Charter Charts Course in D.C. For Time Warner Cable Deal

Suitor will promote proposed merger’s value-added aspects
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Look for Charter to make a strong public interest pitch in Washington that it will bring a culture of no broadband caps and fast speeds to a combined Charter-Time Warner Cable deal. But you can also expect it to face pushback from the usual suspects—anti-consolidation groups for whom bigger amounts to badder.

The $77.8 billion deal (equity plus debt) was announced last week, coming about in the rubble of the collapsed Comcast-TWC merger proposal. The FCC had indicated the latter combo put too many broadband subscribers into the hands of one company. Technically, the FCC didn’t have to say anything officially, since the deal was scrapped before it had to weigh in, but the message was clear nonetheless, with FCC chairman Tom Wheeler saying it was the right call.

Fast-forward to last week, when Charter was talking about bringing Time Warner Cable and—through a separate deal, BrightHouse—into the Charter fold.

Charter wasn’t coming right out and saying the deal would create a stronger competitor to top cable operator Comcast, particularly in broadband, but that was clearly part of the argument it will make on Capitol Hill.

As with the Comcast deal, the key for approval in Washington likely depends on whether the approximately 30% of high-speed broadband subs the new company says it will have is too much for an FCC and a Department of Justice currently focused on what they have called ISP “gatekeepers.”

Here are some of the points Charter will be pressing in Washington as it tries to succeed where Comcast failed.

Broadband Price Break.

Charter’s baseline speed is 60 Mbps, more than double what the FCC has set as an aspirational target for advanced telecom. According to one source familiar with the argument, Charter can point to its $40 promotional rate for that 60 Mbps service and compare it to the $64.99 TWC charges as a promotional rate for 50 Mbps. Then there is the fact that Charter does not charge a separate per-modem lease fee—TWC’s is $8. Charter made clear last week it would be bringing that model of faster, cheaper broadband to TWC.

Look Ma, No Caps.

Another big selling point will be that Charter has no data caps, usage-based pricing or early termination fees, all things the FCC has been eyeing for their impact on consumers and network neutrality.

Jobs, Jobs and—One More Time—Jobs.

Charter will stress that it has added 7,000 new positions over the past three years, most of them in customer service. “Big Cable” critics have hammered operators over customer service, and were doing so last week, but Charter will point out that it in-source’s its customer service and will bring TWC’s customer service in-house, and in-country.

Net Neutrality Agreement.

It is unclear whether the company would agree to it as a condition of the deal, but Charter has said it would not block, throttle or pay prioritize regardless of what the courts decide.

While the deal could create a stronger No. 2 competitor to Comcast in broadband and video, distinguishing it from the merger that would have made Comcast even bigger, it got almost immediate pushback last week.

“The cable platform is quickly becoming America’s local monopoly broadband infrastructure,” lobby group Free Press said in a statement. “Charter will have a tough time making a credible argument that consolidating local monopoly power on a nationwide basis will benefit consumers.”

While it was short of pushback, FCC chairman Tom Wheeler immediately released a statement saying the deal would need to show public interest benefits, beyond the absence of antitrust issues. Chances are Charter already knows the FCC has a public interest standard test that goes beyond antitrust. But that may also have been Wheeler’s way of clarifying his position to anti-consolidation activists after he reportedly phoned cable execs two weeks ago to tell them that the failure of Comcast/TWC did not mean a chilly climate for all deals.

FCC GIVES BROADCASTERS PAUSE ON ALERTS

The FCC made it close, but at the 11th-and-a-half hour, it cut broadcasters some slack, giving them more time to come into compliance with Communications and Video Accessibility Act (CVAA) requirements to make emergency alert texts (and ultimately graphics) in non-news programming accessible to the blind and visually impaired. Cable operators get some wiggle room as well.

Those are the crawls and maps that break into regular programming during tornadoes, thunderstorms and other emergencies. There had been a May 26 deadline to come into compliance.

The National Association of Broadcasters had argued that stations needed six more months to comply with the general requirement, sought a waiver to come up with an audio version of graphics—charts, for example—and challenged the requirement to provide audio for long and frequently changing school-closing crawls.

The FCC essentially gave broadcasters everything they asked for, agreeing that it was a vexing technological challenge. But they added that broadcasters will ultimately need to come up with an audible representation of charts and other non-text graphics.

Regarding those endless school-closing crawls, the NAB had argued that they could crowd out other info, given that audio is delivered on a secondary channel. The FCC is revisiting its decision to require them at all.

The FCC also made the day of smaller cable operators. In response to an American Cable Association petition, the commission will allow some systems with analog and digital customers to supply set-tops to provide the audible info to analog customers, at least until the systems go fully digital. But while the ACA had wanted that equipment capped at three boxes per home, the FCC’s Media Bureau said they would need to provide them for as many sets as there were.

Look for Charter to make a strong public interest pitch in Washington that it will bring a culture of no broadband caps and fast speeds to a combined Charter-Time Warner Cable deal. But you can also expect it to face pushback from the usual suspects—anti-consolidation groups for whom bigger amounts to badder.

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