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Editorial: Time Warner Cable Deal 2.0

What if a cable company told the FCC it was going to offer 60 MHz speeds to millions more people, and cut the price to boot? What if it said it was not going to have price caps on broadband plans, or usage-based pricing, or early termination fees, and that it would drop its modem rental price to zero?

What if this same cable operator said it would bring offshore jobs back home, and invest more in WiFi?

A cable company has promised all that—the proposed combo of Charter and Time Warner Cable.

Charter hardly had time to outline the public interest deal points when critics began to pick at the proposed merger. For many consolidation critics, bigger is simply not better ever, period.

FCC chairman Tom Wheeler was quick—unusually so, if you ask us—to weigh in, on the morning of the deal announcement, warning that simply managing to avoid violating antitrust laws was not the yardstick. To us, that was repeating a truism:The FCC has a public interest standard to measure deals that goes beyond theJustice Department’s antitrust review. But we also saw it as the case of swinging the pendulum back, rhetorically, after word that Wheeler had contacted cable execs to assure them the FCC’s rejection of Comcast/TWC didn’t mean a de facto chilly reception for all mergers, and that deals would be judged individually, on merit.

To some that might have looked like a green light flashing after a red one; if so, Wheeler just flashed a yellow with this Charter/TWC statement.

The FCC never “officially” opposed the Comcast/ TWC deal. Instead, the commission had been prepping a decision to refer it to an administrative law judge with the recommendation that the deal was not in the public interest. That definitely would have been the kiss of death, with both parties at least knowing exactly why.

As it is, the current deal inspires a bit of guesswork, though as one analyst pointed out, Charter and Time Warner Cable were both in the meetings on the last deal and should have a pretty good sense of what the FCC wants. And they likely would not have tried a sizeable merger so soon after the Comcast smackdown if they had gotten a clear sign it was likely a no-go.

Not that you really need to be in meetings to know what the FCC wants, which is broadband competition and no discrimination against competing over-the-top video services. Just how big in terms of total broadband subscriber counts a company can be to be too big for the government remains arguably the $78.7-billion question. Comcast’s 50%-plus share of 25 MHz-plus subs was too big for government deal-vetters. Just before shutting off the lights on his last day in office, attorney general Eric Holder hailed the blocking of the deal and even got in a “gatekeeper” shot at Internet service providers. And since when did “gatekeeper” become a pejorative term? Try telling that to St. Peter.

Charter/TWC’s high-speed broadband sub count is something under 30%. Is that too much? Only the government deal-vetters know for sure. But we will hold Wheeler to his promise that the FCC will review “every merger on its merits,” with the attendant idea, we hope, that it will not reject a merger because of presumed harms not in evidence.