Reactions to FCC Chair and DoJ’s Approval of Charter/Time Warner Cable Deal

Following the Department of Justice’s announcement Monday that it is allowing Charter’s acquisition of Time Warner Cable/Bright House to proceed with conditions, FCC Chairman Tom Wheeler circulated his approval to the other commissioners. It is expected to get enough votes at the FCC, but the merger does still need approval from California regulators in May.

The DoJ paid careful attention to call out the condition that “New Charter” would not be allowed to impose restrictions that impede online video distributor access to video content.

“In conjunction with the Department of Justice, specific FCC conditions will focus on removing unfair barriers to video competition,” Wheeler says in his statement. “First, New Charter will not be permitted to charge usage-based prices or impose data caps. Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers. Additionally, the Department of Justice’s settlement with Charter both outlaws video programming terms that could harm OVDs and protects OVDs from retaliation.”

The FCC chairman also says that conditions would allow for an additional two million customer locations to have access to a high-speed connection. “At least one million of those connections will be in competition with another high-speed broadband provider in the market served, bringing innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another,” Wheeler notes.

FCC Commissioner Michael O’Rielly also put out a statement about the chairman’s recommendations. “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,” O’Rielly says. “I will carefully consider the item put before me and vote in a timely manner.”

For its part, Charter reports it is pleased with the news from the DoJ and the FCC chair. “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 as well as the California PUC,” the operator says in a statement.

Others were not so pleased, including groups like Free Press that say that the merger wouldn’t help make the market for cable TV and Internet services more affordable and competitive. It also charges that customers of the merged company would have to deal with higher prices as Charter looks to pay off the costs surrounding financing the deal.

“Their crushing monopoly power will mean fewer choices, higher prices, no accountability and no competition,” Free Press President and CEO Craig Aaron says. “Conditions won’t lower the monthly bills for those who’ll be hit hardest by these rate hikes: low-income households and communities of color.”

Public Knowledge is calling for the conditions surrounding the deal to be strictly enforced, and for the FCC to keep careful watch on New Charter’s moves in the future.

“It is hard to cheer for further media and broadband consolidation, regardless of what conditions the FCC or DoJ might adopt. However, there is some solace that, if rigorously enforced, these conditions should eliminate the more egregious harms this merger could cause while creating a baseline for acceptable industry behavior,” John Bergmayer, senior staff attorney at Public Knowledge, states.

Bergmayer also claims that “Charter may look for new tools” that might result in an anti-competitive environment, and the FCC must be vigilant to prevent that. “The merger will not be approved, of course, without a vote of the full Commission. There is still time to fine-tune the proposed conditions to protect consumers even better,” he concludes.