Broadband Access: FCC Kills Merger Agreement Requiring Charter To Compete

The United States Federal Communications Commission (FCC) voted Monday to reverse a Barack Obama administration decision that mandated Charter offer its broadband service to one million households that already have a broadband option from a competing company.

The original decision was part of the terms of approval the FCC placed on Charter’s merger with Time Warner Cable. Charter was to provide broadband internet access to two million new customers within five years, including one million that already have access to another broadband service—a process referred to as “overbuilding.”

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Under the revised order put in place Monday by the FCC, Charter will still be obligated to build out its broadband infrastructure to two million new households but will no longer be mandated to compete with other providers.

FCC chairman Ajit Pai, who was appointed to the head of the commission by President Donald Trump, compared the now-reversed requirement to “telling two people you will

buy them lunch, ordering two entrées, and then sending both to just one of your companions.”

Pai, who also blocked the expansion of subsidized broadband services to low-income Americans, argued the condition “was not and is not in the public interest, and it runs directly against the goal of promoting greater Internet access for all Americans.”

Pai was serving on the FCC as a commissioner when the Charter-Time Warner Cable merger was first proposed, but voted against the agreement—not because of the merger of two major cable providers, but because he felt the FCC’s stipulations for approval were too onerous.

At the time the overbuild requirement was passed, then-FCC chairman Tom Wheeler—an appointee of President Obama—argued the ruling was needed to create competition where ISPs were refusing to do so. Cable companies often avoid markets already served by a high-speed provider, ensuring the companies never create a race to the bottom for pricing.

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Commissioner Mignon Clyburn, the loan Democrat on the FCC, concurred with the decision. In a statement issued Monday, Clyburn explained the "ship has sailed" on pushing Charter to compete with other broadband providers, but noted the new order would give Charter the ability to provide its broadband to underserved areas and "could mean that almost three percent of our nation’s unserved areas will at least have one option."

Charter CEO Tom Rutledge agreed at the time to fulfill the requirement to overbuild, but said in a 2016 speech that he would only overbuild in areas where telephone companies—not cable companies—are the primary internet providers.

“When I talked to the FCC, I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge said at the MoffettNathanson Media & Communications Summit in New York.