Pai Proposes Removing Charter-TWC Overbuild Condition

Two-million-home requirement would still apply, but all that could go to new deployment

FCC chairman Ajit Pai has circulated an item adjusting a Charter-Time Warner Cable deal buildout condition so that it would no longer require Charter to overbuild where a million homes were already getting broadband service.

That is according to sources familiar with the order.

An FCC official speaking on background confirmed that the item had been circulated but will need at least one more vote to become the new law of the Charter-TWC landscape. There were two parts to the condition: One was that Charter had to build out broadband to 2 million additional homes, and the other was that at least one million of those homes had to be “outside of its footprint where any provider other than New Charter offers 25 Mbps or faster.”

The 2 million buildout requirement remains, but according to the item that could now all be buildouts to currently unserved homes, with no overbuilding, though Charter could still choose to overbuild those one million. They are just no longer required to do so.

What was being circulated was the grant of a petition for reconsideration of the deal condition by the American Cable Association, which had asked that the overbuild requirement be removed.

ACA has seven million subs that could theoretically be targets for overbuilds.

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"The threat of government-mandated, uneconomic entry undermines the incentive for smaller operators to invest in expanding their networks to bring new and better broadband services to unserved or underserved populations," ACA told the FCC this week, adding that it would also divert Charter funds from building out to unserved areas without service to providing it for homes that already have 25 Mbps or higher speeds.

Pai appeared to share that sentiment.

The FCC source said the chairman's motivation is that it is more important to build to unserved houses to close the digital divide than provide high-speed service where there is already high-speed service and that he does not want the overbuild condition to be a disincentive for Charter to serve those unserved subs.

Last May, when the Charter-Time Warner Cable order was released, then-commissioner Pai blasted the overbuild condition and the buildout condition as well. "Charter’s increased broadband market share will come at the expense of smaller competitors," he said, adding that the order moved the FCC "one more step down the path of micromanaging where, when, and how ISPs deploy infrastructure."

Pai actually dissented from the order but not because he thought the deal was not in the public interest but because he thought the conditions the FCC majority extracted from the companies in an effort to micromanage the wider internet economy were not.