Charter Spectrum Tells FCC Broadband Caps Are 'Popular' As It Tries To Kill Merger Conditions Preventing Them

Broadband

from the bad-things-are-good-for-you dept

To be very clear: American consumers don’t like broadband usage caps. At all. Most Americans realize (either intellectually or on instinct) that monthly broadband usage caps and overage fees are little more than monopolistic cash grabs. They’re confusing, frustrating price hikes on captive customers that accomplish absolutely none of their stated benefits. They don’t actually help manage congestion, and they aren’t about “fairness” — since if fairness were a goal you’d have a lot of grandmothers paying $5-$10 a month for broadband because they only check their email twice a day.

Enter U.S. cable giant Charter (Spectrum), which is currently in the middle of trying to get the FCC to kill the merger conditions applied as part of its 2015 $79 billion acquisition of Time Warner Cable and Bright House Networks. Those conditions, among other things, required that Charter adhere to net neutrality (despite the fact that the GOP has since killed net neutrality rules), and avoid usage caps and overage fees. Both conditions had 7 year sunset clauses built in, and Charter, eager to begin jacking up U.S. broadband consumer prices ever higher, has been lobbying to have them killed two years early.

Charter’s lobbying tactics so far have included giving money to groups like the Boys and Girls Club in exchange for gushing support for the elimination of the merger conditions, despite the fact that doing so would harm these groups’ constituents with higher prices.

Charter’s other major play apparently involves trying to tell the FCC that U.S. consumers really like monthly usage caps and annoying fees, restrictions the cable monopoly claims are “popular.” From a filing (pdf) spotted by Ars Technica:

“There is also evidence that some consumers?either those who do not consume a lot of data and/or those who are looking for a lower-cost plan?may want a service where prices are based on the amount of data used… These different plans are proliferating in the market because they offer consumers a cost-effective alternative to unlimited data plans that are more than adequate to meet their needs. The DC/UBP [data caps and usage-based pricing] Condition, however, prevents Charter from keeping pace with its competitors and offering consumers the kinds of plans they are looking for.”

This is a cute bit of logic U.S. broadband monopolies have long used that attempts to imply that caps and overage fees are about “fairness.” But they’ve never been about fairness. ISPs love to insist they just want to “experiment with price differentiation,” but you will never see a giant ISP offer a super cheap plan for people like your grandma that only check the Weather Channel website and their email a few times a day. And they don’t do that because the goal is to drive up the costs of everybody’s connection over the longer haul to please investors’ needs for higher quarterly returns.

And they can get away with this because in most U.S. markets, their only competition is a phone company that hasn’t upgraded its DSL lines since 2004 or so, or no competition at all. If the market actually saw competition and had functional regulatory oversight, you might see plans more closely tailored toward your actual usage. But in a market absent of real pricing competition and overseen by fecklessly captured regulators, what you get instead is endlessly higher prices, usually in the form of sneaky, misleading fees. Charter’s filing tries to tap dance around this problem as well:

“Opponents? claims that the BIAS market is not competitive are beside the point and overstated. The Conditions are unnecessary regardless of the level of BIAS competition because Charter, like other broadband providers, lacks the incentive or ability to discriminate against OVDs. OVDs are critical to the BIAS business and far too large and powerful to thwart with data caps or interconnection fees.

Only a cable monopoly with a 20 year track record of overcharging captive customers could try to argue that a lack of competition is “beside the point.” Incumbent telecom monopolies, eager to protect their dwindling TV revenues, have every incentive to use usage caps anti-competitively. And they already are. AT&T, for example, exempts its own streaming video service from its arbitrary usage caps, while financially penalizing users that use Netflix, Amazon, or any other competitor.

There is zero doubt that Charter wants to follow down this path as well. And it certainly will; it just wants to do so slowly to minimize backlash (picture the boiling frog fable with you as the frog). There’s also not much doubt that the captured, fact-phobic Trump FCC is eager to help them, proclaiming that letting a cable monopoly price gouge captive customers is about “restoring internet freedom,” or whatever half-baked justification is on the menu this week.

Filed Under: broadband caps, consumers, fcc, merger conditions
Companies: charter, charter spectrum