Charter-Time Warner merger: Good for consumers?
Approval of the mega-merger, still waiting on a final vote by the FCC, comes with several key conditions meant to protect consumers and content providers.聽
Approval of the mega-merger, still waiting on a final vote by the FCC, comes with several key conditions meant to protect consumers and content providers.聽
The US Justice Department today approved Charter Communications's $65.5 billion bid to buy Time Warner Cable and Bright House Networks.
The Federal Communications Commission (FCC)聽has yet to sign off on the merger, but if聽the purchase goes through, the so-called 鈥淣ew Charter鈥 will become the country鈥檚 second-largest broadband provider with 19.4 million users, and the third-largest cable television provider with 17.4 million customers, as The New York Times reports.
Already, three companies 鈥 Comcast, Charter, and Altice, a European company that's in the process of buying Cablevision 鈥 now control 80 to 90 percent of all broadband access and thus the content transmitted, as a result of massive cable consolidations in recent years.
Federal regulators are framing the deal as a boon to consumers, saying that restrictions ("conditions") on New Charter will聽encourage broadband competition. 聽But consumer advocacy groups are skeptical.聽
鈥淎s proposed, the order outlines a number of conditions in place for seven years that will directly benefit consumers by bringing and protecting competition to the video marketplace and increasing broadband deployment,鈥 said聽FCC chairman Tom Wheeler in a statement Monday. Mr. Wheeler聽has approved the deal and recommended that the five FCC commissioners vote in favor of it.
Groups such as聽Consumers Union,聽an independent consumer advocacy organization,聽say that history shows that the politically powerful conglomerate, already among the lowest-ranked companies for customer service, is unlikely to keep its promises.
"Since day one, we've been very skeptical of this deal and the power it could give one company to become a cable and broadband giant," said George Slover, senior policy counsel for the Union, in a statement Monday.聽
In approving the deal, the Justice Department seems to have tried to assuage consumer anxieties by requiring that Charter not charge their customers extra fees based on the amount of data they use for streaming videos and other activities. It also required the company to expand Internet access to two million more homes, and to offer a cheaper broadband service to low-income households.
To maintain a level of competition in the shrinking industry, the Justice Department has asked the company not to negotiate special deals with with TV networks. The biggest fear is that Comcast will negotiate exclusive deals with networks such as Bravo, for instance, that would prohibit them from selling content to streaming services such as Hulu and Amazon Video.
The conditions will apply for seven years and include an independent monitor intended to ensure that New Charter is following the rules. 聽
The Consumers Union, which had聽advocated for federal regulators to impose such conditions in the first place, called the steps 鈥減romising鈥 in a statement, though the organization doesn鈥檛 go so far as to support the merger.
"The conditions put forth by the government are all aimed at protecting competition and consumer choice, along with providing other public-interest benefits to consumers,鈥 said George Slover, senior policy counsel for the Union, in a statement. 鈥淏ut history has shown us how powerful companies look for every angle to avoid or weaken the conditions imposed on their mergers, so the government is going to have to have back up these tough conditions with tough enforcement,鈥 he said.
In 2015, when the country鈥檚 biggest cable company, Comcast, was working to buy Time Warner Cable (ultimately unsuccessfully), the Consumers Union outlined examples when imposing conditions on cable mergers had not been effective in the past:
Some reports claim that New Charter and Comcast together will control access to 70 to 90 percent of the high-speed broadband connections in the country, including some of the biggest markets, such as Los Angeles and New York City.
FCC members have yet to vote on the deal, and there is no date set for the vote.