Charter Points to SMB Services, More Wireless Offerings To Bolster Argument for Deals
Pointing to entry into the mobile services market and better services for small and mid-sized businesses, Charter Communications is trying to shore up its public interest argument for its proposed purchases of Bright House Network and Time Warner Cable. But critics of the $89.1 billion pair of transactions continue to issue broadsides.
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The "larger scale" of New Charter would justify spending more on wireless services than the three companies could do individually, and open the door to New Charter offering mobile products "through increased Wi-Fi deployment, the deployment of licensed spectrum or a mobile virtual network operator management and likely through some combination of these," Charter said in a filing posted Monday in docket 15-149. It didn't elaborate. While Charter would like to take part in March's incentive auction, it likely can't given "the lack of visibility on the timing" of when Charter/TWC/BHN might close, Wells Fargo analyst Marci Ryvicker wrote investors Monday recapping Charter CEO Tom Rutledge's talk at a UBS conference.
All Charter/TWC/BHN nondigital customers will be upgraded to digital in 15 to 30 months, which would have taken longer for BHN and TWC by themselves, Charter pledged in Monday's filing. That move to all digital will free up bandwidth used for analog video to the DOCSIS platform, allowing minimum broadband speeds of 60 Mbps throughout New Charter's footprint, it said. That minimum speed will be offered within 12 months of closing in the BHN and TWC markets that already are digital, and in the remaining markets once they go digital, Charter said. Dish Network, an opponent of the transactions, has argued such upgrades would happen regardless of the deals -- and seemingly more quickly without (see 1511300049).
Charter also said post-acquisitions it would bring more competition in the small and mid-sized business (SMB) and the enterprise business markets because it would be more able to compete for multisite business customers that Charter, BHN and TWC couldn't tackle individually. It also said its SMB offerings "will lead its competitors" in such areas as price, speed and offering an Internet/voice bundle without contractual commitments. "These savings ... will add up to hundreds of millions of dollars per year across the New Charter footprint," Charter said. And Charter said its introduction of its cloud-based Spectrum Guide "will serve ... to convert customers' traditional television sets into 'smart TVs,'" while its Worldbox will be cheaper than current BHN and TWC set-top boxes.
Internal documents show Charter claims it would have no motivation to hurt online video distributors are "a sham," Dish said in a heavily redacted filing posted Monday. Having started its own over-the-top service aimed at its own broadband customers, the takeovers "will only stoke its interest in this service and therefore its incentive to thwart or destroy competing OTT services," Dish said, also indicating Charter internal documents show it "intends to use any means at its disposal to ensure that OVDs never challenge its core video services." In a talk with Owen Kendler, who's heading the FCC working team overseeing the deals' review, Incompas discussed its argument that New Charter "would create a new barrier to broadband competition and infrastructure management" because it would be able to get video from video programmers at particularly advantageous rates, given its size, said a filing posted Monday. Meanwhile, the expense of video is a big barrier to broadband deployment, especially for small and mid-sized providers, since they have to offer linear video services at a loss when trying to compete, it said. The trade group said it was working on an economic report to further bolster its broadband competition argument.
Charter said there are no cable operators friendlier to OVDs than itself, in a statement Monday on Dish's comments. "Our minimum broadband speed is 60 Mbps, we don’t have data-caps, we don’t use usage based billing, and we don’t charge modem lease fees," Charter said. It said Netflix, "which strongly opposed the Comcast merger, supports the approval of the Charter transactions." Regarding Incompas, Charter said New Charter’s programming cost savings "will benefit its customers in the form of more competitive subscriber fees and increased investment in infrastructure and innovation.”