Local Governments Can Protect Themselves and the Public By Filing Comments

Charter Communications, Inc., Time Warner Cable Inc. and Advance/Newhouse Partnership recently filed a public interest statement with the FCC seeking approval of the proposed merger announced in May between Charter, TWC and the associated acquisition of Bright House Networks by Charter. The merger will combine Charter, TWC and BHN into a single company, to be called New Charter, that will serve approximately 24 million customers across 41 states and make it the nation’s second-largest broadband provider after Comcast.

The FCC must determine whether the merger serves the public interest, convenience and necessity by weighing the potential public interest harms and benefits and whether the merger violates or interferes with the Communication Act’s objectives. According to the public interest statement, the merger will create no risk of public interest harms, and will instead result in a range of public interest benefits, such as faster Internet at a better value, continued commitment to an open Internet and a faster rollout of advanced video technology.

To ensure these benefits are realized, New Charter says it will:

• increase competition, within four years of closing, by investing at least $2.5 billion to build-out networks in commercial areas within its footprint beyond where it currently operates, building out a million line extensions of its networks to homes in its franchise areas, and deploying more than 300,000 out-of-home WiFi access points;
• not block or throttle Internet traffic or engage in paid prioritization for three years;
• not impose data caps, engage in zero-rating or charge additional fees for use-specific third-party Internet applications for three years;
• engage in reasonable and non-discriminatory interconnection and submit any interconnection disputes to the FCC for resolution on a case-by-case basis for three years;
• transition all TWC and BHN cable systems to all-digital networks within 30 months of closing, allowing substantially all customers to take advantage of at least 60 Mbps download speeds;
• market services consistent with Charter’s current packaging and pricing strategies to consumers in TWC and BHN areas where cable systems are all digital;
• create thousands of U.S.-based jobs for customer service call centers and field technician operations and return TWC call center jobs to the U.S.;
• embrace TWC’s commitment to diversity and inclusion in governance, employment services, procurement and community partnerships; and
• build upon BHN’s broadband program for low-income consumers by making broadband offering available with higher speeds and expanding eligibility at a significant discount across its footprint within three years of closing.

Charter, TWC and Advance/Newhouse Partnership also made similar commitments in the applications they recently filed with the New York Public Service Commission and California Public Utilities Commission for approval of the transfer of control of subsidiaries and franchises located in the respective states.

Whether these promises are made in a way that is enforceable, and whether they are sufficient or meaningful is, of course, another question.

As explained in a previous legal alert, the FCC and state agency reviews of the merger provide an opportunity for local governments to voice their concerns about the merger’s effects on localities and seek conditions that could protect local communities should the FCC and state agencies decide to approve the merger and transfer of control. It is fair to raise questions about the sufficiency and enforceability of the promises — i.e.: Is a 60 Mbps maximum download speed really adequate? Does it provide upstream capacity to allow residences and businesses to participate in the Internet economy? Given the price paid, will the combined company have the money to upgrade networks to provide more advanced services at reasonable rates?. Some of these concerns may include the following:

• The merger will have an impact on competition in the provision of cable services. For example, Charter, TWC and BHN have systems that abut one another, which means eliminating and combining the systems would remove one of the most readily available competitive entrants — the neighboring cable provider.
• The applicants do not make any commitments with respect to protecting and promoting public, education and government access programming. This is of particular concern, as Charter has shown an unwillingness in some communities to provide connections required to distribute PEG programming, unless those connections are paid for by the community.
• The commitments to providing a meaningful lifeline tier of service are minimal.
• The applicants’ commitments to Open Internet and Net Neutrality principles have a three-year expiration date. Upon expiration, New Charter could block or throttle Internet traffic, allow paid prioritization or impose data caps and engage in zero-rating, which would allow favored providers to have their content delivered without counting against the data cap. This could negatively affect small businesses that depend on robust Internet access to buy and sell goods and services, and also impact local governments that are increasingly relying on electronic communications to provide services, distribute information and streamline development.
• With TWC and Charter ranking near the bottom of customer satisfaction surveys, local governments may want to request that the FCC and state agencies condition approval of the merger on the applicants’ commitment to specific enhancements to customer service that include comprehensive reporting metrics about New Charter’s customer service practices and performance record.

With the review process now underway in the FCC, NYPSC and CPUC, local governments may want to begin discussing the importance of these issues with elected officials in Washington, D.C. and at state legislatures. And, they should prepare to participate in FCC and state agency proceedings to ensure that, if the merger is approved, it protects vital community interests.