. "The proposed transaction would be no better for the public interest than the one proposed between Comcast and TWC [and] Charter and TWC’s application leads to the same conclusion: the merger would permit and motivate the combined company to hurt or destroy online video rivals ... through its control over the broadband pipe," Dish said in a filing in docket 15-149 posted Wednesday.

The review saw some additional supporters chime in, with backers including New York Law School's Advanced Communications Law & Policy Institute (ACLPI) and the Information Technology and Innovation Foundation (ITIF). And a number of groups said this week they were neutral on the deals while nonetheless are urging the FCC to scrutinize particular aspects.

Given that small and mid-sized multichannel video programming distributors (MVPDs) are so reliant on programming from Discovery networks, affiliated with Charter and BHN, and from Starz, affiliated with Charter, New Charter could tip the competitive scales to their disadvantage, ACA said, and the FCC should put in place a variety of conditions. They include returning "to its pre-Comcast-NBCU approach of imposing a non-discriminatory access condition and a commercial arbitration condition for New Charter-affiliated programming," ACA said in a filing. The group also said the FCC should beef up means of enforcing nondiscrimination access and change its commercial arbitration rules "to make sure this mechanism is a realistic option for small and medium-sized operators."

Affiliated programming issues came up repeatedly. Neither signing on to nor opposing the takeover, AT&T and Free State Foundation suggested how the FCC should look at the deal. AT&T said affiliated programming should be a big focus because John Malone is chairman of Liberty Broadband, which would be the largest shareholder of New Charter, and Malone "has significant interests in Discovery Communications' family of channels," while TWC and Comcast have stakes in SportsNet New York and iN Demand is a VOD service of BHN, Comcast, Cox and TWC. Also in its filing, AT&T said regulators should watch certain cable-only consortia that have the ability to stifle competition, pointing to cable companies' Wi-Fi consortium, and to CableLabs and its ability to promote features and intellectual property that favor cable and its technology. The FCC should ensure rules governing ethernet will be applicable to all providers, the telco said.

While not opposing the deal, the New America Foundation's Open Technology Institute (OTI) said the FCC should look at whether it "would actually foster an oligopoly in the pay TV and broadband markets." OTI suggested some conditions, including stronger open Internet commitments, such as durations longer than Charter's voluntary three years. A ban on New Charter exclusive arrangements that keep interconnecting parties from routing traffic through alternate routes instead of just via New Charter was sought in OTI's filing. It also called for New Charter's interconnection agreements to be made public.

That New Charter never gives even lip service to public, educational and governmental (PEG) access or to localism is a reason for denying the transaction, PEG organizations Alliance for Community Media and Alliance for Communications Democracy said in a joint filing. Charter "has an unfortunately long record of poor treatment of PEG access," and New Charter would mean a bigger threat to PEG access, the two said, adding that if the FCC doesn't deny the deals, it should impose "significant, enforceable PEG-related conditions on any consent it gives." Those conditions should include PEG channels being made easily accessible and available without discrimination on all New Charter video platforms in the same format as local broadcast channels are carried, being carried in proximity to local commercial channels with similar programming and not "channel Siberia," being given "the same functions, functionality and signal quality" as local broadcasters' main channels, and being afforded the ability for delivery on HD tiers or platforms, the two said.

Pointing to what it called New Charter's "incentive and ability" to use interconnection to slow down online video distributor competition, Comptel said that while it opposes the deals, any regulatory approval should be predicated on a seven-year settlement-free interconnection policy instead of the current three years Charter is pledging. "It is important that the Commission allow sufficient time for OVD competition to further develop," Comptel said in a filing. Comptel also urged some changes to Charter's interconnection policy.

While no conduct conditions "would be sufficient to mitigate, let alone cure" the sizable anticompetitive effects of Charter/TWC/BHN, the public would at least see some protection if the FCC imposed a series of conditions, Dish said. They include imposing Charter's voluntary conditions for seven years and requiring New Charter to unbundle its broadband offerings from its video business for the next seven years. Dish also called on the FCC to force New Charter to split its broadband and MVPD services. Dish said New Charter's pledge to abide by open Internet principles like no paid prioritization and no data caps should be extended to seven years.

The deal faces some total opposition. New Charter would mean it and Comcast combined would have close to two-thirds of the nation's broadband market, while it takes on $66 billion in new debt, Free Press said. Charter has not shown "any merger-specific benefits," Free Press said. "They only offer a few tissue paper-thin, ephemeral conditions, many of which amount to nothing more than promises to follow the law, in a doomed effort to ameliorate the transaction’s merger-specific harms." The Writers Guild said New Charter will pose a risk to online video distributors (OVDs) because of the incentive MVPDs have to stifle any potential threat to their pay-TV revenue. Even though there's not much overlap in local customers in the transaction, the Writers Guild said in a filing that the deals would hurt competition since most TV networks and OVDs seek national distribution.

Charter in a statement Wednesday said its BHN/TWC deals are "receiving broad support." It pointed to such backers as Netflix; civil rights groups like the Hispanic Leadership Alliance; independent programmers TV One, Bounce TV Fuse (formerly Nuvo) and One World Sports; as well as dozens of local businesses and community organizations. "We recognize that there are also parties who challenge the benefits of the proposed transactions," Charter said. "We are listening to them and have addressed many of the issues they have raised with commitments such as those about expanding access to fast broadband, preserving an Open Internet and investing in interconnection, and enhancing customer service by adding more highly trained employees for our call centers and field technician operations. We look forward to continued engagement with regulators, interested parties and members of the communities we serve about the significant public interest benefits of the transactions.”