Charter Tells FCC of Commitment to Net Neutrality Regardless of Legal Intrigue

Charter CEO Tom Rutledge - H 2014
AP Photo/Richard Drew

Charter CEO Tom Rutledge - H 2014

If a $55 billion merger between Charter Communications and Time Warner Cable is completed, the marriage will result in a bigger company that commands about 15 percent of the nation's cable and satellite subscribers and 22 percent of its broadband subscribers.

Naturally, concern about the ramifications of consolidation has ensued. This week, Charter answered its critics with a filing at the FCC that among other things, stresses its commitment to the principles of net neutrality.

"New Charter will not block or throttle Internet traffic or engage in paid prioritization, regardless of the outcome of the litigation over the Open Internet Order," says Charter, referring to the FCC's decision to reclassify internet service as a utility under Title II of the Telecommunications Act and the subsequent and pending legal challenges made by companies including AT&T and Alamo Broadband.

As the DC Circuit Court of Appeals gets set to hear oral arguments about the FCC's authority, Charter goes further by stating it won't "charge consumers additional fees to use third-party applications, engage in zero-rating, or impose data caps. Charter has also committed to a settlement-free interconnection policy that facilitates the ability of edge providers to have robust and frictionless access to Charter customers."

Charter's response to critics also doubles as a love poem to Netflix, the popular if bandwidth-hogging streaming company that fought Comcast during the Comcast-TWC engagement. 

With Netflix's regulatory sway widely acknowledged, Charter tells the FCC it is "unsurprising" that Netflix supports the merger. That's not only because of Charter's stated commitment not to charge interconnection fees, but also because it says Time Warner Cable is a slow network and it can at least quadruple the speed for TWC subscribers. Plus, Charter argues that it has a strong financial incentive to grow the online video provider business.

Reacting to those who worry how a bigger Charter might see OVDs like Netflix, Amazon Prime, YouTube Red and Sony Vue as a competitive threat and use its size to muscle them out, Charter asserts the logic isn't rationale.

"Foreclosure is the exact opposite of the strategy Charter and the other applicants have been pursuing, and is the exact opposite of where New Charter's incentives will point," it tells the FCC. 

Charter says that its broadband interests will outweigh its interests as a multichannel video programming distributor. "Broadband subscriptions are growing while MVPD subscriptions are stagnant, and the Applicants' average gross margins for broadband are higher than those for video services," it continues. 

While expressing broad commitments and shrugging off competitive harms, Charter is only willing to go so far in memorializing any obligations. Some objectors like Dish have proposed that before the FCC approves the merger, conditions should be imposed on Charter like restrictions on most favored nation, windowing and holdback agreements. Charter believes those to be inappropriate given what it believes to be unique circumstances and a fast-moving content market.