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ACA Pushes FCC to End Charter's Overbuild Condition

The American Cable Association has filed a letter with the FCC on behalf of 38 small and mid-sized ISPs asking the FCC to remove the overbuild condition in the Charter-Time Warner Cable merger.

"[W]e all have plans to invest in improved network technologies to offer greater performance or to expand our networks into unserved areas. Unfortunately, the merger condition requiring Charter to overbuild other providers has undermined those plans to provide improved services and reach new customers," the ISPs told the FCC. "We write to encourage the Commission to act in the best interests of millions of unserved and underserved customers by eliminating the overbuild condition."

The letter went to all three commissioners, but ACA is definitely preaching to the choir when it comes to FCC chairman Ajit Pai and likely commissioner Michael O'Rielly, which would be a majority of the commission at the moment.

FCC sources have told B&C that Pai circulated an item last month to adjust the Charter-Time Warner Cable deal buildout condition so that it would no longer require Charter to overbuild where a million homes were already getting broadband service.

The 2 million buildout requirement remains, but according to the item that could now all be buildouts to currently unserved homes, with no overbuilding, though Charter could still choose to overbuild those one million. They are just no longer required to do so. Charter last year said it intended to focus its overbuild activity on telco broadband providers, not other cable companies.

What was being circulated was, in fact, the grant of a petition for reconsideration of the deal condition by the ACA, which had asked that the overbuild requirement be removed.

ACA has seven million subs that could theoretically be targets for overbuilds.

An FCC source said Pai's motivation for scrapping the overbuild condition is that it is more important to build to unserved houses to close the digital divide than provide high-speed service where there is already high-speed service, and he does not want the overbuild condition to be a disincentive for Charter to serve those unserved subs.

FCC officials were not available at presstime to comment on the status of the chairman's grant of the petition.

If all three voted it, then the two Republicans could make it happen. But if Democrat Mignon Clyburn does not vote, the majority would need to schedule the item for a public meeting and vote it there.

Last May, when the Charter-Time Warner Cable order was released, then-commissioner Pai blasted the overbuild condition and the buildout condition as well. "Charter’s increased broadband market share will come at the expense of smaller competitors," he said, adding that the order moved the FCC "one more step down the path of micromanaging where, when, and how ISPs deploy infrastructure."

Pai actually dissented from the order—not because he thought the deal was not in the public interest but because he thought the conditions the FCC majority extracted from the companies, in what he signaled was an effort to micromanage the wider internet economy, were not.