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COMPTEL: Charter-TWC Would Have Too Much Programming Clout

COMPTEL, which represents competitive communications network providers, has asked the FCC to deny the Charter/Time Warner Cable merger.

In a petition filed Oct. 13, the deadline for such filings, COMPTEL focused on what it said would be the combined company's market power over video programming and its impact on broadband deployment.

The group argues that combining Charter and Time Warner Cable would mean the company would be negotiating content purchases for 17.3 million video customers, making it the second largest MVPD after Comcast.

That, says COMPTEL, would give it "more bargaining power to elicit favorable terms from programmers and create a substantial barrier to future broadband investment and competition."

They say Charter's claim that the combined company would face competition from competitive broadband providers does not hold up, and they should know.

"The crucial issue for determining whether the Transaction would be in the public interest is whether New Charter would face substantial competition in the future," COMPTEL told the commission. "If New Charter were to face 'dynamic' broadband competition, it would come from the competitive community that COMPTEL represents. The feedback from COMPTEL's membership, however, is that New Charter's cost advantage for video programming would make irrational any thought of investing in broadband to compete against the new firm."

While COMPTEL initially gave Charter props for committing to settlement-free peering, and still calls it a "step in the right direction," COMPTEL said the commitment of the duration too short, and changes are needed if the FCC did decide to approve the merger.

For one, the three-year commitment to settlement-free should be seven years, it said. Plus, it argues that Charter's point that it has never asked for interconnection payments was mostly because it had not had the scale to demand payments. so that rather than being a sign of "benign intent" it was a "reality of its pre-merger market power."

“Charter’s proposed transactions with Time Warner Cable (TWC) and Bright House Networks (BHN) is receiving broad support, " Charter said in response to various petitions to deny the deal. "To date, there are hundreds of  positive comments positive comments filed with the FCC from a broad and diverse array of voices, including Netflix; civil rights groups like the Hispanic Leadership Alliance; independent programmers TV One, Bounce TV Fuse (formerly Nuvo) and One World Sports, as well as from dozens of local businesses and community organizations."

We recognize that there are also parties who challenge the benefits of  the proposed transactions. We are listening to them and have addressed many of the issues they have raised with commitments such as those about expanding access to fast broadband, preserving an Open Internet and investing in interconnection, enhancing customer service by adding more highly trained employees for our call centers and field technician operations. We look forward to continued engagement with regulators, interested parties and members of the communities we serve about the significant public interest benefits of the transactions.”

Charter was not commenting on the specific COMPTEL petition, but it has pointed out that it will be a smaller provider than either Comcast and AT&T, and that rather than subsume the number-two provider as Comcast/TWC would have, the deal would arguably create a stronger compwetitor to AT&T and Comcast.

As to the programming leverage, it has pointed out that TWC already negoaties programing for Bright House, so that adding Charter's 4.5 million subs will hardly create a dramatic shift. Charter is also on the record criticizing volume discounts and supporting wholesale unbundling.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.