Charter's Trying To Kill Recent Merger Conditions Banning Usage Caps, Net Neutrality Violations

from the pay-more-money-for-the-same-product dept

For decades now the FCC has been an expert at imposing utterly meaningless merger conditions. Usually these conditions are proposed by the companies’ themselves, knowing full well these “demands” are utterly hollow — and FCC punishment for ignoring them will be virtually non-existent. The end result has been a rotating tap dance of merger conditions that sound good upon superficial press inspection, but wind up being little more than hot air. It’s a symbiotic relationship where as the telecom sector consolidates (often at the cost of less competition) the FCC gets to pretend it’s not selling consumer welfare down river.

But last year something weird happened.

When Charter proposed its $79 billion acquisition of Time Warner Cable and Bright House Networks, former FCC boss Tom Wheeler brought in net neutrality advocate Marvin Ammori to help hammer out conditions that wound up actually being meaningful. Under the deal, Charter was banned from imposing usage caps, engaging in interconnection shenanigans with content providers like Netflix, or violating net neutrality (even if the rules themselves were killed) for a period of seven years. Charter was also required to expand broadband to 2 million additional locations.

Not too surprisingly, broadband providers and the new incumbent-cozy FCC are getting right to work trying to eliminate those conditions entirely. New FCC boss Ajit Pai is circulating an order that would kill requirements that Charter overbuild into competing ISP territories, something demanded recently in a letter to the FCC by the American Cable Association. As is kind of telecom sector status quo, smaller cable companies say they’ll take their investment ball and go home if the threat of additional, regulator-mandated competition isn’t eliminated:

“To respond to growing consumer demand for increased bandwidth, all of us have been planning to upgrade the electronics on our networks and to deploy more fiber closer to customer locations over the next five years (the lifespan of the overbuild condition). Many of us have been planning to extend our networks to serve communities adjacent to our current service territories. But we have been forced to reconsider, scale back, or halt these investments in the wake of the Commission?s order.”

Of course that’s not how competition works, and companies believing they get to choose when you upgrade their networks speaks to the level of competition these companies already see. Elsewhere, broadband industry-funded think tanks like the Competitive Enterprise Institute (CEI) are also pushing Pai to kill off the usage cap ban, trotting out the long-standing industry claim that usage caps are all about fairness:

“…the Order requires New Charter to refrain from imposing ?data caps? or setting “usage-based prices” for its residential broadband Internet access services for seven years after the transaction closes. Given that ?the record makes clear that online video places enormous demands upon the networks of Charter and Time Warner Cable and increases their capital costs,? Commissioner Pai asked a simple question in his dissent: ?Who should bear those costs?” Because the Order concludes that ?all customers must do so equally,? New Charter?s natural response to this condition ?will be to increase prices on all consumers in order to amortize the cost of serving a bandwidth-hungry few.”

Granted if you’ve been paying attention to the usage cap debate, you realize this is a stale canard. Industry executives have acknowledged that caps have nothing to do with network management, and aren’t an effective way to police network congestion anyway. As any earnings report highlights, caps aren’t a financial necessity either, since flat-rate broadband has been incredibly profitable for the industry for years.

What usage caps are is a price hike imposed on uncompetitive markets. Granted they also help ISPs protect their TV revenues from the rise of internet video by penalizing competing streaming services, while letting the incumbent’s own services sail through without penalty (aka zero rating). Anybody believing that imposing caps and overage fees on all users is really about making sure a few people “pay their fair share” should steer clear of swampland and bridge salesmen.

Granted Charter’s latest merger has still proven harmful for consumers, who say the company has frozen broadband upgrades and raised rates dramatically in the wake of the megamerger. If consumer welfare were truly a U.S. telecom regulatory criteria the deal likely would have never been approved at all, but the cap condition specifically at least kept things from being arguably worse in the face of limited competition. If the FCC’s looking to give a middle finger to the millions of customers impacted by this deal, killing the conditions — and requiring these users pay even more money for the same service — is a fantastic way to do so.

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Companies: charter, time warner cable

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Comments on “Charter's Trying To Kill Recent Merger Conditions Banning Usage Caps, Net Neutrality Violations”

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Anonymous Coward says:

If you want to help protect NN and privacy rules you should support groups like ACLU and the Electronic Frontier Foundation and Free Press who are fighting to keep Net Neutrality and privacy rules.

also you can set them as your charity on

also write to your House Representative and senators

and the FCC

Anonymous Coward says:

Re: Re:

Normally I’d jump at the chance to support these groups but they don’t have a chance to protect ANYTHING right now because:

A. We have an FCC all too willing to do the bidding of the telecom industry.

B. A Republican president, senate, and house all too willing to oblige the telecom industry.

Truth hurts.

Wendy Cockcroft (user link) says:

Re: Re: Re:

That doesn’t mean you shouldn’t try. It’s precisely this kind of face-down defeatism that allows this kind of crap to go on — and brings the Every Nation guy out in goosebumps.

This is a chance to make a difference. Don’t let is slip away because you couldn’t be bothered due to the proliferation of cheeto-faced gibbons (one is more than enough) and their rabid supporters (why??!).

Anonymous Coward says:

As any earnings report highlights, caps aren’t a financial necessity either, since flat-rate broadband has been incredibly profitable for the industry for years.

How does the financial picture stack up when cable subscriptions are also taken into account? Data caps have little to do with broadband profitability, but rather more to do with cable T.V. profitability.

Anonymous Coward says:

Perhaps Pai should enforce actual usage limits, so if your paying for 150Mbps downloads, then it should be available at all times with an SLA. I’m sure that would work wonders on edge providers suddenly removing caps. I doubt it will happen, but the fairness has to work both ways. Currently we have a system with every provider, even myself selling more bandwidth than is available due to the laws of averages. Adding caps is basically just a money grab and every network engineer knows it. Sure when a legit provider sees averages hitting 50%, your looking to upgrade, but I often wonder about edge providers and their theories, especially in territories that have no competition.

Jason says:


On the drive home last night I heard a Charter commercial on the radio, in which they were touting “no usage caps!” as—one would assume?—one of the benefits of signing up with them.

Then again, I’m one of the lucky ones who lives in an area where there are at least a couple of alternatives… assuming you’d want to put up with AT&T or Comcast I guess.

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