Numerous New Charter Conditions Fell by Wayside in FCC Order

Other suggested conditions the FCC didn't adopt in its 348-page order, issued Tuesday (see 1605100050), included requirements on the availability of multichannel video programming distributor apps on third-party devices and creating new standards to promote navigation device competition -- issues the FCC said raise broader regulatory actions better suited for rulemaking. It also rejected calls by Nvidia for conditions on TV Everywhere authentication on third-party devices (see 1603220030), saying there isn't sufficient evidence to back Nvidia's claim that Charter didn't authenticate TVE apps on that company's Shield TV or other Android TV devices to forestall competition with Charter devices.

It also dismissed suggested conditions on programming diversity and negotiating new carriage deals with independent channels in good faith. The FCC said its analysis points to the deals not disproportionately affecting diverse, minority-owned, minority-focused or independent video programmers, and its existing program carriage rules suffice to tackle any discriminatory conduct claims.

The FCC did adopt a seven-year ban on data caps or usage-based pricing for residential broadband, a mandatory seven years of settlement-free interconnection and employing an internal Charter compliance officer and an independent external one to report and monitor New Charter's compliance with the approval terms.

The DOJ independently is pursuing a seven-year ban on New Charter employing any contractual alternative distribution method limits on online video distributors and retaliating against programmers for licensing to online video distributors (see 1604250039). New Charter's bigger scale by adding TWC and BHN would mean "increased incentive to engage in such behavior because it will stand to lose substantially more profits than Charter, TWC and BHN individually if [online video distributors] take business from traditional MVPDs, and it will internalize more of the benefits of harming OVDs," the DOJ said in a competitive impact statement Tuesday.

Some conditions have come under fire by FCC observers. The American Cable Association said it was "troubled" by a broadband overbuild requirement "because it is not tailored to areas where additional entry is most needed -- namely, where prices exceed those offered in urban areas and network performance failed to meet the FCC's benchmarks." ACA said it will harm Charter customers "by preventing Charter from investing its resources most efficiently, such as by upgrading its networks to higher speeds," and hurt customers of local, small providers since Charter can use its New Charter market power to out-muscle smaller competitors.

NTCA is similarly "not enthusiastic" about the buildout condition, especially because the FCC didn't require -- as the group had sought -- a condition that Charter coordinate such buildout work with other commission digital divide efforts like the Connect America Fund (CAF), Senior Vice President-Policy Mike Romano told us. Without that coordination, both New Charter's buildout and CAF could end up focusing on certain overlapping rural areas, leaving other rural areas even less likely to get better broadband service, he said.

Despite concerns by scores of public, educational and governmental programmers and by local franchise authorities about Charter's history of dealing with its PEG commitments, the FCC seemed dismissive, citing the small number of comments about those concerns, ACM's Wassenaar said. "At the end of the day, we weren't heard." The FCC in its order said it didn't see any deal-specific PEG harm. Wassenaar also rejected the FCC's argument it doesn't want to involve itself in local franchising issues: "They're more than happy to interfere with the rights of parties negotiating when it fits a certain agenda."

While the conditions overall "were focused on the right issues," the lack of a required stand-alone broadband offering separate from the low-income broadband offering across New Charter's footprint was disappointing, said Consumers Union Senior Policy Counsel George Slover. The FCC in its order said there's no evidence New Charter would want to raise its stand-alone broadband pricing enough that it would give subscribers an incentive to get a bundled broadband/video package instead, and New Charter would actually lower the stand-alone residential prices now offered in TWC and BHN territories for comparable speeds. Slover said New Charter's incentives could change, but if New Charter were to discontinue its stand-alone broadband offering, that could be subject to DOJ review as a potential antitrust violation.

Zoom Telephonics is "disappointed" the FCC didn't take up its suggested condition requiring cable modem monthly rental fees be separately stated, counsel Andy Schwartzman emailed. "The good news is that the FCC clearly wants a robust retail market for cable modems and set-top boxes, and the FCC is looking to the already open Navigation Devices proceeding as the place to clarify cable modem rules."