On Monday, Federal Communications Commission Chairman Tom Wheeler promised a yes-vote for Charter’s acquisition of Time Warner Cable and Bright House Networks, paving the way for regulatory approval. The U.S. Justice Department has also given the go-ahead after an antitrust review.
In exchange, the combined entity must agree to seven years’ worth of conditions.
The most important condition, at least for subscribers who stream lots of Internet video, is that the new Charter won’t impose data caps or other usage-based billing for at least seven years. Although Charter and Time Warner Cable don’t impose data caps currently, Comcast has been expanding data caps in some markets, and AT&T recently started enforcing data caps for U-Verse subscribers nationwide.
The cable industry has acknowledged that these caps are not about congestion, but about profits (or, euphemistically, “fairness”). As more subscribers abandon or reduce their dependence on traditional pay TV packages, it’s likely that other cable companies will try to tip the scales back in their favor through usage-based billing. Charter had originally offered to abstain from data caps for just three years as a condition of acquiring Time Warner Cable, but is now agreeing to a much longer term.
The other big concession is harder to quantify: In its deals with TV networks, Charter has agreed not to seek terms that could harm online video services. Cable companies have long been accused of including anti-streaming provisions in their contracts with media companies, or threatening repercussions for companies that venture outside the TV bundle. In December, Dish Network accused Charter of trying to derail Sling TV, Dish’s $20 per month streaming service, by making “thinly veiled complaints to programmers.” Charter’s agreement with the FCC and Justice Department disallow such practices, paving the way for more cable TV alternatives.
Why this matters: While the government’s merger conditions aren’t permanent, seven years is a long time in the tech world. Netflix, for reference, had only just started streaming video seven years ago, Hulu was barely a year old, and Amazon Prime video didn’t even exist. Data caps are already deeply unpopular with consumers, which explains why the companies implementing them are moving slowly and cautiously to minimize attention. The hope is that in seven years, streaming video will be the norm, and a company like Charter will have a hard time turning on the meter.