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FCC Eases Charter Condition Imposed in Merger With Time Warner Cable

Variety logo Variety 4/3/2017 Ted Johnson
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The FCC has removed a condition imposed on Charter’s acquisition of Time Warner Cable last year that required that the company extend internet service to 1 million homes in areas that already had a competing high-speed broadband service.

The modification was passed unanimously by all three FCC commissioners.

Charter, in acquiring TW Cable, obtained FCC approval last May, but was subject to a number of conditions, including that it extend high-speed internet service to at least 2 million more homes. One million of those homes were to be in areas that already had another high-speed internet provider — as then-FCC Chairman Tom Wheeler had decried the lack of competition for broadband service.

But smaller cable companies objected to the condition, arguing that they would have trouble competing against one of the largest of all cable and internet companies.

“This overbuild threat, added by then-FCC Chairman Wheeler at the eleventh hour of the merger approval, undermined these operators’ ability to make investments that would benefit their existing subscribers or expand their networks to reach unserved households,” said Matthew Polka, the president and CEO of the American Cable Association, which represents smaller- and medium-sized cable and internet providers.

Charter will still have to build out to 2 million new homes, but they will not be obligated to build them in areas that already have service.

“The difference now is that the beneficiaries will be consumers currently on the wrong side of the digital divide,” said FCC Chairman Ajit Pai. “That’s a major difference, and one that will go a long way toward helping deliver online opportunity to all Americans.”

Commissioner Mignon Clyburn concurred with the decision.

In a statement, she said that “it has become clear that forcing New Charter into competing with another carrier incentivizes the company to overbuild where the weakest potential competition currently exists.”

“Given our conclusions about competition in the broadband market, I am concerned that years from now, we will simply end up with still only one entity — New Charter — serving those ‘overbuilt’ areas,” Clyburn continued. “By removing the overbuild condition, we at least give New Charter the freedom to serve more unserved communities.”

A spokeswoman for Charter said that “by modifying the overbuilding condition, the FCC enables Charter to more fully devote our resources and attention to building out high-speed broadband to areas without it today.”

Wheeler tweeted a link to a story on the FCC’s move and wrote, “Nobody likes competition … except consumers!”

Tom Rutledge, the CEO of Charter, met with President Donald Trump last month where he committed to hiring 20,000 workers, many call service employees in the United States. Charter announced those plans before the election, at the time its merger was approved in May.

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