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Regulators Approve Charter/Time Warner Cable Union

25 Apr, 2016 By: Erik Gruenwedel

Deal includes safeguards dissuading anti-video streaming practices

Federal regulators April 25 formally approved Charter Communications’ $88 billion acquisition of Time Warner Cable. The union creates the third-largest cable operator after Comcast and AT&T/DirecTV with 17.3 million subscribers. The new Charter also boasts the second-largest broadband penetration with 19.4 million households.

Key to approval from the Department of Justice and Federal Communications Commission were safeguards put in place to guarantee Charter follows recently established net neutrality guidelines, including not imposing data restrictions on subs for seven years, and avoiding engaging in anti-competitive practices (exorbitant interconnection fees) in an attempt to thwart third-party streaming services such as Netflix, Hulu and Amazon Prime Video, among others.

“Based on imposed conditions that will ensure a competitive video marketplace and increase broadband deployment, an order recommending that the Charter/Time Warner Cable/Bright House Networks transaction be approved has circulated to the commissioners,” FCC chairman Tom Wheeler said in a statement. “The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet.”

The approval comes despite some industry pushback — spearheaded by Dish Network, which contends the combined cablers could conspire to undermine its Sling TV over-the-top video service. Dish had cited the FCC’s repeal of Comcast’s previous attempt to acquire TWC as grounds for dismissal.

The FCC didn’t see it that way. Neither did Netflix, which had lobbied against the Comcast/TWC deal, but supported Charter/TWC — the latter due to the company’s stated to desire to be pro-OTT.

A coalition of parties opposed to the deal — Stop Mega Cable Coalition — said the FCC decision addressed many, but not all, issues related to safeguarding consumers. For example, the coalition said Charter should be required to offer a stand-alone broadband video streaming service that would enable consumers wishing to 'cut the cord' to have that option.

"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," said the coalition.

Interestingly, Charter last year did launch a broadband-only $13 streaming service called Spectrum TV Plus offering all the major networks and the choice of either HBO Now or Showtime OTT. For an additional $7, the service offers almost the identical pay-TV lineup as Sling TV.  

In a statement, Charter said it was pleased by the decision, and pledged to operate a “consumer-friendly” and “pro-broadband” business.

“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 [Public Utilities Commission],” Charter said.

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