Charter gets tentative federal approval and conditions for Time Warner takeover

by Steve Blum • , , , ,

The Federal Communications Commission and the federal justice department gave their conditional blessing yesterday to Charter Communications’ proposed purchase of Time Warner and Bright House cable systems. Links to the documents that have been published so far are below. The justice department’s settlement was based on its belief that the merger would reduce competition in the video distribution market. The FCC’s conditions deal with both broadband and television service.

The known highlights are…

  • No consumer data caps or usage-based pricing allowed for seven years. The restriction applies to existing Charter systems as well as ones acquired from Time Warner and Bright House.
  • No interconnection fees for “companies that meet basic criteria”, again for seven years. Those criteria haven’t been disclosed yet, but the FCC did particularly say that “online video providers” are included.
  • During that time, Charter can’t use its new found market muscle to sign programming contracts that put online video providers at a disadvantage or retaliate against them.

According to the press release issued by FCC chair Tom Wheeler, other conditions will require Charter to extend broadband service to two million new locations, and “at least one million of those connections will be in competition with another high-speed broadband provider in the market served”. No details on what that means, but presumably the two million new locations include the 150,000 in California that Charter has promised to either upgrade from analog to digital or extend new lines, and maybe the additional locations called for in a draft decision by a California Public Utilities Commission administrative law judge.

There are a lot of ways to read the language about competition with another high speed provider, but my guess is it’s referring to places where there’s a certain level of service from the incumbent telephone company. Verizon FiOS systems, including ones in California just acquired by Frontier, come to mind, but it might also include AT&T systems in business districts and neighborhoods that are sufficiently affluent to be deemed high potential and receive advanced VDSL upgrades.

The justice department’s settlement with Charter is signed but there’s a legal process to go through before it’s final. The FCC’s draft approval order is circulating amongst commissioners, and their formal approval is necessary too. The deal also needs a sign off from the CPUC.

FCC chairman (and democrat) Tom Wheeler’s press release

Republican commissioner Michael O’Rielly’s press release

Federal justice department’s press release

Formal complaint filed by DOJ against Charter

Settlement agreed by DOJ and Charter, pending approval by judge

I’m assisting the City of Gonzales with its efforts at the CPUC and its negotiations with Charter. I am not a disinterested commentator. Take it for what it’s worth.