The American Cable Association (ACA) and NTCA – The Rural Broadband Association are not giving up on their opposition to an FCC decision last year that calls for Charter to overbuild one million locations that already have broadband service available to them at speeds of at least 25 Mbps. The decision was made as a condition of FCC approval of Charter’s acquisition of Time Warner Cable and Bright House Communications.
The Charter overbuild conditions also included a requirement to deploy broadband to an additional one million locations that do not already have service. Both ACA and NTCA contacted the FCC this month to urge the commission to eliminate the overbuild requirement.
Opposition to Charter Overbuild Conditions
“While we expect ordinary competition, such commission-mandated competition is far from ordinary,” said a letter sent to the FCC by ACA on behalf of 38 small and mid-sized cable and telecom service providers this week.
The letter argues that “based on our experience and knowledge of the industry, we expect Charter to fulfill that overbuild condition through edge-out expansion to locations primarily served by a small broadband provider.” These are markets the small providers would not normally expect Charter to enter, including “markets that might not support two providers,” the letter states.
The 38 carriers said they all had planned to upgrade the electronics on their networks and to deploy more fiber closer to customers over the next five years, the lifespan of the Charter overbuild conditions. But according to the letter, the carriers “have been forced to reconsider, scale back or halt these investments in the wake of the commission’s order.”
NTCA, meanwhile, has met this month with FCC officials to urge them to reconsider the Charter overbuild conditions. The association argued that if Charter were to overbuild small rural telcos, resources would be wasted and some of the telcos could be driven out of business. In addition, NTCA said the commission failed to give appropriate notice that it was considering the requirement.
A Receptive Audience?
Tom Wheeler, a Democrat who was FCC chairman when the Charter overbuild conditions were imposed, said at the time that the overbuild requirement would bring “innovation and new choices for consumers and demonstrate the viability of one broadband provider overbuilding another.”
Not all FCC commissioners bought that argument, however. “At first blush, it appears that the commission may have operated well outside the four corners of the merger application to pursue unrelated matters and policies,” said FCC Chairman Michael O’Rielly at the time.
And now that O’Rielly and new FCC Chairman Ajit Pai — both Republicans — dominate the current three-member commission, perhaps NTCA and ACA will find a more receptive audience for their concerns than they did when they first expressed opposition last year.
After the Charter overbuild conditions were revealed last year, Charter CEO Tom Rutledge reportedly said the company had no intention of overbuilding cable operators because such a move would cause the FCC to oppose any plans Charter might later have to purchase those companies. Instead, he said Charter would overbuild telcos and noted that his primary telco competition was AT&T or, in some cases, Frontier.
But ACA and NTCA apparently are not convinced by Rutledge’s assurances.