No surprises as CPUC begins review of Charter-Time Warner-Bright House deal

by Steve Blum • , , ,

Charter Communications is asking the California Public Utilities Commission for permission to buy cable systems belonging to Time Warner and Bright House Networks. Yesterday saw the opening round of wrangling over the transaction, with a CPUC administrative law judge hearing from lawyers representing the companies involved on the one side, and representatives from the CPUC’s office of ratepayer advocates, consumer lobbying groups and a couple of cities on the other (full disclosure: one of those representatives was me).

Charter claims that the merger will bring great benefits to everyone in its prospective new service area, particularly because of the wonderfulness of its broadband service. Except that not everyone in its service area – old or new – can get broadband access from Charter. The company has redlined tens of thousands of low income people in California, leaving them with just low quality, analog television service. That includes the City of Gonzales in the Salinas Valley, which asked for and received permission to become a party to the proceeding.

According to its formal motion…

The City of Gonzales intends to request the California Public Utilities Commission condition the pending action to insure the intent of DIVCA is met, correct the record regarding the extent of Charter’s broadband Internet access service footprint and condition the pending action on a binding requirement that Charter immediately upgrade all of its analog and otherwise substandard systems to be capable of providing broadband Internet access service at the same level of service it misleadingly claims to offer to “virtually all of its current customers in California.”

Charter’s attorney pushed the judge for quick approval, saying that there really isn’t much for the State of California to worry about since the major issues will be thrashed out at the Federal Communications Commission. Not surprisingly, there was fast and emphatic disagreement from people on the other side, who offered essentially the same arguments made in opposition to Comcast’s failed mega-merger earlier this year: the deal is potentially anticompetitive, it could have negative consequences for consumers and, critically, that state and federal law allow, if not require, the CPUC to consider a wide range of factors in its eventual decision, including the impact on broadband service in California.

No decision was made, nor was one expected. The judge did order Charter to pay for an evaluation of the deal’s effect on broadband competition in California. The next step will be to set a timeline for the process, which is expected to last well into next year.

I’m assisting the City of Gonzales with its effort to upgrade broadband service for all its residents. I am not a disinterested commentator, and I’m also guilty of quoting some of my own work above. Take it for what it’s worth.