FCC Kills Charter Merger Condition That Would Have Forced ISPs To Compete

from the let's-ignore-the-obvious dept

While FCC boss Ajit Pai has repeatedly claimed his top priority while running the FCC is eliminating the digital divide, his behavior in just the first few months of his term has made that claim utterly and indisuptably laughable. It doesn't take a sociology degree to realize that Pai's recent decisions to protect prison phone monopolies, protect the cable box monopoly, undermine efforts to bring broadband to the poor and dismantle net neutrality solely help one particular constituency: the telecom sector's biggest, wealthiest, and most powerful providers.

And while repealing a previous FCC's policies isn't entirely new or unexpected (especially from somebody with Pai's extremely mono/duopoly friendly voting record), Pai has been pushing his purview even further. Last week the FCC boss announced that he'd even begun stripping away at the conditions attached to Charter's $79 billion acquisition of Time Warner Cable and Bright House Networks.

While the FCC has a history of relatively toothless merger conditions (often proposed by the companies themselves), Wheeler's FCC went a little further with Charter -- not only banning the company from imposing usage caps and overage fees for seven years, but requiring that Charter continue adhering to FCC net neutrality rules -- even if those rules are killed (something Pai has repeatedly promised to do). But the FCC also mandated that Charter Communications expand its broadband footprint to two million additional locations -- one million of which needed to be in areas already served by cable competitors.

Former FCC boss Tom Wheeler had argued that this "overbuild" condition would specifically impose added competition on those regions, "bringing innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another." But small and large cable company lobbyists had spent months lobbying to have all of the conditions killed, going so far as to threaten to freeze broadband investment if the conditions weren't eliminated (you know you're in a non-competitive market when you labor under the illusion that you get to choose when to compete).

Quickly rushing to the aid of these companies before they faced the dreaded specter of additional competition, Pai's office announced that the agency would be retroactively killing the overbuild condition. This was, Pai insisted in an FCC statement, yet another shining example of the FCC boss's relentless dedication to helping "the public interest":

"My top priority is making sure that any American who wants high-speed Internet access is able to get it. Today, we take another step toward achieving that goal. Last year, Charter Communications agreed to build broadband out to two million new customers as part of its merger with Time Warner Cable and Bright House Networks. Unfortunately, the FCC appended an “overbuild” condition to the order, requiring that half of those new locations be already served by another provider. Since these one million overbuilt deployments would be credited against the total, it would substantially reduce buildout to unserved areas. This is like telling two people you will buy them dinner, ordering two entrées, and then sending both to just one of your companions. This condition was not and is not in the public interest, and it runs directly against the goal of promoting greater Internet access for all Americans.

So one, to believe Pai you'd have to ignore not only his entire voting record, but the fact that he just began dismantling an FCC program specifically designed to help bring broadband to the poor.

That said, people should also understand that large ISPs (and those that kneel in fealty to them) like to keep the focus on an ambiguous dedication to "closing the digital divide" because it ignores the real problem: high prices and limited competition. According to NTIA data, there are about 26 million households left in the U.S. that aren't connected to the internet. If you look closely at the breakdown of why these homes aren't connected, the top three reasons either involve these users not giving a damn about being connected, or not being able to afford connectivity due to cost:

Because these companies obviously don't want people focused on the lack of competition, you've perhaps noticed that Pai (and the large ISPs that adore him) avoid ever acknowledging that lack of competition -- and the resulting high prices -- are a problem. In fact, it's often comedic to watch how desperately many of these folks (including the lion's share of hired ISP policy mouthpieces and think tankers) try and avoid the subject. Instead, apparently, we get odd metaphors about dinner entrees that don't really make much coherent sense in context.

Of course, then, the overbuild condition was axed because it did the unspeakable: actually forced a handful of companies to compete. Granted this overall lack of competition is what lets these companies impose arbitrary and unnecessary usage caps and overage fees -- which are little more than glorified rate hikes. And cable lobbying groups like the NCTA have been lobbying the FCC to get rid of the conditions banning Charter caps as well (pdf).

All told, much like the man that appointed him, FCC boss Ajit Pai likes to try and obfuscate his almost mindless dedication to protecting large legacy companies with an utterly phoney dedication to the downtrodden. The Charter merger, approved under the Obama administration, was admittedly a bad deal that has already resulted in higher prices and even worse customer service for impacted customers. But eliminating these conditions only serves to make an already bad deal, even worse. And the pretense that it's being done out of a love of America's downtrodden only adds insult to injury.

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Filed Under: ajit pai, competition, fcc, merger conditions, overbuild

Companies: bright house networks, charter, time warner cable