Properly Enforced Charter/Time Warner Cable Merger Conditions Should Reduce HarmsApril 25, 2016
Today, the Federal Communications Commission and the U.S. Department of Justice announced that they are in the final stages of their reviews of the proposed merger between Charter, Time Warner Cable, and Bright House Networks. The FCC’s review has focused on issues directly affecting consumers in the broadband marketplace, while the Department of Justice’s review has addressed ways that the new company would be able to leverage its position as a dominant distributor of video programming to affect the online video marketplace.
The following can be attributed to John Bergmayer, Senior Staff Attorney at Public Knowledge:
“According to Chairman Wheeler, the FCC is poised to approve the merger between Charter, Time Warner Cable, and Bright House Networks, with conditions. We're glad the Commission has listened to petitioners and improved on Charter's initial offering of conditions in a number of ways that could benefit broadband subscribers. Most significantly, the term of the conditions has been extended from three to seven years.
“Some of these conditions, such as a ban on data caps and usage-based pricing, and an agreement to engage in settlement-free peering, demonstrate that broadband companies do not need to impose excessive charges on either consumers or video distributors to be profitable. Other conditions, such as expanding low-income broadband access, are gains for the public interest and should be connected to the Lifeline program and extended over time.
“At the same time, Charter may look for new tools to effectuate the same anti-competitive results and the Commission must be vigilant to prevent such behavior. 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.
“Also, the Department of Justice has proposed a settlement with the companies that addresses possible anticompetitive effects the merger could pose for the development of video competition and consumers’ access to diverse programming. The DOJ has accurately diagnosed the problems this merger could create for video competition, creators, programmers and consumers. In particular, the enhanced leverage that Charter will now have will give it the ability to impose restrictions on programmers that could hold back video competition and the development of new, particularly online, business models.
“The DOJ has therefore adopted conditions designed to address these harms — such as restrictions on windowing, on some kinds of ‘most favored nation’ contractual terms, and certain restrictions on programmers' ability to distribute content online.
“The conditions the DOJ has proposed are aimed at addressing some of the concerns independent programmers in particular have raised about their dealings with large cable companies. Overall, the DOJ has sought to prohibit certain harmful behaviors while leaving other arrangements intact. It will now be the DOJ's responsibility to enforce the restrictions it has adopted to make sure they are effective and that any flexibility the DOJ has allowed Charter to retain cannot be abused. The DOJ has recently demonstrated its willingness and ability to protect consumers and promote competition in the communications and media marketplace, and it clearly has its work cut out for it.
“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.”
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