CPUC-Proposed New Charter Conditions Seen as Possible FCC Road Map

But the state Public Utilities Commission ALJ's proposed decision issued Tuesday is surely putting extra pressure on the FCC to issue its decision by or around May 12, when the CPUC potentially could rule, since the FCC won't want to be seen as the holdup, another media attorney with deal experience told us. And the proposed conditions could be a road map for what could come from the FCC, the attorney told us, because much of the ALJ proposal involves requiring conditions Charter had voluntarily made, and those same conditions also are likely in front of the FCC.

PUC commissioners likely will be lobbied both by Charter and allies and by critics of Charter/TWC/BHN, many of them seeking changes in the proposal -- though its history shows the PUC is likely to approve something that's roughly akin to what the ALJ put forth, one media lawyer told us. In a statement, Charter said, "We are pleased the regulatory process is moving forward and will continue our productive engagement at the California Public Utilities Commission as we work toward obtaining final approval in the weeks ahead and bringing the benefits of New Charter to more Californians."

Charter April 7 signed a memorandum of understanding (MOU) with the California Emerging Technology Fund (CETF) containing New Charter commitments to commence at closing and last for five years, according to the ALJ filing. They include offering of a low-income broadband service with minimum speeds of 30 Mbps down/4 Mbps up at $14.99 per month to all California households in its footprint containing either a child in the National School Lunch Program or a senior citizen receiving Supplemental Security Income, with the pricing to remain for a minimum of three years, and rise to no more than $17.99 per month for the remainder of the MOU. The agreement also has Charter expanding its broadband footprint to an additional 80,000 homes and businesses, deploying 25,000 more out-of-home wireless broadband hot spots within four years of the close, working with CETF to identify 75 anchor institutions to which it will provide free broadband and providing a total of $32.5 million to CETF. The ALJ proposal also said New Charter's goal is to sign up 350,000 new broadband customers over five years.

The ALJ's proposed order would require New Charter abide with the terms of its CETF and National Diversity Council (see 1601150017) MOUs, plus the terms of its agreements with Monterey County and the city of Gonzales on upgrading services there. The cable operator also would increase broadband speeds within a year in the all-digital network in its California footprint to 60 Mbps, with its entire California footprint being all digital -- with that minimum download speed -- within 30 months. The ALJ also proposed New Charter offer the option of subscribers' acquiring their own set-top boxes.

The proposal requires New Charter follow the terms of the FCC net neutrality order, and for at least three years not adopt fees for users using third-part Internet applications, not engage in zero rating or usage-based billing, not impose data caps and submit to CPUC any Internet interconnection disputes "not resolvable by good faith negotiations on a case-by-case basis." It requires the company follow its own settlement-free interconnection policy for at least three years, that New Charter's certificated carriers offer Lifeline phone service discounts to eligible households within six months, and provide each existing or new VoIP customer with information about the need for backup power.

The Stop Mega Cable coalition, a critic of the New Charter deals (see 1603280039, 1603110048 and 1602240030), said in a statement that the ALJ recommendation to approve Charter/TWC/BHN "with only weak conditions that fail to address the harms posed by this merger is disappointing, but not surprising. After all, this is the same judge who last year put his stamp of approval on Comcast’s attempt to acquire Time Warner Cable just weeks before that deal collapsed in the face of certain rejection by the FCC. Now, it is up to the California PUC to stand up for consumers and competition by insisting on conditions that actually solve ... the many harms this deal would inflict on California and consumers nationwide."

Any FCC approval should come with conditions that address what Stop Mega Cable sees as its numerous harms, including coordinating behavior with Comcast, usage-based pricing that could stifle over-the-top competition, and requiring interconnection fees from those OTT competitors, Stop Mega Cable said in an ex parte filing Tuesday in docket 15-149 on meetings with FCC General Counsel Jonathan Sallet and Owen Kendler, who's overseeing the Charter review team, and separately with FCC representatives including Chairman Tom Wheeler aides Gigi Sohn and Philip Verveer. Stop Mega Cable also said conditions should be set for at minimum 10 years, with New Charter having to justify any sunset, and that a compliance monitor should be appointed. Participating in some or all of the anti-deal meetings were representatives from beIN Sports, Common Cause, Consumers Union, Dish Network, the Future of Music Coalition, New America, NTCA, Public Knowledge and Writers Guild of America, West and Zoom Telephonics.