FCC, DOJ Proposing Conditions on Charter/TWC/BHN
The FCC is considering requiring New Charter to stick to its pledge not to charge for interconnection, along with other conditions from the commission and DOJ that would bolster online video. A draft order also would expand its high-speed broadband footprint by 2 million customer locations as a condition of Charter Communications being allowed to buy Time Warner Cable and Bright House Networks, the agency said Monday. In a statement, Chairman Tom Wheeler said an order is circulating on the eighth floor that contains some seven-year commitments by the cable company. That follows proposed Justice Department conditions that agency announced Monday as terms of a lawsuit it also filed Monday that would bar New Charter from any contractual alternative distribution method (ADM) limits on online video distributors.
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According to the FCC, under its conditions 1 million of those new broadband connections will overlap in markets served by other high-speed broadband providers, "bringing innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another." It also said it would bar New Charter from usage-based pricing or charging interconnection fees, including to online video providers, and from imposing data caps. The FCC said its conditions line up with the aim of promoting online video distribution content the same as the DOJ settlement. And the agency said it would require an independent monitor to ensure compliance; the agency took a similar step with AT&T/DirecTV (see 1507240055).
The DOJ said Charter also couldn't use other distributors' most-favored-nation provisions to put ADMs in place, under the proposed settlement of the suit filed in U.S. District Court for the District of Columbia. It also prohibits any New Charter retaliation against programmers for licensing to online video distributors, it said.
"We are pleased that Chairman Wheeler has submitted the proposed conditions for consideration by the full Commission and that the DOJ has submitted its agreement for approval by the court," Charter said in a statement. "The conditions that will be imposed ensure Charter's current consumer-friendly and pro-broadband businesses practices will be maintained by New Charter. We are confident New Charter will be a leading competitor in the broadband and video markets and are optimistic that we will soon receive final approval from federal regulators" and the California Public Utilities Commission. The CPUC could rule as soon as May 12 (see 1604130020).
FCC approval may not be unanimous. In a statement, Commissioner Mike O'Rielly said, "At first blush, it appears that the Commission may have operated well outside the four corners of the merger application to pursue unrelated matters and policies. I will carefully consider the item put before me and vote in a timely manner."
The Stop Mega Cable coalition, which has been a critic of Charter/TWC/BHN, wasn't mollified by the proposed conditions. In a statement, it said the FCC proposal "represent[s] an important first step towards protecting the interests of consumers and preserving competition in the cable and broadband marketplaces," but "it still falls short of addressing all of the threats to competition and consumers posed by this transaction. Among other things, the conditions proposed in the draft order do not fully prevent Charter from using its dominant position in the marketplace to thwart competition from over-the-top (OTT) streaming services and to stifle competitors in underserved, rural communities. For example, Charter should be required to offer a stand-alone broadband service that would enable consumers wishing to 'cut the cord' to have that option. As the merger review proceeds at the FCC, our members urge the Commission to consider the public interest above all, and to impose conditions that truly solve for the competitive harms presented by this merger."