Tech News

Column: Spectrum, like other big companies, seeks to abandon its merger promises

In 2016, cable giant Charter Communications made several promises demanded by federal regulators as conditions for approving a merger deal that would make Charter even more gargantuan.

Are you shocked that now that the merger is long overdue, Charter is asking the Federal Communications Commission to waive some of these conditions? Neither do I.

Especially since the result of such an action by the FCC would allow Charter, which operates its cable and broadband systems under the Spectrum brand, to raise prices on many of its Internet users. (Full disclosure: The Times is teaming up with Spectrum on a regular local TV news show.)

Why would a rational business take the time to get permission to do something it doesn’t intend to do?

Matt Wood, free press

By approving Charter’s $ 88 billion acquisition of Time Warner Cable and Bright House Networks, the FCC banned Charter from imposing data caps on its customers for seven years – that is, charging more customers if their internet usage exceeds certain levels – or until mid-2023. .

The commission also banned Charter from charging streaming video providers such as Netflix for interconnections to its system during the same period.

In a petition filed with the FCC on June 17, Charter asks to drop these conditions from May 2021, two years earlier. The cable company cites a safeguard clause in an appendix to the FCC decree, allowing him to ask for permission to shorten the period to five years. The FCC has set the initial public comment period on the petition to expire on Tuesday, although its timeline has been criticized as too hasty.

There is nothing new about companies that have made costly concessions to get what they want from regulators who subsequently attempt to renege on their promises. I have reported a few of these cases over the past few weeks.

T-Mobile last month asked the California Public Utilities Commission to rescind several conditions imposed on the PUC’s approval of its merger with Sprint.

The large northern California hospital chain Sutter Health too sought to delay judicial review of its 2019 antitrust agreement with California Atty. General Xavier Becerra. (A state judge rejected this request.)

Both companies cited the COVID-19 pandemic to justify their demands, but it’s a safe bet that if the pandemic had not happened, they would have sought another excuse.

Consumer advocates generally criticize data limits, especially for fixed broadband service customers, which do not face the same bandwidth constraints as wireless communications, where they are common.

Data caps raise prospect of higher prices with the expansion of “bandwidth-intensive activities, such as TV shows and streaming movies” The Consumers Union put it in 2015.

They have also proliferated as mergers have reduced broadband options for the average consumer. Additionally, COVID-19 lockdowns have increased household reliance on broadband use, as more and more customers spend more hours at home, using the internet not only for entertainment but also for work.

There are some curious aspects to the Charter petition. The first is that she swears that she actually has no current plans to impose data limits on clients and that she has “no plan to do so” in the future, according to the carrier. lyrics by Justin Venech.

“I would be skeptical,” says Matt Wood, general counsel for consumer advocacy group Free Press. “Why would a rational business take the time to get permission to do something it doesn’t intend to do?”

Another aspect is that Charter says, in a public statement about its request, that it “is simply seeking to level the playing field so that we can continue to grow and provide superior service to our customers across the board. country. Major competitors like AT&T, Verizon, and Comcast, you see, impose data caps or data quotas at different levels of usage.

Of course, if Charter cannot pursue a business model that its competitors can pursue, it is not a level playing field. But it’s important to remember that this is a playing field that Charter himself has assessed – agreeing to these terms in order to get his merger approved.

Charter’s petition claims that the streaming video industry and its customers, whom the terms of the merger were supposed to protect, are “flourishing” – if not explosive – despite the ability of large broadband providers to stifle the use of given by subscribers.

Instead, says Charter, “video consumers reign supreme, showing a seemingly insatiable interest in video options.” Of course, viewers’ interest in video content would likely multiply with or without data limits, so the relevance of this claim is difficult to understand.

Charter’s core contention is that the video streaming market, which accounts for the vast majority of internet data usage, has become “almost unrecognizable from what existed in 2016”. Therefore, the restrictions are obsolete.

If this were true, it wouldn’t mean much to the business modeling team at Charter Communications, which made $ 3.5 billion in profit on $ 29 billion in revenue in 2016, this which probably could have cropped up for some seasoned tipsters. (In 2019, the company earned $ 1.7 billion on revenue of $ 45.8 billion.)

But the idea that video streaming was going to grow strongly year after year could not be a secret. This was part of the rationale for the Charter-Time Warner Cable merger itself. Charter is one of the few Internet service providers to focus entirely on broadband service, rather than going into entertainment content like Comcast did by acquiring NBC Universal and AT&T by acquiring WarnerMedia.

The data limits imposed by some Charter competitors have been defended as being so loose that the vast majority of customers will not meet them. Comcast, for example, raised its cap to 1 terabyte per month from 300 gigabytes in 2016; above this level additional charges apply. A gigabyte is just over a billion bytes, and a terabyte is equivalent to 1000 gigabytes.

AT&T estimates that to reach 1 terabyte, a user would have to send and receive 11,000 emails, watch 142 hours of standard streaming video, 129 hours of high definition video and 94 hours of ultra-high definition 4k video, spend 345 hours in games in online and download 2,000 social media posts with photos, all in one month.

Still, “it’s an argument with an expiration date,” Wood says. “Ten years ago, people would have said, ‘Why would anyone need 25 megabits per second’” for Internet speed?

If there is one truism that crosses all technological frontiers, it is that the speed, capacity and use of technological resources will increase. Computers today make them look pathetic, and some smartphones today even make computers look pathetic.

The bottom line in these usage estimates is video – as 4k streaming equates to a greater share of video consumption, data usage will increase proportionately – not to mention the likelihood of even more data-intensive video technologies. possibly appear.

Broadband usage has already surpassed levels that Internet businesses deemed inaccessible just a few years ago. In 2017, for example, Cox Cable said that only 2% of its users reached the 1 terabyte level. Last month he put the figure at 10%.

“The state of the art is changing very quickly in this area,” adds Wood. If companies weren’t expecting customers to hit usage levels of 1 terabyte, “why would they put the cap here?”

Nonetheless, Smart Money says Charter’s petition to be relieved of its previous engagements will go through the Republican-dominated FCC. The die was cast at the time of the initial approval, which took place under a commission controlled by the Democrats.

GOP Commissioner Ajit Pai voted against the approval because he objected to the terms. The approval order “does not concern competition, competition, competition; it’s a matter of regulation, regulation, regulation, ”a spokesperson for Pai said at the time. “This is the government’s micromanagement of the Internet economy.” GOP commissioner Michael O’Rielly voted in favor of the merger, but waived conditions.

Both are still with the FCC – Pai having been elevated to the presidency by President Trump. The chances that they are kindly looking at Charter’s request are good.

Already the FCC has been accused of having greased the track at Charter’s request. This charge came, curiously, from the conservative news organization Newsmax Media.

Newsmax, which has a business interest in blocking data caps by Internet service providers broadcasting its content, says the commission issued a notice setting the comment period for the request two months too early, based on the terms of initial approval of the merger. The FCC’s rush to comment creates “the appearance of undue favoritism” towards Charter, Newsmax argues.

This is especially true given the prospects that the FCC could come under Democratic control again early next year, an eventuality that could complicate the Charter request.

Regardless of why the Charter seeks to evade conditions, one counter-principle should be paramount: When a company promises to get a huge break from government regulators, it should be held by them. Period.

Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button