Commentary

Charter-Time Warner Merger Makes Bad Situation Worse, Critics Say

Opponents of Charter's proposed merger with Time Warner Cable and Bright House Networks told regulators at a recent meeting that the deal poses a threat to online video distributors as well as consumers.

The post-merger company "would have the means and incentive to harm established and emerging streaming services, to the benefit of its own service offerings," the Stop Mega Cable coalition says today in a filing summarizing its meeting with the Federal Communications Commission.

The group, which includes Dish, Public Knowledge, Consumers Union, the Writers Guild of America, East and Writers Guild, West, adds that the new post-merger Charter "could limit consumer access to a stand-alone broadband service, or raise the price of stand-alone broadband in a way that favors its own bundle of services."

Also, the organization says, Charter could "discriminate against competing streaming services while treating its own content favorably."

The coalition points to well-publicized reports of consumer dissatisfaction with the cable industry, arguing that the merger would make a bad situation worse.

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"Ongoing price hikes, poor customer service and the lack of choice in the cable and broadband marketplaces" would be compounded by the merger, the group says. It warns that the debt Charter would incur to finance the merger would give the company "every incentive to cut costs by further degrading customer service, limiting investment in new innovations and raising prices."

The anti-merger coalition apparently took a harder line at last Friday's meeting than the industry group USTelecom, a former member, had anticipated. That organization, which was present at the meeting, sent out a notice late Friday stating it would no longer participate in the Stop Mega Cable Coalition. "The coalition is no longer aligned with USTelecom’s policy positions" the organization stated, adding that it doesn't oppose the merger, but wants the FCC to consider imposing "some common-sense conditions." (USTelecom argued in an earlier filing that the FCC should prohibit a post-merger Charter from giving "undue or unreasonable" advantages to other multiple station cable operators.)

Last year, in an obvious attempt to preempt concerns about the acquisitions, Charter promised that it will follow some of the net neutrality rules for at least three years as a merger condition, even if the regulations are vacated in court. The company also promised that it won't cap broadband data, or charge customers based on their data consumption, for at least three years. In addition, Charter said it won't charge content companies like Netflix extra fees to interconnect directly with Charter's servers.

Netflix subsequently said it supported the merger.

But other online video distributors, including Dish HBO, are expressing concerns. Dish says the deal would leave Charter in a position to undermine Sling TV, while HBO says its Charter could hinder the new HBO Now stand-alone streaming service.

For its part, Charter seems optimistic that regulators will approve the deal. CEO Tom Rutledge reportedly told investors last week that the company expects the FCC and Justice Department to give the nod to the deal by March.

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