FCC To Ban Charter Communications From Imposing Usage Caps If It Wants Merger Approval

from the throttled-and-capped dept

Mon, Apr 25th 2016 3:48pm — Karl Bode

If you recall, the FCC and DOJ blocked Comcast's acquisition of Time Warner Cable, in large part because of the sheer volume of nonsensical benefits Comcast tried to claim the deal would bring consumers. When Charter Communications subsequently announced its own acquisition of the company, it decided to take a different tack; most notably by taking a more congenial tone with regulators, dialing back the tone-deaf rhetoric and astroturf, and even hiring long-time net neutrality and consumer advocate Marvin Ammori to help seal the deal.

And it's now apparent that Charter's approach paid off. After months of meetings with regulators, both the FCC and the DOJ have announced they intend to approve the deal -- with a few conditions. After Bloomberg leaked word of the looming approval, FCC boss Tom Wheeler issued a statement saying (pdf) that most of the conditions being attached to the deal will focus on preventing Charter from harming Internet video competitors.

According to Wheeler, Charter won't be able to impose caps, engage in interconnection shenanigans, or bully broadcasters into withholding content from streaming providers (something Dish complained about) for a period of seven years:

"In conjunction with the Department of Justice, specific FCC conditions will focus on removing unfair barriers to video competition.

First, New Charter will not be permitted to charge usage-based prices or impose data caps. Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers. Additionally, the Department of Justice’s settlement with Charter both outlaws video programming terms that could harm OVDs and protects OVDs from retaliation– an outcome fully supported by the order I have circulated today. All three seven-year conditions will help consumers by benefitting OVD competition. The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet."

The FCC's ban on usage caps is probably the most interesting or the proposed conditions. The agency has by and large turned a blind eye to usage caps and zero rating of content so far. In part because it was unsure whether or not the courts would uphold the regulator's new net neutrality rules (which should be settled any day now), but also because the FCC has been hesitant to engage in broadband rate regulation. Like net neutrality, usage caps are a sign of a lack of competition in the broadband market, and streaming competitors like SlingTV worried that the Charter merger would simply result in yet another giant like Comcast -- with a vested interest in using the lack of broadband competition to hammer emerging streaming TV evolution.

Granted the conditions aren't all that revolutionary in that while Charter has flirted with usage caps, it currently doesn't impose them anyway. And on the interconnection front, the devil will be in the condition details (the threat of neutrality rule enforcement appears to have solved many of these disputes, for now). Meanwhile, consumer groups like Free Press say they aren't impressed, arguing the debt created by the deal will be passed on to Charter customers in still-uncompetitive markets, one way or another:

"Customers of the newly merged entity will be socked with higher prices as Charter attempts to pay off the nearly $27 billion debt load it took on to finance this deal. The wasted expense of this merger is staggering. For the money Charter spent to make this happen it could have built new competitive broadband options for tens of millions of people. Now these billions of dollars will do little more than line the pockets of Time Warner Cable’s shareholders and executives. CEO Rob Marcus will walk away with a $100 million golden parachute."

And while it's probably true that Charter will just find some other way to impose rate hikes on these subscribers, the conditions are at least an interesting signal from the FCC (and the DOJ, that issued its own statement on the approval) that it recognizes the growing threat usage caps are posing to the future of innovative services. Still, the conditions will be no substitute for real broadband competition, the lack of which a bigger, badder Charter will simply have to find new and creative ways to abuse.

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Filed Under: antitrust, broadband caps, conditions, data caps, datacaps, doj, fcc, merger, usage caps
Companies: charter, time warner cable

25 Comments

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Coyne Tibbets (profile), 25 Apr 2016 @ 3:59pm

Out with "usage caps"
So the FCC has told they can't use "usage caps" anymore. Let's start suggesting alternate phrases for them to use...

abuse prevention
excess retrieval filter
customer access assurance
overage limits
customer allowance
more?
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Anonymous Coward, 25 Apr 2016 @ 4:08pm

Uh, so?
Will they actually enforce that? Have we not read here before how the post-merger companies never abide by the agreements and nobody (i.e. the government) enforce it?
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Anonymous Coward, 25 Apr 2016 @ 4:08pm

ding ding ding goes the trolley
"Hey kids, can you say "anti-trust"?"
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Whatever (profile), 25 Apr 2016 @ 4:22pm

Re: Uh, so?
I agree. It would seem unenforceable.

Moreover, I think it would create an unfair advantage for any competitor that they have, which would offer a lower capped price and take business away.

I suspect a condition of sale like this could easily be shot down in court.
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Anonymous Coward, 25 Apr 2016 @ 4:39pm

Re: Re: Uh, so?
I think it would create an unfair advantage for any competitor that they have

Which competitor would that be?
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Capt ICE Enforcer (profile), 25 Apr 2016 @ 4:39pm

Usage Caps???
We will never charge for usage or have data caps. What we have is a RLRP (Real Life Role Play). Here is how RLRP works. Everyone starts out at the bottom of the totem pole. A sewer rat trying to climb your way to success in order to be the King/Queen/CEO or whatever you chose. Here is how you increase your level in RLRP...

Level / Spend Per Month / Reward
2: / $100 / Free access to YouTube
3: / $200 / Free 512 MB of online storage
4: / $300 / Free drink koozie with our logo on it.
5: / $500 / Priority data transmission which is still slower than your neighbors.
65: / $1,300 / You did it, You are the king. Go online and select your Elite membership package. Which includes a $5 string backpack, $4 sunglasses, $1 bumper sticker. All of which include our company logo. $49 charge for shipping and handling.
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Anonymous Coward, 25 Apr 2016 @ 5:37pm

Who lies more, corporations or politicians?
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Sneeje (profile), 25 Apr 2016 @ 6:01pm

Re: Re: Uh, so?
"I suspect a condition of sale like this could easily be shot down in court." Nope.

I think if you do a little research you'll see that there really aren't any examples of post-merger legal actions against the government. The anti-trust laws give the government wide latitude to take these guys to the cleaners and pre-merger approvals have been well-vetted in the courts.

Any challenges would have to be of a fundamentally obvious constitutional nature (like if they FCC said ... as long as those *Jews* don't charge usage caps), they won't dare take it to court. Because if they do, the anti-trust hammer comes down hard.
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Whatever (profile), 25 Apr 2016 @ 6:45pm

Re: Re: Re: Uh, so?
So you think it's acceptable for the FCC to impose conditions on a company that would likely lead to a competitor greatly harming it, and at the same time driving consumers to the alternate capped provider?

Seems like it's lose-lose for consumers and the company.
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Shilling, 25 Apr 2016 @ 8:46pm

Re: Re: Re: Re: Uh, so?
They do not have to agree to the conditions but then the whole deal is off. They know exactly what they are getting into.
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Anonymous Coward, 26 Apr 2016 @ 1:14am

Re: Re: Re: Re: Uh, so?
...Again, where is the legitimate competition?

The two companies here don't even meet the FCC broadband mandate in large swathes of the country!
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Skeeter, 26 Apr 2016 @ 1:23am

Re: ding ding ding goes the trolley
Actually, anti-trust would imply you have no choice. Unless you can prove that this would create sole-providers in an area, the argument doesn't fly. If you can prove it, you can pretty-much stop it by using anti-trust laws to prevent it.
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Anonymous Coward, 26 Apr 2016 @ 2:20am

Re: Re: Re: Uh, so?
I dunno, I just moved and as far as broadband and cable goes there seems to be plenty of competition: I mean, I can choose Charter Select, Charter Silver, or hell, even Charter Gold. That's almost too many options! How am I ever gonna decide!?
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Anonymous Coward, 26 Apr 2016 @ 2:23am

Re:
What's more fun to drive, cars or automobiles?
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Anonymous Coward, 26 Apr 2016 @ 5:19am

Re: Re: Uh, so?
Seems that corporations do as they please these days, some receive a slap on the wrist and have to cough up a small percentage of their ill gotten gains while continuing the bad practices because it still generates profit. All the while, they keep claiming that the market is self regulating. Yeah sure it is.
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Rich, 26 Apr 2016 @ 6:06am

So, after seven years they can screw us. Great.
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DannyB (profile), 26 Apr 2016 @ 6:36am

In addition to usage caps . . .
Will Charter also be banned from harvesting the organs of its customers as part of its terms of service?
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K`Tetch (profile), 26 Apr 2016 @ 10:29am

I don't see how they (ISPs) can even justify their cap levels.

two years ago, I was on AT&T DSL. I wasn't exactly pushing it hard and yet I broke 250GB (not even the 15Gb they said DSL was limited to) most months. And that's with 6/0.5Mbit DSL - something that hadn't been 'broadband' for a few years, and which had stayed steady in price since 2007.

I'm now on charter (as those that read my IPgeolocation piece will know) and it's 60/4. I looked up some stats for some of my devices at the end of Jan, and just between the xbox, my main desktop, my tablet, son's tablet and wife's phone, we'd done over 300gb. That doesn't count the smartTV, eldest's phone, eldest's laptop or tablet, youngest's tablet, my laptop, my media-editing desktop (which does all my multi-gig youtube uploads), my wife's laptop (where she works from home most days via a VPN) or my work PC (where I do all the lovely bittorrent testing stuff for TorrentFreak)

I wouldn't be surprised if I pushed a terabyte or more a month. And the worst thing - I have apprximately 64Mbit/sec of bandwidth available to me. 1TB/month is not even 4Mbit/sec average. it's 1/16th of what I pay for, and I'm betting that's WAY over what they claim I should use.
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Coyne Tibbets (profile), 26 Apr 2016 @ 11:53am

Re:
I don't see how they (ISPs) can even justify their cap levels.

Arbitrarily selected cable company: "S'easy! more profit for us!"
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vdev (profile), 26 Apr 2016 @ 2:32pm

restriction period
Why is it that the restrictions are only for seven years?? Granted, that's better than three which was an earlier proposal, but why only seven??

Why not "forever" ??

This is like saying that you have to be good for seven years but then you can rape and pillage all you like.

NO !! The prohibition on bad things is supposed to be permanent.
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JBDragon (profile), 26 Apr 2016 @ 3:19pm

Re:
That's a trick question!
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Wendy Cockcroft, 28 Apr 2016 @ 5:57am

Re: Re: Re: Re: Uh, so?
There's also "Take your business elsewhere, then. You can't? Haaaaah!", which I've seen the voluntaryist faction tout as an option.
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Wendy Cockcroft, 28 Apr 2016 @ 6:01am

Re: Re: ding ding ding goes the trolley
I thought anti-trust laws took on cartels and price-fixing, too.
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Anonymous Coward, 26 May 2016 @ 4:59pm

Re: Re: Re: Uh, so?
The company they merged with silly
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Anonymous Coward, 6 Apr 2017 @ 8:29am

Re: Out with "usage caps"
prophet margin
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